You’ve followed all the tips, stuck to the budget and managed your spending – and your credit score has reaped the benefits! Now what? What should you do when your credit card health is exactly where you want it to be? For starters, don’t get comfortable. There’s always room to improve, but at the very least you’ll want to maintain the benefits of your hard work.
Maintaining your credit score, or even taking it up a notch or two, won’t be as much work when you’re starting at the top, but it will require effort and continued monitoring. As a reminder, you should always know your score and the history behind it. Even if you’ve decided to shift into coasting mode, one wrong report or transaction could change your credit score and the sooner you act, the less damage you’ll have to repair.
With good credit, comes great responsibility.
Stay under the radar. Now that you’ve paid down your balance(s), you might be tempted to spend, spend and spend. Resist the urge! In order to maintain your new and improved score, you’ll need to keep your credit card utilization to 30% or lower. And in this case, less is definitely more.
You can buy whatever you need. Don’t put that credit card in storage. You can and should still use it. Credit bureaus want to see an ongoing history of good payment. Instead of tossing that card, change your mindset. Credit cards aren’t just for large purchases. Use your card to cover some of your basic needs like gas or groceries. Then pay the balance at the end of the month. To make it even easier, you can set-up automatic payments so that you’re sure to maintain your on-time payment history. Pro-Tip: Maximize your purchases by using a rewards card. This way your basic purchases can earn you points, and some credit card companies even offer cash back incentives.
Keep your old cards close. If you’re thinking about closing a credit card, you may want to think again. When you close a card, you are essentially reducing your available credit, which in turn will impact your credit card utilization ratio. Instead, consider adding a small recurring subscription to the card, like a streaming service or a magazine or online news subscription. This way you’ll keep your card active, have a nominal monthly payment and maintain a good repayment history. If you need to downsize your credit card portfolio, make sure you keep your card(s) with the longest history open. The older the card history the better the impact to your score.
Say it with me… on time! We are shouting this one from the rooftops. Make your payments on time, every time. It’s best to pay your balance off each month, but you should always at least make your minimum payment. And be on time, all the time. Whether you’re making a minimum payment or paying your balance in full, timing matters. If you find yourself in a financial crisis, don’t ignore your bill. Call your credit card company and inform them of your situation. Most companies will work with you and make alternate payment arrangements.
Lost and found. A missing or lost credit card is a dangerous thing. Cancel or freeze your card as soon as you notice it missing. Most credit card companies, with an app, will allow you to freeze and unfreeze your card. This provides a safe period to look for your card. Start your search by reviewing your payment history. Most credit card companies offer $0 liability, which means you won’t have to pay for those unauthorized purchases. If you find your card, you should be able to easily unfreeze your account. If it is lost, you’ll need to request a replacement from your credit card company.
Whether building or rebuilding your score, you did it and that deserves to be recognized. Follow us on Twitter for things credit card health.