Maintaining a good credit score or fixing a hurt score can often be daunting and discouraging but is still incredibly important. Credit plays a significant role in your overall financial health, as a higher credit score can grant access to countless benefits and opportunities, and a lower score can often hinder your financial growth.

While building your credit back up or simply maintaining your credit score (especially on a tighter budget) might seem challenging, it IS possible with a bit of discipline and strategizing. Here are 3 great ways to protect your credit without breaking the bank:

1. Pay Your Bills on Time
While this tip might seem obvious to some, plenty of people still neglect to pay their bills on time or to even make payments at all. Payment history is one of the most important factors in building your credit, 35% being calculated into your overall score. So naturally, late or missed payments will negatively affect your score, especially if it happens often. To help keep track with your payment dates and other important finances, you can make a spreadsheet outlining all of your monthly expenses, including your credit card bills.

2. Keep your Credit Utilization Low
Credit utilization rate is the amount of revolving debt you currently have compared to your total credit limit. As a rule of thumb, it is recommended to keep your credit utilization under 30%. To achieve this number, it is important to monitor how often you use your credit card monthly. It is also important to the balance of your accounts low, as a higher balance is also factored into credit utilization. Generally, the more debt you owe, the harder it is to build your credit up. Creating a budget can help reduce the amount of times you might reach for your credit card, and help you manage your money a bit better.

3. Don’t Close Old Accounts
After paying off a credit card, you might think closing the account altogether could be a smart move- however, closing old accounts can actually hurt your credit even more. Closing a credit card account decreases the amount of available credit you have, which then in turn increases your credit utilization rate. Having available credit without spending it is beneficial in maintaining your credit score, and can eventually help your score increase, the only exception to this being if you can’t afford the annual fees.

If you’re ready to start reaching your savings goals or are ready for a new bank account, contact Mechanics Cooperative Bank today!