Even people with good credit need to take steps to maintain their score. Luckily, with a few tips and a little planning, you can set yourself up for success.
Pay On Time
Your payment history accounts for approximately 35% of your credit score – making it the single most important factor that’s included. Paying at least the minimum balance every month on your accounts is an easy but important part of establishing, improving and maintaining a good credit score.
The best way to make sure you don’t miss a payment is to set up automatic monthly payments. With Industrial’s Bill Payer service, you can arrange for your payment to be made on a specific date every month and decide how much to pay – the minimum balance, a flat amount or the full balance of the bill that arrives. And if your loan is with Industrial, it’s even easier. Automatic transfers are easy to set up and will ensure your payment always arrives on time.
Know How Much You’re Charging
Keep track of how much credit is available to you, taking into account both installment loans and revolving lines of credit. Installment loans are for a fixed amount, such as for a vehicle, that are reduced to $0 as you make payments on the loan. Revolving lines of credit, such as credit cards, have a limit that can be paid and borrowed against continuously.
Next, make sure you know how much of your available credit you’ve used – or what the balance of your credit accounts is. Just because credit is available doesn’t mean you can afford to pay back what you charge, so stay on top of how much of your available credit you’re using.
It’s free and easy to manage your balances using Money Management – a free service available through Industrial’s OnLine Banking. Here, you can view multiple accounts at different financial institutions, monitor spending in different categories, create custom goals and set alerts to help keep you on track.
Avoid Maxing Out Credit Accounts
Part of your score is calculated by determining how much of your available credit you’re using; when you use up the majority of your available credit, it reflects negatively on your score because it appears that you aren’t being responsible with your available credit.
Manage Your Debt-To-Income Ratio
Your debt-to-income ratio shows how much you spend on monthly bills versus how much you make. Maintaining a low debt-to-income ratio is important because it shows lenders that you’re likely able to pay back any new debt you take on. Maintaining a cushion in your debt-to-income ratio is also a critical component of any good budget so that you can put money away for vehicle repairs, college funds or a rainy day.
Monitor Your Credit Report
It’s important to pay attention to your credit report to make sure there are no errors that could affect you negatively. The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.
For more information on how to order your report and report any inaccuracies, visit the Federal Trade Commission’s credit information site here.