How to Protect Your Credit Score: Do’s and Don’ts

In our current economy protecting your credit score is more important than ever and should be closely guarded and monitored. Credit scoring formulas are looking to see a large gap between any outstanding balances you have and the amount of credit you still have open and available to you. So refrain from running your credit cards up to or near their limit during these credit crunching days.

Naturally making your payments on time always is essential to maintaining a good credit history; as well as making the payment of the minimum amount due, although I always recommend paying extra on every payment, if only a few dollars.

Monitoring your credit statements carefully right now is very crucial, as many credit card lending institutions are cutting consumers available credit limits, raising rates and even canceling accounts as they are trying to reduce their risk portfolios.

credit-scoreIf you are like most Americans, you probably have somewhere near 11 or more credit card accounts, clearly know what the interest rates and terms are for each one and use them accordingly. If you have 0% interest rate cards that are going to expire negotiate a new rate before your interest free period is up, and push for a better rate when and if you maintain a balance on those accounts. Transfer outstanding balances to another interest free account if you can, but fewer and fewer banks are offering those rates any longer so keep that in mind when deciding how you will manage those accounts.

Do not close out your interest free accounts they usually carry the higher credit limits because they are often used to combine outstanding balances on multiple accounts to lessen your monthly payment amount; and can have a serious negative out-come on your credit score if you close them outright because it will lower your credit limit to debt ratio.

Finally, spend less, make larger payments than due, and save more money for a healthier credit score.