Banks don’t offer good credit credit cards to just anyone. Building good credit takes hard work, but the rewards of this diligence can save you frustration and a considerable amount of money in the long run. Just like it took careful attention to your finances to earn your good standing among creditors, it also takes continued dedication to maintain those standings.
Avoid these common credit pitfalls to keep your credit at the top:
1. Late payments
Payment history accounts for the biggest chunk of your credit, making up 35% of the FICO score. Automate your credit card and loan payments whenever possible to reduce the risk of sending it late.
2. High balances
Credit cards for people with good credit often have high limits, allowing you to charge thousands of dollars. But carrying high balances can hurt your credit. Credit utilization accounts for 30% of your credit score, and when the ratio of credit used to credit available surpasses 30%, it can start to have a negative effect. Keep your balances at less than 30% of your limits to stay in good standing.
3. Closing credit accounts
You may not use that first account you opened when you began receiving credit card offers for good credit, but don’t close it just yet. Credit history is another biggie when it comes to determining your credit score. Keep those old accounts open and in good standing to cultivate a long, healthy credit history.
4. Medical debt
According to a recent NerdWallet Health study, one in five Americans will be contacted by a collection agency about medical debt this year. Medical bills on your credit report can destroy your good standing. If you find yourself with unmanageable medical bills, make payment arrangements, take out a loan or talk to a medical bill advocate to prevent the damage.
When you have excellent credit, some of the best credit cards for good credit will come to you. You’ll get offers in the mail and online. But don’t let all of the attention go to your head. Keeping your credit in good standing takes effort. Keep tabs on your credit score and make sure to pull your credit report at least once a year to look for errors or accounts that may need your attention.
While you may be enjoying the results of your hard work now, taking your good credit for granted and going on auto-pilot could allow a late bill or annual fee slip by you unnoticed. Stay alert and cautious with your credit and you’ll reap the benefits long into the future.
Image via iStock.