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Zach Raus is President of BHG’s Lending Division. An expert on financing for dentists and other licensed healthcare professionals, Raus oversees the lending team responsible for funding financial solutions for licensed healthcare practitioners and other highly-skilled professionals. Bankershealthcaregroup.com.
Your credit score is a powerful three-digit number. A good score can enable you to advance your career, start a dream business, reach personal goals, and make smart investments; a bad score, however, can hold you back in many ways.
Your credit score can fluctuate monthly, depending on how you manage your bills and debts. Keeping your credit score intact will serve you well in the long run, so if you want to give yours a boost, here are five “Don’ts” to keep in mind.
Don’t Miss a Payment
FICO Score Breakdown: Payment History = 35 percent
The most important factor of a FICO score is payment history. If you’re guilty of missing a payment, it’s time to commit to making all of your payments on time every month. A late payment can signal you’re a risky borrower or someone who doesn’t respect what they owe to someone else. Don’t let payments slip by and hurt you; you can put your bills on autopay so you don’t even have to think about it.
Don’t Max Out Your Credit Limits
FICO Score Breakdown: Amounts Owed = 30 percent
The more you owe, the more overextended you appear (even if you’re not), so strive to keep your cumulative balances under 50 percent of your actual credit limits. If you approach maxing out your cards, you don’t need to wait until the due date to make a payment. Chipping away at the overall amount owed throughout the month can be viewed favorably by credit bureaus (and help you maximize cash flow).
Don’t Close Old Credit Cards
FICO Score Breakdown: Length of Credit History = 15 percent
The age of your credit history matters. If you have a card that you opened years ago but don’t use, don’t close it; swiping it even just once in a while can help keep it active and count toward the length of your credit history. As an added bonus, when you keep an old card active and use it only infrequently, your utilization ratio goes down, which can help boost your score.
Don’t Open Too Many New Accounts at Once
FICO Score Breakdown: New Credit = 10 percent
When applying for a new card or loan, your credit could take a hit if the lender makes a hard credit inquiry. If you’re shopping around for the best offer, be sure you know how the credit check might impact your score so you can limit the number of inquiries.
Don’t Forget Card Diversity
FICO Score Breakdown: Credit Mix = 10 percent
Having a variety of cards and loans shows creditors that a borrower has experience managing and paying back different types of accounts.
Your credit score matters. It can take as few as 30 days to see a score change, for better or for worse, so be mindful of how you manage your credit.