Boosting a low credit score can be a long, difficult process. Once you get that number up into a satisfactory range, you deserve to feel some pride in all the work it took; but no sooner do you stop worrying about how to raise the score than you start worrying about how to maintain it. Here’s what you can do with that high score now that you’ve got it—while also making sure you keep it high.
How to maintain your credit score
Before you start considering everything you can do now that your credit score is in the green, you need to practice keeping it up there. You put in a lot of effort here, and the on-time payments you made or the cards you paid off will continue to reflect on the score—but it can still go back down.
To start, never neglect a payment or line of credit, even if one line has a better interest rate than the other. Treat them all equally, pay them all on time, and don’t let your guard down. Keep old lines open, too, because the length of your credit history makes up about 10% of your overall score. It may be tempting to get rid of all of your credit cards to reduce the likelihood that you’ll overuse them, but it’s better to keep them and practice restraint in using them.
That being said, having too many open credit lines isn’t good for your score, either, so consolidate some of your cards if you can. Ask your bank about a balance transfer card—once your score is good again, it shouldn’t be as difficult to get one as it would have been when your score was lower. See? New options are already presenting themselves to you. Take that as a good sign that all your work was worth it here (and a reminder that you can’t afford to backslide).
The most basic tip is this: Don’t live outside of your means. Credit cards don’t contain magical money; they just represent money you haven’t spent yet.
What to know about your credit score
Even if your score is already high, you can still learn a thing or two about how this mysterious metric works.
“Educate yourself,” finance specialist B. Hernandez of BPH Ventures said. “For instance, there are three credit bureaus: Equifax, TransUnion, and Experian. These are private entities that use your public and private data to build a score that rates your ability to pay back debt. Lending companies, such as banks and credit card companies, use this to figure out how much you can borrow and how much interest they can charge you. The scores can range from 300 to 850. Depending on the lender considering you for credit, below 600 is not great, whereas above 750 is considered excellent. Most Americans are in the 600 to 700 range.”
Staying aware how your score works and fluctuates is key to maintaining it and utilizing it to its maximum potential. When you receive your credit report, always check it over carefully for errors, which can happen. Knowing exactly what your report says—and raising a little gentle hell with customer service when it says something incorrect—will help you keep it in a solid range.
“You can call or write letters to the bureaus and ask them to remove inaccurate information,” Hernandez said. “Inconsistencies matter because lenders will penalize you with denials, extra verification steps, or higher rates because of inaccurate information. If they can’t prove that the wrong items are accurate, they have 30 days to remove them. It’s the law.”
How to monitor your credit
As long as you stay alert for scams, it’s worth it to consider what kinds of options you have for raising and maintaining your score beyond checking it yourself. Some credit repair companies are more reputable than others, so research for who, exactly, can help you with all those disputes you’re planning—or recognize what you should dispute before you do.
Once the score is up where you need it to be, Hernandez said, “Sign up for a credit monitoring service. The basic free plans are with companies like Credit Karma, which is solid but limited, as it only shows two of the three reporting bureaus—Equifax and TransUnion. Most banks also have their own calculation of your credit score, but generally it’s best to get your reports directly from the bureaus themselves. I use IDnotify to get the reports. They show the three reports side by side, so it’s easy to spot inaccuracies. They also tell you when your credit has been pulled, so it’s a good watchdog for possible identity theft. This option costs about $21 per month, but it’s worth its weight in gold because it shows you everything that’s on your report exactly as shown on a monthly basis.”
Clearly, whether paying off chunks of your credit card or buying a monitoring service, you have to spend money to make money. But once you do….
How to take advantage of good credit
What did you have in mind when you raised your credit score? Did you want a new car, a house, or just to avoid phone calls reminding you to make payment? Whatever it was, you can now move confidently—but carefully—in the direction of your dreams.
“It’s time to take advantage of good credit,” Hernandez said. “Ways to do this include refinancing high interest rate credit cards or loan balances. A good rule of thumb is to get rid of toxic debt, or debt that is above 10%. Another way to do this is to use a mortgage to buy a home, which generally appreciates in value over time. In general, use your good borrowing status to get your financing as cheap as possible.”
Remember everything you learned during this credit-building journey, and reap a few of these benefits—responsibly, of course.