What to Avoid if You Want to Keep a Good Credit History

For many people, having a good credit history is paramount if they want to be able to borrow again in the future. This is because your credit rating is taken into account every time that you apply for a loan, and if you have a bad history, you will likely be turned away at the very first hurdle. 

Furthermore, it is not only loans that you could be refused, but you may also be forced to have a prepayment meter installed for your household utilities, or you could be refused to finance a new vehicle. The implications are huge, so you must do all you can to maintain a good credit history. 

In this article, we are going to take a look at the things that you need to avoid doing to maintain your rating, so read on to find out more. 

Closing Down Credit Cards

It may sound completely counterintuitive, but your credit history could be affected by the fact that you close down any of your credit accounts. This is because it appears to the agencies that you are not as creditworthy as you would have been as you have less open credit extended to you. Even if you never use a card, it is better to keep it open and unused because you will have a long history of ‘good’ credit, and this will be extremely appealing to loan and utility providers. The older the card, the more important, so keep what credit you already have to maintain your good rating. 

Late Payment of Bills

Paying your bills late is a big no-no if you want to maintain your good credit history. Every single missed payment will appear on your record, and the more of these late payments rack up, then the lower your rating will become. If it is a question of laziness, then you should set up direct debits. If you are struggling financially, then you should reassess your expenditure as your household bills must be paid on time if you want to access credit in the future.

Avoid a False Report

There are three main credit agencies, and they do not all produce the same scores and are just as prone to making mistakes as any human. It is, therefore, important to know your credit history to make sure that there are no errors. You can access reports easily, and you could go through them with a fine-toothed comb, especially if you are looking to borrow a large sum of money. Sometimes the agencies are difficult to deal with, but if you persevere and provide evidence for their false record-keeping, then it should be no problem to have your history corrected. 

Avoid Applying for New Credit

Unless you really need new credit avenues, it is best not to apply, full stop. This is because every time that you apply for credit, whether you are granted it or not, there will be a mark made on your credit history. If you are refused, then this black mark will linger for longer affecting your chances of ever being extended a loan. Obviously, in an emergency, you should still seek to borrow money, but if it is just for a holiday, it is worth bearing in mind the long term consequences of your actions before you make a final decision.

Avoid Living Beyond Your Means

We all crave the glitzy and glamorous things in life, but it is important to remember to live within your means and that these extravagances need saving up for. Too often, people want everything right now, and this mentality can have far-reaching consequences later in life. Your debt should never exceed 20% of your net salary, and you don’t want to be making monthly repayments of over 10% of your net income. If you stick to these levels of debt, then you will not be stretching yourself, and you are more likely to be offered credit in the future.

As we have discovered, it is important to live within your means and to always pay your bills on time if you want to protect your good credit history. Avoid closing down any unused credit, especially if it has been open for a long period, and don’t apply for unnecessary credit, because if it is turned down, a black mark will remain on your file for years. If you follow these rules, then you will be well placed to maintain your high credit rating and will find credit available to you in the future.