Elements of Healthy Credit: Habits

Healthy credit doesn't have to be confusing. If you're just starting out with a young credit profile, or rebuilding after a life event, start with establishing these basic credit habits:

1. Credit Card Balances: If you don't have a big purchase coming up, there's no reason to keep your credit card balances under a microscope. However, credit card debt can be crippling for consumers. If you're working to establish a healthy credit profile, strive not to use more than 30% of the available credit limit on your credit cards. You'll be amazed at how much this simple habit can impact your credit score! 

2. On Time Payments: Yes, we agree that this is a simple one, but until you've suffered the consequence, you may be ignorant to the seriousness of this habit. Paying your accounts on will help you build a strong credit profile for the long term. Unfortunately, late payments can be an anchor on your credit score, and will impact the health of your overall credit profile for the long term. 

3. Moderation In All Things: Understand that a balanced credit profile is a healthy credit profile. To have healthy credit, you need to use credit. This doesn't mean maxing out credit card balances and over-leveraging yourself. This does mean having a good mix of credit (two credit cards and an installment loan for example) and focusing on the first two habits. 

There is no magic wand to remove correct, validated derogatory information from your credit history. However, if you've dealt with credit challenges in the past, or faced life events that have left scars on your credit profile, continue in your pursuit to establish strong credit habits on your journey to a healthy credit profile. 

In our next post, we'll review the second element of healthy credit; the accuracy of your credit profile. 


Alex Grimnes