1. Always pay on time
If you’ve missed a payment, pay as soon as possible because your payment history makes up 35% of your credit score.
2. Monitor your credit regularly
Review your credit reports regularly to make sure they are accurate, and look for areas where you can improve.
3. Pay more than the minimum
Paying more than what’s due will help you pay down debt faster, save on interest expense and may improve your credit score.
4. Know your limits
Being close to or maxing out your credit limits may negatively impact your credit score, so try to keep your balance on revolving lines under 30% of your limit.
5. Know your debt-to-income (DTI) ratio
Lenders look at the amount of debt you have compared to your monthly income when extending new credit, so it’s a good idea to keep your DTI ratio under 35%.
6. Take on new debt only when needed
Having too many accounts with balances can lower your credit score an may become difficult to manage.
7. Qualify for lower rates
See if you quality for lower rates on your current debts, especially if your credit has improved or if interest rates have dropped since you originally applied.
8. Think before closing accounts
Consider keeping accounts open if they have a good payment history as closing them may lower your available credit and could hurt your credit score.
9. Build an emergency fund
Having funds set aside in a savings account can help you to avoid using credit cards for unexpected expenses.
Getting smarter about your credit by taking charge of your debt can make all the difference when it comes to preparing for long-term financial success. You can explore credit basics and different ways to manage your debt at wellsfargo.com/goals-credit/smarter-credit/. What’s the next step on your empowerful journey? Get inspired at wellsfargo.com/empowerful.
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