How to maintain a good credit score

Your credit history reflects how you’ve managed debt in the past. And that history shows up through your credit scores—three-digit numbers that summarize the information in your credit reports. 

Creditors can use those scores to judge creditworthiness and set borrowing terms for credit cards and other loans. Landlords may even use them when you apply to rent an apartment. So maintaining good credit scores can have a big impact on your financial future.

Key takeaways

• Credit scores are based on many factors, including credit utilization ratio, payment history and credit mix.
• Maintaining good credit scores can improve your chances of qualifying for a loan or getting better loan terms, like lower interest rates.
• Responsible financial habits, such as paying bills on time, staying below credit limits and monitoring credit reports, can help to build and maintain good credit scores.

There are multiple factors that can affect your credit scores. Things like bill payment history, credit utilization, age of credit accounts and recent credit inquiries can all play a role. The amount and type of debt you have can also impact your scores.

It’s important to remember that you can have multiple credit scores. FICO® and VantageScore® are two of the most common credit-scoring companies. Each uses its own formulas to calculate scores, so you might see a slight difference between them. 

Ultimately, each lender uses its own credit policies to determine an applicant’s creditworthiness. But building and maintaining good credit scores might increase your likelihood of qualifying for a loan or getting a better interest rate.

A good credit score depends on how you use credit responsibly over time. Here are a few tips from the Consumer Financial Protection Bureau (CFPB) to help keep your scores up:

Paying your credit card bills and other loans on time is important—especially since a history of late or missed payments can cause a dip in your credit scores. If you’re concerned about missing a due date, features like automatic bill pay can help you stay on top of your account payments.

Your credit utilization ratio is the amount of credit you use compared to your credit limits. According to the CFPB, experts recommend keeping your credit utilization below 30% of your available credit.

The length of your credit history is another factor in determining your credit scores. So it’s important to factor that into decisions about opening and closing new accounts. FICO, for example, says part of its scoring models look at your oldest account, your newest account and the average age of all accounts. 

Closing a credit card account can affect more than just your credit age. Doing so could also increase your credit utilization ratio because it reduces the amount of credit you have available. 

One thing to note: Card issuers close credit card accounts if they’re not used for a certain period of time. If you have a card you don’t use often but still want to keep active, you might consider ways to avoid that. One option is to use the card to cover small, recurring charges and then set up automatic payments to cover the balance each month.

You may want to consider what credit you actually need before applying for a new card. Responsible credit card use can play a significant role in your overall credit health. But multiple credit applications in a short period of time could have a negative impact on your scores.

If you’re unsure you’ll be offered a card, lenders like Capital One offer pre-approval options. By using these tools, you can see whether you’re pre-approved for various cards. There’s no impact on your credit scores and it only takes a few minutes.

Proactively checking your credit reports for errors is another helpful habit. You may be doing everything right, but others may not. And errors or fraudulent activities can potentially hurt your credit scores. 

You can get free copies of your TransUnion®, Experian® and Equifax® credit reports at AnnualCreditReport.com. Or you could use a free tool, such as CreditWise from Capital One. It gives you access to your TransUnion credit report and VantageScore 3.0 credit score. And using CreditWise won’t hurt your scores.

By using credit responsibly, you’re more likely to maintain good credit and have a better chance of improving your scores. This means doing things like making consistent and on-time payments, keeping a balanced mixture of credit accounts and monitoring your credit.

Keep an eye on your credit as often as you want with CreditWise from Capital One.