Your credit score affects many aspects of your life.
For instance, financial institutions will review your credit history to determine whether to give you a mortgage or approve a credit card application. Your credit score also determines what interest rate you’ll pay.
A higher score can help you qualify for the lowest interest rates and increase your borrowing limit. That’s why it’s important to maintain a good credit score and ensure it’s well protected. But with identity theft and credit card fraud on the rise, where do you even start?
Since your score is calculated based on information on your credit history, including credit cards, and other loans listed on your credit report, safeguarding your credit cards should always take precedence. Here are a few tips that can help you protect your credit cards’ credit score.
1. Keep Credit Card Balances Low
Your credit card balance is more than just the amount of money you owe to the card issuer; your card balance has a direct impact on your credit score.
Credit card companies normally use a technique called credit utilization, which is the ratio of your outstanding credit card balances to your credit card limits, to gauge your credit score. Lower credit utilization is better because it demonstrates you haven’t overextended yourself and can responsibly use credit.
To be on the safe side, always keep your credit card balances as low as possible. While zero balance is the absolute best, it’s not practical, unless you don’t use your card. Experts recommend keeping your credit card balances at or below 30% of your credit card limit.
2. Monitor Your Accounts Regularly
Even if you don’t use them, make the habit of monitoring your credit card accounts regularly for any charges, to ensure no one is fraudulently using your cards.
You can leverage the services of a monitory company to be sending you alerts and monthly account updates or make the habit of checking your credit reports regularly.
If there are any suspicious activities that may hint to credit card fraud, it should reflect in your credit statements and reports. For more information on how to detect credit card fraud, check out this article on credit card fraud detection.
3. Don’t Open New Credit Cards Just to Increase Your Credit
Applying for new credit cards just to increase your credit is a very dangerous move and one that can jeopardize your credit score.
Also, if you have multiple credit cards, carry as few as possible.
For example, if you carry a gas card and an emergency card, you don’t need to carry additional cards such as a business credit card or store card, unless you intend to go to the store. This way, if you lose your purse or wallet, only a few cards will be at risk of being misused or cloned.
4. Guard Your Personal Information
Exercise caution when giving out your personal information such as credit card info, birthday, and social security number.
In addition, make sure you’re not leaving this information in the open where anyone can gain easy access to it, like in a dustbin. If this information falls in the wrong hands, it can be used to clone your credit card, making you a victim of identity theft—which can seriously harm your credit score.
Your credit rating is paramount, so protect it the way you’d protect a wallet full of cash.