Is maintaining a good credit score with minimal debt even possible? Maybe you think your credit score is unimportant if you’re getting out of debt and don’t plan on borrowing in the future. If so, you’d be mistaken. Your credit score is used in determining your car insurance premiums, can factor into rental decisions, and is used by many employers for pre-hire screening. This may seem unfair, but credit scores do directly correlate to general responsibility.
4 Tips for Maintaining a Good Credit Score with Minimal Debt:
1.)Your Mortgage Payment.
If you currently have just a mortgage payment, there’s no need to sweat over your credit score. If you’re paying your mortgage consistently on time, that should be enough to get and keep your score at a good level. My husband and I have been credit card free for over a dozen years. The only debt we have is a small mortgage and both our scores are excellent.
2.) A Secured Credit Card.
With a secured credit card, you open a savings account at a bank and they put a freeze on that money and issue you a credit card with the same limit. These cards are reported to the credit bureau just as regular credit cards. If you ever get into financial trouble, you can have the bank liquidate the saving s account to pay off the card.
3.)A Credit Builder “Loan” from your local credit union.
Some credit unions offer an arrangement, where you agree to send them a payment of a certain amount every month and they deposit it into an account for you. These “payments” are reported to the credit bureau just like a loan. You will pay a small percentage for this arrangement. However, after the term is up, you have a savings account with a lump sum in it and a good credit score!
4.)A Low-Limit Credit Card that you pay in full monthly.
As a last resort, get a low-limit credit card and make several small purchases on it every month and then pay it in full. If you have a card with a $500 limit and just charge your gas to it monthly, this will still be enough activity to help keep your credit score active and in the positive range.