Never underestimate the value of a good credit score. The benefits include not only lower interest rates on credit cards and loans, but also savings on insurance policies, utility bills, and even cell phone plans.

Interested in how you can experience these benefits in 2020? Here are some tips and good practices to help you improve your credit score and keep it that way this year.


Building Good Credit

If you don’t have any established credit or need to improve your credit score, there are several habits you can establish that will help you to build good credit.


1. Begin with only one credit card.

No need to give in to the temptation to open more than one credit card in the beginning. The more credit you have to keep track of, the harder it will be to keep track of balances and payments. Sticking with one card for a while will make things easier for you. At AimBank, we make it easy to choose the card that’s right for you with benefits like low rates and preferred points rewards.


2. Only borrow and charge amounts you can afford to pay back.

When it comes to credit cards, do your best to charge only what you can afford and make doing so a habit. This will give lenders and credit issuers the impression that you are responsible and disciplined. This also has the added benefit of helping you avoid debt.


3. Do your best to modestly use the credit you have available.

Doing things like maxing out your credit cards or even coming close isn’t wise when trying to build up your credit score. Lenders can view this as a potential inability to repay borrowed money. Instead, use your credit cards moderately and for amounts that you can repay on a regular basis.


4. Pay your bills on time.

Not all monthly payments affect your credit report, but any payment missed could be added to the report if a collection is necessary. Paying your credit card and any other bills on time will help build up your credit score and will always look better when lenders view your credit report. Tools like AimBank’s Bill Pay can take the hassle out of paying regular monthly bills and can help make sure you never miss a payment.


5. If you have a large credit card balance, manage it well.

Having a large balance that you’re paying on is okay, but you must handle it the right way. Pay more than the minimum each cycle and keep it at a manageable level, and the balance won’t affect your credit.


Maintaining Your Credit

The work doesn’t stop once you’ve built a good credit score. Maintain that impressive credit rating with these helpful tips.


1. Keep old accounts open, even if they aren’t necessarily being used anymore.

Keeping all of your credit accounts open, even if you don’t use them or have paid them off, can add to your “credit age” and build good credit for you. The longer you’ve had credit, the better it is for your credit score.


2. Consider consolidating your cards to have fewer balances.

The approach of spreading your balances out across credit cards can backfire if you overuse it. Having multiple credit cards with balances, even if relatively low, can hurt your credit score rather than help it. Combining your monthly payments onto a “balance transfer card” can simplify your bills as well as improve the optics of your credit report.


3. Avoid applying for new credit.

New credit applications make up ten percent of your total credit score. Not to mention the fact that every time you apply for new credit, an inquiry is made into your full credit report, which can cause your score to take a hit. Unless it’s absolutely necessary, do your best to avoid applying for new credit cards or loans.


4. Watch your credit like a hawk, and don’t be afraid to contact someone if there are errors or trouble.

Credit report errors are more common than you might think. You can receive free yearly credit reports from Equifax, Experian, and TransUnion. Go over your reports meticulously and always report errors. Free services like those provided by Credit Karma and Credit Sesame are valuable tools that can alert you to new credit inquiries, changes to your credit score or any activity that might impact your credit score.


5. Keep paying at least the minimum on your credit balances, but pay in full if you can.

Paying the minimum on your cards or balances can stretch the debt out over years, which can look bad on credit reports, not to mention the unnecessary interest that can be accrued. However, if you can only pay the minimum, always pay on time and avoid missing payments as late or missed payments can stay on your report for up to seven years. 

There are many tips, tricks, and healthy money habits that can help you build and maintain a good credit score. They will also provide a solid foundation for your financial future. Being proactive and consistent with credit payments, managing your spending habits, and paying bills on time are some simple and valuable steps to get you started. Doing these things can get you off to a financially strong start in 2020!


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