After getting credit such as credit card or home loan or car loan, the most vital thing that you should do is to ensure that you keep it under control so as to ensure that you achieve all your financial goals without going too far and deeper in debt. A good credit score makes it easy to secure financing from lenders when you want to buy a house or so something else. In fact, the first question that many people ask themselves when they want to buy a house or other real property is; what is my credit score? No one would like to have a poor or bad credit rating. However, the transactions that we enter in to may cause us to have a poor credit rating.

The following are some tips as to how you can maintain a good credit score.

Know what counts and that which doesn’t in getting better credit score

 What credit score do I need to buy a house? This is the first question that is likely to come into your kind when you want to buy a home.  If you know what exactly counts towards getting better credit and that which doesn’t, you will be more capable of maintaining a good credit score.

There are five critical pieces of information that are used in calculating the credit score.

These include:

  • Payment history
  • Credit age
  • Debt level
  • Credit mix
  • Recent credit

However, not all financial transactions will affect your credit score rating. An example is when you check your utility payments and account overdrafts. These will not in all cases affect your credit score rating.

Keep track of all your expenses

 To maintain good credit score you keep good track of all the ATM card usage, credit card transactions as well the checks that you have written. Also, take a proper review of all monthly statement as and when you get them. If you note any discrepancies in these statements you should immediately report them.

Avoid exceeding the credit limit on credit cards and other credit lines

Your available credit refers to the amount of credit that remains on a credit card or credit line. In other words, it is the credit limit less the outstanding balance. You should always be careful to ensure that your spending doesn’t fall below this particular amount. To this end, you may practice what is known as the 20/10 rule which refers to not letting the credit card debt exceed 20% of the total income per year after payment of taxes.  Also every month, you should ensure that you don’t exceed 10% of your monthly payments in payments via credit cards.

Set aside an emergency fund

Without an emergency fund, you will be forced to borrow and go further in debt if you suddenly lose your job, you or your dependant gets sick, or any other unexpected thing happens. The emergency will help you avoid payday loans or other advance credits which usually attract high rates of interests thus increasing the risk and probability of defaulting in repayments.

Pay debts in time

Defaults in payments or paying late the debts that you have incurred will negatively affect your credit score. Adopt the practice and habit of making payments in time.

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