It’s hard to get through life without lines of credit. Whether you own a business or need it for personal purchases, having a credit card can make life convenient. What’s important to keep in mind is that protecting your credit and credit score is important. I don’t just mean charging responsibly and paying your bills. You could be destroying your credit score without even knowing it. But improving your credit score isn’t as difficult as you might think.
In life, it’s usually the small details that you miss that end up having much bigger consequences later on. Pay more attention to the small and large details of your financial life. Here is a list of things that I learned the hard way about protecting my credit score.
Check the Mail
Look out for all of your bills in the mail. Don’t ignore the smaller bills over the larger ones. Penalty fees can add up, no matter the size of the bill. If you move, make sure your mail is forwarded. Delinquent bills of all kinds, not just utility bills, are referred to collection agencies. Once that happens, it can appear on your credit report and affect your score.
Don’t Throw Away Your Traffic Tickets
You really can’t beat City Hall. The more you try, the more you end up losing. If you have outstanding parking tickets, pay them in a timely fashion. If you want to go to court to fight the tickets, do that. Whatever you do, don’t ignore your traffic tickets. Unpaid traffic tickets can be referred to a collections agency which can then show up on your credit report. Also, you risk imprisonment depending on where you live.
Reach Out To Your Customer Service Representative
No one is perfect. I am certainly not. We have all paid bills late at some point or another. If you are experiencing severe financial difficulties, don’t suffer alone in a self-imposed reality vacuum. Call the customer service representative for your credit card company. Inform them of your current financial distress. They may be able to give you more time to pay. Why take the hit to your credit score if you don’t have to?
Don’t Max Out Your Credit
Credit utilization is the ratio of how much credit you have available to how much credit you use. If you have a $1,000 credit limit and $400 worth of charges, then you have a credit utilization ratio of 40%. Keep this as low as possible. Credit bureaus and potential lenders may see you as a financial risk if you are maxing out your credit all the time.
You will look financial irresponsible and always in dire need of cash. Even if you pay the bill in full later on, this activity will be recorded on your credit report. This bad habit could affect your credit limit and lower your credit score in the long run. About 20% to 30% of your credit score is determined by your credit utilization ratio.
Pay attention to the small things. Mind your mail and pay your bills. Try to keep your credit utilization score under 30% if possible. The only thing more important than having a credit line is protecting your credit score with responsible use.