Maintain Your Credit Limit and History for a Good Credit Score
Worried about your credit score and wondering why, despite your financial honesty, it is
low? Your bills are paid on time but your score lags behind and is below the average
score. This is the reason that regular credit checks are desired, as scores may vary. Read
on to discover what is affecting your score.
Do you have a high balance to limit ratio?
This is the reason for low scores and a bad credit report. This is one of the most vital
elements of scoring: what you actually owe relative to the credit you have been aligned
with. With too high of a ratio, it depicts a trembling financial life in the near future and
leads to a low score, no matter if you had never paid late in your life.
Along with being current on all your payments, it is necessary that you should not exceed
your limit. Maxing out signifies a higher probability of defaulting on some of your
accounts in the near future. The automatic grading system will score you low and this
gives a warning to the potential creditors about your worthiness.
Maintain a low debt to credit ratio and check your credit scores to learn how to increase
the number. There are people who find that their scores are lower than those of
individuals with an irregular payment history but with a lower debt to limit ratio.
It is recommendable to maintain your balances below 33 percent of the available credit
and if possible maintain it up to 20%.
Is your credit history short?
Seven years, or in some cases ten years, is the life of bad credit on a credit report. Most
people make a big mistake if they wait for the bad credit to be removed from the report.
In seven years they do not opt for any new credit as they think they cannot get it. Waiting
to clean one’s history can destruct scores, as the smart scoring systems wonders why a
mature adult is without paper trails of previous payments. No or limited current credit
will surely hamper the score.
It is likely to be understood by the calculating software that the person without any
history is someone who is at bad risk today and he or she might have had difficulty with
payments in the past.
What you should do?
There is always room for improvement and this holds true for credit scores. Pay your
bills on time and maintain a favorable credit limit. Also, check your credit file on a
routine basis and check your free credit scores to find out the areas for improvement.
If you are applying for a loan or making a big investment, know your credit scores. For a
good financial life, its important to keep a check on the credit score, so check your credit
scores regularly and monitor them with a credit monitoring service.