How You Can Make the Most Out of Your Credit History

A high credit score can be incredibly rewarding. When you have a high score, you tend to get lower interest rates on credit cards and loans. You’re more likely to have your loan applications approved and given bigger credit limits to work with. You might find that you have an easier time getting a mortgage, buying a car and even getting a new cellphone than others. 

If you’re hoping to obtain these benefits, you need to think about your credit history. Your score is based on five major factors: Credit Mix, Payment History, New Credit, Credit Utilization and Credit History. Your Credit History is the length of time that you’ve had a credit account open, and it will have a significant influence on your score. Read ahead to see how you can make the most of it:

Use a Personal Line of Credit

A personal line of credit can help you extend your credit history without forcing you to commit to a steep repayment plan. You have direct control of the outstanding balance, and therefore, you have control over the necessary repayments. So, if you have the goal of increasing your history, you can keep your balance low. That will make it an easy account to maintain.

Do you not have one? If you don’t already have a line of credit on-hand, you can apply for one online. Go to the website CreditFresh to learn about personal line of credit requirements and see if you’re qualified to apply. This could be the solution that you’re looking for.

Keep Accounts Open

Keeping your accounts open is one of the easiest ways that you can get the most out of your credit history. The longer that you keep those accounts open, the more experience you will accrue.

If you’re planning on closing an account, take a step back. Doing this could lower your credit score. Your credit cards and lines of credit will still add to your credit history, even when they don’t get much use. Closing accounts also changes your credit utilization ratio since you’re eliminating the credit limit from your financial portfolio. Naturally, losing out on the extensive experience and offsetting your ratio will often lead to a lower credit score — not a higher one.

So, keep your old accounts open for as long as possible. Keep them active with a small balance. Make sure to check on them regularly. Rarely used accounts are more vulnerable to identity theft and fraud since users don’t keep a close eye on transactions. 

Close Your Accounts Strategically

You feel like you have to close an account. Maybe the pressure to spend beyond your means is too much. Maybe you’re tired of juggling so many credit cards. Whatever your reason, you want to eliminate at least one account from your portfolio.

So, how do you make sure that you don’t eliminate too much credit history? You’ll have to be strategic. Don’t close your oldest accounts because those will have the most experience. Instead, see if you can close a newer account to minimize the loss of credit history and the impact on your score.

Your credit history proves that patience and persistence will always pay off. The longer that you maintain your accounts, the better your credit score can be. It’s that simple.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.