The following five factors are used to calculate credit scores:
Factors that are used to calculate credit scores (Experian)
The most important duty for maintaining decent credit scores is to make payments on time.
A simple solution, if provided by one’s credit card provider, is to use automated payments for each billing cycle.
For those who wish to manually submit payments after reviewal of the credit card statements, they can use simple reminders (phone alerts) to ensure monthly payments.
Greater utilization of credit lowers one’s credit score. Interestingly, this metric means that it can be beneficial if consumers pay credit card balances early.
<aside> 💡 Early credit card payments can often benefit one’s credit score
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Credit card providers periodically send credit usage information to credit bureaus. Therefore, if a consumer pays off a certain portion of their credit card balance prematurely (before the statement due date), it is possible that they can decrease their credit utilization before the next instance in which the credit card provider sends their credit usage information to the credit bureau.
One strategy for maintaining a low credit utilization is to submit payments whenever one’s credit card balance reaches a certain threshold. For example, one may decide to pay off half of their credit card debt whenever their balance reaches $1000. However, it is important that the consumer still pays off the remaining balance by the end of the statement period to avoid late payments.
One factor for calculating credit card scores is the length of the consumer’s credit history. Often, this metric is determined by the age of the longest-held line of credit.
Therefore, it is important that consumers keep their lines of credit alive in certain circumstances.
<aside> ⚠️ Credit cards can be canceled due to inactivity
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