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Tips for Building and Maintaining Good Credit

Apr 02, 2021
credit scores. Very Poor, poor, fair, good, excellent

Credit Scores can be overwhelming to think about. These tips can help get you started to understanding and gaining control of your score!

Choose carefully!

  • Not all cards are equal.  Make sure to look at annual fees, interest rates (APR), program fees etc.
  • Be careful about taking advantage of higher credit lines, store cards and introductory rates. It’s easy to overspend, and many intro rates and store cards come with strings or fees attached.

Start small!

  • If you are building or rebuilding credit, look for a secured credit card.  These cards typically have lower credit lines and require you to keep a certain balance in a savings account as security.  This is a great way to build good habits while you raise your credit score.

Keep balances low!

  • A lot of folks think they need to carry a balance on their cards in order to build credit – this isn’t true!  You can pay a balance in full every month and maintain great credit!
  • Utilization rate, usage ratios, available credit…. What do these terms even mean? It’s all just a way of talking about how much of your credit line you are using.  So, if your line is 10k, and you are carrying a 5k balance, you’re at a 50% utilization rate.  General rule of thumb is to keep your ratios under 30%.

Keep payments current!

  • Make every payment, every time.  Missing a monthly payment can impact your credit score.  Always make sure your payments are received on time each month.
  • Remember – the monthly minimum payment is not the same thing as how much you owe.  Don’t just budget for your ‘monthly payment’ – know what you owe on each card, and make a plan to pay them down.
  • Paying only the minimum every month will not only extend the amount of time it takes to pay off the card, but you’ll pay more in interest the longer you carry a balance. Don’t spin your wheels making minimum payments.  Your best bet is to pay your card in full each month – you’ll save money, keep your utilization rates low, and make sure you aren’t spending more than you make.

Keep your eye on your credit!

  • Everyone gets a free copy of their credit report from each of the 3 major reporting agencies each year.  Whether you look at them all at once or space them out, make sure you check these annually! It helps prevent identity theft, let’s you keep an eye on debt, and allows you to know what your credit history looks like.

Feeling overwhelmed by credit, debt, or just trying to put together a plan to build your score? We’ve got you covered.  At TruChoice we offer a free Credit Score Analysis where we will review your credit report with you and help you to build a personalized plan to reach your credit goals.  Call or Text us at 207.772.0808 to set up your CSA today!