How to Keep Your Credit Score Healthy
For some, keeping a good credit score can be an elusive achievement and is often not even something regularly monitored. Getting that first line of credit can burn a hole in some pockets and healthy spending habits, and if not taught early, can wreak havoc on individuals later in life.
If your spending habits have gotten you on the lower end of the scale, fear not. There are some steps you can take to get yourself back on the right track and stay there. For more information on keeping a good credit score and home financing options, Peak Finance Company takes pride in being the premier destination for home financing resources.
What is a Healthy Credit Score?
Credit scores typically range from 300-850 points and these scores are used by banks, lenders and credit card companies to determine whether or not to offer someone a line of credit and at what rate. FICO credit scores are among the most commonly used. A very bad FICO credit score can range from 300-579 and covers about 17% of all people. A fair score will range from 580-669 and covers about 20% of people. A good score is considered to be in the 670-739 range and covers about 22% of people. A very good score ranges from 740-799 and covers about 18% of people. An excellent credit score is in the 800-850 range and covers about 20% of people.
Now that you understand where you are and where you want to go with your credit score, let’s take a look at some smart financial habits you can implement to make sure your credit score stays in a healthy range.
Establishing Healthy Financial Habits
One of the first things you need to do to establish a healthy credit score is examine credit card debt and take the necessary steps to eliminate it. We all know how difficult it can be, but the first step is to set aside money each month to pay down debt. If the interest on your credit card is what’s really killing you each month and you just can’t seem to get out from under it, consider a balance transfer offer. There are some cards that will offer you zero interest for up to a year or more. That will allow you to eat into that debt balance without incurring additional interest charges.
Another healthy habit to begin is to start tracking your spending. How much do you charge on your credit card each month? How much do you spend on food, rent, clothes, utilities, and fun? None of this should be a surprise. When that credit card bill comes each month, you should know exactly what that balance is going to be. You can get some free budgeting ideas and tools here. And once you know what that balance is, you should pay it off every month.
Paying off your balance is a great way to keep that credit score healthy and earn rewards on your credit card. In addition to paying it off each month, you should pay all bills on time. Late fees can really add up. If you have a hard time keeping track of what is due when, several cards offer email and text alerts, so you won’t be late and rack up those unnecessary charges.
Another thing to keep in mind is just how many cards you are using. More cards can mean more ways to lose track of exactly what you are spending and raises the risk of missing a payment. Make sure you’re checking credit cards statements regularly to avoid any surprises.
Advantages of a Healthy Credit Score
Keeping a good credit score can increase your buying power. It presents you with options to purchase homes, cars or the opportunity to invest in other business and real estate projects. Don’t limit your financial options by not knowing or managing your credit score. Keep your finances in Peak shape.