Keep Your Credit Score on the Upswing

“We’re going to need to check your credit”—it’s a sentence we hear when we least expect it and often not ready for it. But you should be, so you can buy a house or car, qualify for loans or even be hired. Your FICO score matters more than you may realize.

Your credit score is calculated based on so many different factors, but a good score is considered to be in the 600-750 range1. The higher your credit score, the more likely you’ll be seen as trustworthy and given lower interest rates on loans. The lower the score, the more likely you’ll be considered a major risk when it comes to money.

Don’t be a risk—be prepared with these tips on how to keep your credit score higher:

Pay Your Bills on Time

It sounds simple, but making those payments on time and often is the main thing you can do to make sure that your score stays on the upswing. There are people out there who actually have scores in the 800s from doing just this, so it’s a simple yet effective technique.

Keep Your Debt Percentage Down

Not only does your credit score take into account how much debt you owe, but it also looks at it in relation to how much you’re allowed to borrow. In finance language, it’s called your “credit utilization” and it’s recommended that you use less than 30 percent to 35 percent of your allowed limit. So if you’re lucky enough to have a credit card with a $10,000 limit, try to only use up to $3,500 if you can.

Check Your Credit Score—But Not Too Much

There are two schools of thought when it comes to checking your credit score—some finance folks advise to check your credit report only when absolutely necessary, while others suggest checking in on it at least three times a year. One thing they do agree on: If you see any inaccuracies, correct them right away via each agency’s website.

Don’t Cut Up Your Credit Cards Just Yet

While it may feel good to be free from the clutches of credit card debt, don’t take the scissors to the plastic, because it could hurt your credit rating. Believe it or not, having a credit card account open for a long time actually looks better than a bunch of “young” accounts in your history. In a way, it shows you’re reliable and able to commit to credit.

Brought to you by The Guardian Network © 2015. The Guardian Life Insurance Company of America.

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