Bad credit can hinder you from getting that loan you desperately want with the best interest rates. If you are thinking of applying for a home loan, auto loan or student loan you can follow these 3 ways to avoid bad credit. These tips will help you to maintain a great credit score.
- Pay your bills on time. The first thing you have to do if you want to keep your credit flawless is to always pay your bills on time. It’s the most important and simplest thing for you to do to prevent having bad credit,
- Do not get too close to your credit card limits. “When you have a credit card that has a $5,000 limit, do not get up to $4,500,” says Tom from investopedia. That can send your score downwards, this may happen even if you pay off your bills each month. The best thing to do is use 30 percent or less of your available credit.
- Pay bills in full. Paying minimum payments can trap you into a cycle which can cause an increase in debt that in turn can lead to bad credit. I advise you to use your credit wisely and when you are buying things do not buy anything that you can’t pay for at the end of the month.
1. Pay your bills on time
Like I mentioned above this is the number one thing to do is to make sure that you always pay your bills in time, you should make this a habit if you want to avoid bad credit.
you should know that payment history is probably the biggest factor that affects your credit score. There if you miss payments by 30 days or more it will affect your credit score. Take note that just missing your payment once will cause a drop in several points
There are accounts that are not sent to the credit bureaus such as your phone bills and electricity bill, these may affect your credit rating when they are sent to collection agencies which will be listed on your credit report.