Working to improve your financial health is a lot like working to improve your credit score. Follow these tips and you’ll be improving your financial health in no time:
Make on-time payments: Your payment history is the single biggest factor in determining your credit score. Late payments can ding your score significantly, so focus on making on-time payments when working to improve your score.
Pay down credit card balances: It’s recommended that you keep your credit card balances below 30% of your credit limit. If you’re carrying high balances on your credit cards, try making more than the minimum monthly payment to pay them down.
Avoid opening multiple new accounts at the same time: FICO considers borrowers who open multiple accounts within a short timeframe to be riskier to lend to, which could lead to a decrease in credit score. For this reason, it’s wise to only open new accounts when necessary.
Keep unused credit card accounts open: Part of your credit score is determined by the average age of your credit accounts. The longer the average age, the better for your score – so it helps to keep older accounts open, even if you don’t use them regularly.
Diversify your credit mix: Lenders like to see that you have experience with different types of credit like revolving credit accounts and installment loans. While it’s not worth opening a new account just to improve your credit mix, it’s something to keep in mind when you’re working to improve your credit health.
