How to Balance Credit

Credit can be finicky at times and for the unsuspecting consumer it can be difficult to balance. On the one hand, you should have a good amount of open lines of credit with good payment history. However, you shouldn’t open all those accounts around the same time as that could potentially lead creditors to believe that you are credit seeking. You should also maintain a good utilization rate and not go over 30% usage (the lower your utilization rate the better off you’ll be). Additionally, you should use your credit cards to make sure they remain active and don’t become dormant and eventually close out. If you have long standing accounts with good payment history and you no longer use them they could potentially go inactive after a while if you don’t make use of them.

Keeping Accounts Active

It’s no longer advised to open a lot of credit card accounts to simply lower your overall utilization rate since these accounts have to be maintained in the long run. If you open an account and never use it, it will eventually become an inactive account. This is why it’s always advised to occasionally use credit cards that you want to keep open for credit benefits. You don’t need to carry a balance on those credit cards and let interest accrue, you just simply have to make sure the account remains active and are used occasionally. Otherwise, if they’re not, it’s highly likely that creditors will eventually close those accounts out on you due to inactivity.

Diversifying Your Credit Portfolio

Maintaining a diverse credit portfolio can be a great way to have a positive boost to your credit worthiness. It might take a while to establish a diverse mix of credit but once it gets established maintaining those lines of credit or installment accounts shouldn’t be so difficult. In order to diversify your credit, you’ll at least want to have one secured account, one revolving line of credit like a credit card and/or an unsecured account. Maintaining good payment history on these diverse accounts will help you demonstrate that you are a good candidate for credit. Once you’ve completely paid off any accounts they’ll be locked into your credit as paid as agreed and will grant you future borrowing benefits.

Long Standing Lines of Credit

Anytime you have long standing lines of credit with good payment history is a big plus for you and your credit score. Consumers that have open and established credit card accounts for decades plus tend to have a great boost to their score from it. It’s a great way to demonstrate that in the long term you are dependable and reliable in paying back what you borrow.

Following these steps can help you achieve optimal credit and can help you balance your credit in the long term.

Balancing your credit can be a tough act to follow in the long run but if you take precautionary steps and plan ahead you can easily achieve exceptional credit.