Key to Good Credit

You may have heard that the key to a good credit score is making payments on time. If you missed or have been late in making payments to your credit source, the key is to change that immediately. Repayment hostory impacts your credit score significantly.

Past credit history makes up 35% of your credit score, the most impact of any other category.

A typical timeline for the repayment of credit is 30, 60, 90, and 120 days. After 150 days it is typically sent to be written off by the credit provider. After this point it is sent to a collection agency to try and collect. This negatively affects your credit score.

Missing payments or paying late negatively impacts your credit score and can lead to higher interest rates, late fees, penalties, and reduced credit limits. If balances are high, you could even end up with court judgments.

Practice Better Financial Habits

If you know you have had a few late or missed payments, there is no better time to start practicing better financial habits to work toward improving your credit score.

1) Keep your credit utilization below 30%
2) Use a tool to track your credit score like Trans Union
3) Limit how often you apply for credit
4) Set a plan to get back on track to pay bills on time
5) Set up automatic payments for credit cards, cell phone bills and lines of credit

Set-Up Automatic payments.

This can be completed at your bank however you must make sure you always have money in your bank account to cover the payments. Another option is to set up auto payments to your credit card. Paying by credit card also helps if you collect points and you only have one payment to make sure you pay on time.

The key to a good credit score is really tied to a good repayment history.