How to Fix Your Credit BEFORE it’s Broke

2356143672_f5f88797d5_zWhen it comes to your credit, an ounce of prevention is worth a pound of cure, meaning it’s much easier to build and maintain a high credit score than it is to rebuild a poor credit score. Why is that? Because many of the practices that lead to poor credit put you in a situation that’s difficult to climb out of, especially if you end up in a cycle of debt.

So, just how should you keep your credit in tip-top shape? There are a few important habits you should get into immediately.

  1. Pay Your Bills on Time

Your credit score, which is essentially a rating of your credit worthiness to potential lenders, depends on several factors. One of the factors that affects your credit score the most is your payment history. If you have a habit of paying late or missing payments entirely, that’s going to bring down your credit. Another problem with not paying your bills on time is that you can end up with late fees. As these fees accumulate, it will become harder to pay off what you owe.

With all the automated bill payment options available, there’s no excuse for missing a bill payment. Set up automatic payments if you have trouble remembering to pay your bills on time. If you prefer to pay manually to make sure you don’t overdraft your account, set reminders on your phone or computer with all your payment due dates.

  1. Don’t Use Too Much Credit

The other largest factor in determining your credit score is your credit utilization, or the amount of your available credit that you’re using at any time. This factors in all your available lines of credit and all your balances, so if you have three credit cards with a combined credit limit of $20,000 and your combined balances are $5,000, then your current credit utilization is 25 percent.

Ideally, you want to keep this number under 30 percent at all times, although under 20 percent is even better. One of the best ways to manage your credit is to pay your bill in full every month, avoiding any interest charges.

  1. Check Your Credit Reports

You have three credit reports, each issued by one of the credit reporting bureaus, which are Experian, Equifax and TransUnion. The law entitles you to one free credit report from each bureau per year, and you should always take advantage of this. Reading through your credit reports will show you your current credit scores and what you can do to improve those scores. You may also find mistakes on a credit report. If so, you can call the credit reporting bureau that issued the report and the creditor that reported the incorrect information to have it removed.

Don’t make the all-too-common mistake of thinking that the credit reporting bureaus always get it right. Mistakes happen, and for all you know, your credit report may have an account that you didn’t open, information that should have fallen off your report a year ago or an unauthorized credit inquiry. The only way you’ll know and be able to get the issue corrected is by requesting your credit reports every year.

  1. Keep Your Credit Cards Open

One mistake people often make is opening and closing credit cards. The length of your credit history also impacts your credit score, so accounts that you’ve had open for years are a positive factor for your credit score. Aim to only open credit cards that you plan to keep for the long haul. If you need to cancel a card to avoid an annual fee, try to cancel cards that you haven’t had as long.

When you manage your money and credit wisely, it isn’t difficult to maintain good credit. Follow these rules and you’ll keep your credit score high.

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

Leave a Comment


May the 4th Be with You: Star Wars Swag on Amazon

May the 4th Be With You: Star Wars Day Swag

It began as the punniest holiday ever but quickly grew into an earnest (if somewhat random) celebration of the long-running (and still... more →
People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
How to find transportation that seniors can afford

How to Find Transportation That Seniors Can Afford

Affordable transportation is often a concern for senior citizens. Some seniors go without basics to make car payments they can’t... more →