Tips for maintaining a good credit score


The credit score system, developed by the Fair Isaac Corporation, is commonly referred to as a FICO score. The score is a number between 300 and 850 that helps lenders calculate an individual's credit-worthiness and risk. BBB reminds consumers that when it comes to credit scores, it's important to use a great deal of care as one slip up can cause damage for years to come.

It's important for consumers to know how to monitor accounts and detect potential fraud. Establishing good financial habits can help consumers stay ahead of the game.

BBB offers the following tips for managing your credit.

Knowledge is power. The more you know about what goes into your credit score, the easier it will be to maintain a good one. Five key pieces of information are used to calculate your credit score - your payment history (35 percent), amount owed (30 percent), length of credit history (15 percent), types of credit (10 percent), and new credit (10 percent).

Don't be late. Timely payment is one of the best ways to establish yourself as a good credit risk to future lenders. Setting up automatic payments from your checking account is a simple and convenient way to pay your bills on time.

Keep balances low. The higher your credit card balance is, the worse your credit score will be. Your available credit is how much credit you have left on a line of credit or credit card; it is the limit minus your outstanding balance. Try to keep your credit card balance within 30 percent of your credit limit to maintain a good score.

Manage your debt. In addition to your credit card balances, loan balances and lines of credit also impact your level of debt (30 percent of your credit score). If you are unable to pay the full balance, at least try to pay more than the minimum amount due; this will reduce the finance charges you may incur. The lower your debt, the easier it will be to maintain a good credit score.

Don't close old credit cards. Keep in mind, the credit scoring formula places less weight on inactive accounts. After about ten years, the credit bureau will remove that closed account's history from your credit report. Losing that credit history will shorten your average credit age and cause your credit score to drop.

Watch for scams. Phrases such as "Free credit reports" or "quick fixes for bad credit," could be red flags for a potential scam. You are entitled to one free report from each of the three credit reporting bureaus every year at Never provide personal or financial information to anyone you don't know or have not checked out.

Watch your credit report. Reconcile your accounts with all financial institutions at least monthly, and report any possible discrepancies immediately. Checking your credit report throughout the year allows you to detect these mistakes sooner so you can correct them and maintain a good credit score. Remember, consumers are entitled to one free report a year from

Get help. Go to to search for a financial advisor you can trust.

For more information on how to be a savvy consumer, go to To report fraudulent activity or unscrupulous business practices, please call the BBB Hotline: 903-581-8373.

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