Credit scores are much like a person’s test score. This can affect our future, especially on the financial side. A credit score is a measure of credit risk or simply put, it tells how a person is likely to pay.

There are a lot of things that could get affected with our credit score. It could determine our status in getting a car loan, a mortgage loan, a school loan, or a credit card. Lenders would also calculate the interest rate we get for a loan. The higher our credit score is, the lower our interest rate could get. Sometimes, employers also run background checks on one’s credit score to see if we are financially responsible or not.

So, how do we maintain good credit scores?

Paying bills on time can help a lot in increasing our credit scores. This practice indicates that person is responsible when it comes to dealing with his finances. Also, we must make sure that we do not go beyond our credit limit. It is even advised that we must only use up to 25% of our credit limit to maintain good credit scores.

Do not open multiple credit accounts over the same period of time. Doing so could only hurt our credit scores, especially if our credit history has not been doing well from the beginning.

Open credit accounts. It would not hurt to open a few, but only a few. Of course, we must use these accounts well. Getting in debt is the last thing we would want to be in or else our credit scores will plummet in the end. And remember the rule: pay your bills on time.

Use plastic, but only for emergencies. Credit cards should be treated like your last resort in times of financial burden. Although it would help to use it to get freebies and discounts, it would always be best to use cash most of the time and avoid getting into big amounts of debt due to multiple cashless transactions. When we use our credit cards, it would also tell that we are financially active. But we must always keep in mind to control ourselves and not overspend.

Having a good credit score not only affects our reputation in the eyes of financial companies and help us get loans easier. In the long run, a good credit score would also help us get a lot more savings when lenders favor us and give us lower interest rates.

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