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4 Ways to Protect Your Credit Score

Your credit score is an important part of your life. Not only can it determine whether you get a loan and how good of an interest rate you get, it also can be a factor when renting an apartment, getting an insurance policy and even applying for certain jobs. Because of the huge impact it can have on your life, it is important that you protect your credit score as much as you can. It can seem overwhelming to start, but there are a few simple ways that you can help your credit score.

#1. Pay Your Bills on Time

One of the best ways you can protect your credit score is to ensure you make all bill payments on time. Your payment history carries the most weight when it comes to calculating your credit score, so the more late payments you have, the lower your score will be. It is especially important to make sure you make payments on loans and credit cards on time, as late payments not only can hurt your credit score, they also will incur late charges and penalty fees which over time can add up significantly. If you always pay the minimum and occasionally accrue penalties and late charges it is theoretically possible to never actually pay that debt off.

#2. Keep Debt to a Minimum

Another important factor in protecting your credit score is limiting the amount of debt you have. You want to keep your monthly debt payments, including your mortgage payment, to no more than about 35 percent of your monthly income. You also want to keep debt on revolving credit accounts such as credit cards to no more than 30 percent of your available credit. So, if you have $10,000 in credit available to you, no more than $3,000 of it should be in use at any one time. Exceeding these thresholds can lower your credit score. This can also help you avoid overspending and reaching a point where you can’t pay back all the money you have spent.

#3. Avoid Bankruptcy, Foreclosure and Judgments

Nothing will destroy your credit score more than a major financial failure. If you are forced to declare bankruptcy, lose your house to foreclosure, or have a court judgment lodged against you for an unpaid debt, it can be devastating to your credit score. Avoiding these major credit hits will help to protect your score. If you do end up in these situations, it is important that you get professional assistance to reduce the impact that these events will have on your credit score and your life. Financial advisors and lawyers with experience in dealing with financial matters can help you navigate these challenges.

#4. Check Your Credit Report

Some people do everything right and still see their credit score lower than it should be. That can be due to errors on your credit report. To help to protect your score, it is important to periodically check your credit report to ensure there are no serious errors. There are several different ways to view your credit score for free. It is important that you check in more than one place to make sure that you get an accurate view of your score.

Bonus: Credit Score “Hack” Video

Because your credit score is so important, doing everything you can to protect it is vital. You may not realize it, but this number can change a lot about your life. Following these four tips will help you ensure that your credit score is as high as it can be.

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