How to Avoid Getting Bad Credit

Your credit score is usually a number between 300 and 900. The higher the number, the better the credit score. Improve your credit score by: paying bills on time, saying under your credit limit, reduce your credit balance, lengthen your credit history, and limit credit checks.

Why is Avoiding Bad Credit Important?

Having a credit card is all fun and games until it starts affecting your credit score and suddenly you have bad credit. Your credit score can affect many aspects of your life. If you want to rent or buy a home, apply for a job, or buy a car, it all comes down to your credit score. If it’s lower than it should be, the people who consider giving you that car or home have the right to turn you down. It’s essential these days to avoid getting bad credit scores and can even help you gain lower interest rates. 

What can be affected by having bad credit? Well, here’s a list of just a few things that can be affected by your credit score:

  • All types of loans and Line of Credit
  • Rental applications
  • Security deposits
  • Cell phone providers
  • Employment background checks
  • Insurance

That’s a lot, right? That’s why it’s necessary to care for your credit to the best of your ability. But there’s a lot to consider when dealing with credit and many things to keep track of. If you want to gain tips on how to avoid getting bad credit scores, keep on reading. Here are a few ways to maintain good credit.

First Off, What’s Considered Bad Credit?

Your credit score is usually a number between 300 and 900. The higher the number, the better the credit score. It’s a little different depending on different references, but typically a number that’s about 650 or lower is considered bad credit and needs to be improved. A number around 720 or higher is viewed as great credit and is what you should aim to get. Anything in between is considered good credit. It’s not great but it’s not seen as bad credit either; it’s more of the average credit score. 

Now that we know what’s considered as bad credit, let’s get into the tips of how to avoid getting a bad credit score!

Tip 1: Pay Your Bills on Time

One of the most important things to remember doing when it comes to credit is paying your credit card bills on time. Not paying on time lowers your credit score and makes it appear as though you’re not responsible enough to pay your bills on time. To make sure you keep up with the payments, you can pay your bill as soon as your statement balance is received. You can even set up reminders on your phone for the day you should pay your bills. If you want an even easier solution, try and set up an automatic payment to ensure you pay your bills every month. Be careful with this in case your account doesn’t have enough money to pay the full amount.

Tip 2: Stay Under Your Credit limit

Even if you pay your bill in full, going over your credit card limit can cause a lot of issues besides just gaining bad credit. Going over your credit limit can lead to a lower credit limit, overcharge fees, and even shutting down your account. This can happen if you’re consistently going over your credit card limit. You may even experience an increase in interest rates from lenders who see that you’ve been going over your credit limit. Make sure to monitor frequently how much you’re spending on your credit card. This can let you be aware of when to stop using the card for the month.

Tip 3: Lower Your Credit Card Balance

You should focus on being below your credit limit and be sure to not get too high to the limit. Although you wouldn’t technically be exceeding the limit, it’s good to be below a certain percentage. This is because some lenders might view you as a risk. A good tip to avoid getting a bad credit score is to use less than 35% of your credit limit. For example, if your limit is $1500, only use up to $525 on that card. This is why a higher credit limit is better. A higher limit allows you to spend more money but stay below the 35% limit.

Tip 4: Lengthen Your Credit History

Typically, the longer you have a credit account, the better your credit score will be. Over time, you develop a history that better proves your credit history and makes you appear as less of a risk. Having a long credit history also helps clear any bumps along the road. Whereas a bump can appear as a giant mountain in a relatively new credit history and make it easier to have bad credit. Be careful when transferring into a new account from an old one. Transferring to a new account will clear your credit history and will be considered as new credit. If you want to keep your history, try keeping the account open even if you don’t want it. But you can still use it from time to time to keep it active and not have the account shut down. 

Tip 5: Control the Number of Credit Checks

You can check your credit whenever and it won’t affect your credit score. But what can affect your credit score is a hard inquiry which is when lenders and others ask for your credit report. This is also referred to as a credit check. If you have too many credit checks, it could make lenders believe you’re urgently seeking credit or you spend too much. Try and limit how often you apply for credit and try to only apply when you really need to. It’s also great to try and get quotes from different lenders when applying for a mortgage, for example, within the same two weeks. This then becomes marked as a single inquiry on your credit report.

And there you have it. Five tips to help you avoid getting a bad credit score. These are just a few simple points to consider. Keep in mind that this is a very dense topic and there’s a lot to keep in mind when dealing with credit. Having good credit affects all aspects of your life. Sometimes it can be really tricky to keep track of everything. Lucky for you, you don’t have to keep worrying about it. At Solid Ground Mortgage Solutions, we don’t judge anyone’s situation. We know that life gets in the way and everyone has different situations. So we simply help you get where you want to be, regardless of your situation. Got a bad credit score? One of our experts can help you out. We’ll design a plan perfect for you to get that weight off your shoulders. 

Contact us today to get started on rebuilding your credit score! 

Go back to Blogs Content.

  • Start
  • First Home
  • Employed
  • Disability
  • Payment
  • Decisions
  • Finish

I'm lost and need help!

There is no wrong answer. Solid Ground will always keep your information private.

*This is not an application*

Need help?