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If you have frozen your credit to protect your sensitive information from fraudsters, you may at some point want to unfreeze it. That will typically be necessary if you are applying for a new credit card or a loan. A credit freeze provides you with an extra layer of security because it prevents anyone (even a legitimate entity) from running a hard inquiry on your report or potentially opening a new line of credit without your permission.

In this guide, you’ll learn all about how to unfreeze credit.

What Does it Mean to Unfreeze Credit?

When you freeze your credit report, you can’t open a new line of credit, whether that’s a credit card, mortgage, auto loan, or something else. At the same time, no one can run a hard inquiry on your credit report — so lenders, landlords, even potential employers can’t access it. While there are limits on who can legally look at your credit report, a credit freeze can provide peace of mind that no one can open an account in your name.

When you unfreeze your credit, it’s like you’re turning back on access to the credit report. Once your credit is unfrozen, you can once again open a new line of credit or apply for a loan, and lenders can run a hard pull on your report.

How a Credit Freeze Works

Also known as a security freeze, a credit freeze restricts access to your credit file. Credit freezes don’t happen automatically. You have to reach out to each of the three credit bureaus — Experian®, Equifax® and TransUnion® — to ask for a credit freeze. Thanks to the Fair Credit Reporting Act, if you request a credit freeze over the phone or online, the credit bureaus are required to freeze your report within 24 hours. If you send the request via mail, they have up to three business days.

Thanks to the Fair Credit Reporting Act, if you request a credit freeze over the phone or online, the credit bureaus are required to freeze your report within 24 hours. If you send the request via mail, they have up to three business days.

When you make a credit freeze request, each bureau will give you a PIN (personal identification number) or password that you need when you decide to lift the freeze.

A credit freeze is often confused with a credit lock, but they’re two separate things. A credit lock is a service you sign up for, and there’s usually a subscription fee. It’s similar to a credit freeze as you block access from most lenders. However, you can freeze or unfreeze it at any time on your phone or computer, and you don’t have to wait for it to go into effect.

A credit freeze is free, and you have to go through the credit bureaus to thaw your credit, and it takes about an hour to go into effect.

Types of Credit Freeze Lifts

At some point you may think about unlocking your credit freeze. When the time comes, there are two main types of credit freeze lifts:

Temporary Lift

A temporary lift will unfreeze your credit report for a designated time period. You can choose how long you’d like your credit to be thawed.

You can thaw your credit freeze temporarily to apply for new credit, take out a loan, or apply to rent an apartment. But once you’re done with that financial task, the freeze restarts.

Permanent Lift

A permanent lift will thaw your credit freeze for an indefinite amount of time. You might want to go this route if you don’t want to go through the steps of freezing and unfreezing your credit and find that the trouble isn’t worth the benefits.

Recommended: How to Read and Understand Your Credit Report

Ways to Unfreeze Credit Using Bureaus

If you are ready to unfreeze your credit, you need to contact each of the credit bureaus. You can do it in one of three ways:

•   Phone: If you request a lift by phone, the credit bureaus are required to thaw your credit within an hour.

•   Online: If you make the request online, your credit freeze will also be lifted within the hour.

•   Mail: You can also request a credit thaw by mail. If you go this route, expect the lift to happen within three business days after receipt of your request.

Recommended: How to Dispute a Credit Report and Win Your Case

When You Should Unfreeze Your Credit

Generally, you need to unfreeze your credit anytime someone needs to review your credit report, like if you’re opening a new line of credit or applying for a loan. Some common scenarios of when you’ll need to unfreeze your credit:

•   Applying for a credit card

•   Applying for a mortgage, personal loan, or car loan

•   Applying for a line of credit

•   Hunting for an apartment

Recommended: Common Credit Report Errors and How to Dispute Them

Credit Freeze vs. Fraud Alert

If you’re at high risk for fraud, suspect you’ve been a victim of a credit card scam, or just want to take extra precautions, you can set up a fraud alert on your credit report. When you have a fraud alert in place, a lender or creditor needs to verify your identity before they can issue you a new line of credit or approve you for a loan.

To place a fraud alert, you only need to reach out to one of the three credit bureaus. By law, that credit bureau must let the other two credit bureaus know you placed a fraud alert. In turn, all three credit bureaus will place a fraud alert on your credit file.

Initial fraud alerts are free, and initial fraud alerts last one year. After one year, you can renew it. Extended fraud alerts last for seven years, but they are for victims of identity theft, and you must submit a police report to qualify.

A credit freeze, on the other hand, blocks any party, including lenders and creditors, from accessing your credit. You need to place a credit freeze separately with each of the three credit bureaus, which lasts indefinitely. They can only be lifted when you make a request.


💡 Quick Tip: On-time payments are key to building your credit score. To ensure that you make your payments in time, consider setting up automatic payments or set a calendar reminder of your due date.

The Takeaway

Unfreezing your credit report is relatively simple, and it’s easy to set up a temporary lift should you decide you want to apply for a new credit card or personal loan. There are a few different ways you can go about thawing your credit as needed, and the credit bureaus have to unfreeze your credit within an hour of you making the request by phone or online.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can I unfreeze my credit?

You can unfreeze your credit anytime by going through each of the three credit bureaus — Experian, Equifax, and TransUnion — and requesting a lift on your credit freeze. You can ask for either a permanent or temporary lift. The thaw usually lasts anywhere from one to 30 days if it’s temporary.

Can you freeze your credit automatically?

Credit freezes don’t happen automatically. You will need to contact the three credit bureaus and make a specific request. You can do so online, by telephone, or via snail mail.

How soon can I unfreeze my credit after freezing?

You can unfreeze your credit as frequently as you like and request a credit lift as soon as you freeze it. If you made the request online or over the phone, it can take up to an hour to unfreeze your credit. If you send the request in the mail, it can take up to three business days after receipt of your request.

How long does it take to unfreeze your credit?

It depends on the credit bureau and how you made your request. If you requested your credit to unfreeze or “thaw” over the phone or email, the credit bureaus must lift it within an hour. If you made the request by mail, the credit bureaus must unfreeze your credit within three business days of receipt of your request.

Can I still use my credit card after freezing my credit?

Freezing your credit doesn’t impact your ability to use your credit card. You can freely make purchases on your card, book trips, redeem your cash-back points, and so forth. But if you want to do something that requires a hard pull of your credit — apply for new credit, say, or submit a rental application for an apartment — you’ll need to unfreeze your report first.

Photo credit: iStock/nortonrsx

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q325-003

A credit card chip malfunction can be a small embarrassment and disruption in your day-to-day life, but don’t panic. There are several reasons why it might be malfunctioning, including wear and tear, dirt buildup, or an issue with your account.

Here, learn the basics of credit card chips, the different reasons a credit card chip might stop working, and what to do if it malfunctions.

What Is a Credit Card Chip?

A credit card chip is a microchip that’s embedded in your credit card. The chip protects your data when you make an in-person payment. It uses a process called tokenization that encrypts your information, and generates a one-time code for each transaction.

Thanks to this technology, your credit card information is never received or transmitted by the merchant. This lowers the instances of credit card fraud when you use your card in a store or restaurant.

How a Credit Card Chip Works

Chip technology is also known as “card-and-PIN,” “card-and-signature,” or EMV (aka Europay, Mastercard, and Visa). The microchip that’s embedded in your card uses a process called tokenization. This is the same technology used in contactless credit cards and payments. In short, tokenization takes your sensitive card information and converts it into a unique token. This token protects your card info and account details.

The credit card chip holds encrypted data and transaction codes. These transaction codes are unique, one-time use, and always changing. As a result, it’s hard for counterfeit thieves to duplicate the data that’s stored on the chip.

Credit Card Chip Types

Within the realm of credit cards, there are three main chip types:

Standard “smart cards”: If you want to make an in-person purchase or take out cash at an ATM, many “smart cards” with the EMV chip technology simply require you to insert or tap your card into the card terminal.

Chip-and-PIN cards: This type of credit credit chip offers the most security. To make a purchase or make a withdrawal from an ATM with a chip-and-PIN card, you’ll need to first tap your card into the card reader, then punch in your credit card PIN code.

Chip-and-signature cards: This type of chip card provides a bit more security than if you simply swiped your card, but it’s not as secure as the chip-and-PIN type card. As the name implies, to use your card, you insert your card into the reader, then provide a signature for the transaction to go through.

Chip-and-signature cards aren’t as secure as their chip-and-PIN counterparts because it’s easier for fraudsters to forge a signature than to decipher your 4-digit PIN.

5 Things That Can Cause a Credit Card Chip to Stop Working

Here are some reasons why your credit card stopped working, and how to avoid these hiccups from happening:

Grime Buildup

Your card encounters dirt each time you insert or swipe in a machine, and grime will build up over time. This grime buildup could mean the terminal can’t read your card. To avoid this from happening, wipe down your card periodically.

Wear and Tear

Over time, the chip can get scratched or damaged. While scratches to the plastic on your card won’t cause any issues, scratches or dings to the chip might cause your chip to stop working and the transaction won’t go through.

To prevent wear and tear, consider protecting your physical card with a protective sleeve holder. These are usually made of a thin yet durable material, like synthetic fibers.

Heat or Water Damage

If you accidentally spill coffee and your credit card gets doused in the hot liquid or you leave your card in the hot car in the middle of summer, the chip on your card might get warped and go on the fritz.

To avoid this from happening, keep your card in your wallet when not in use. And be mindful of exposing it to extreme heat.

Recommended: All You Need to Know About Credit Card Numbers

Issue With Your Account

Sometimes when your chip stops working it’s because there’s an issue with your account. Common reasons include going over your credit limit, a missed minimum payment, or making purchases in locations where you don’t normally shop.

In this case, try swiping your credit card instead of doing the chip-and-PIN route. Hopefully that will resolve the issue and your payment will go through.


💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.

Issue with your account

Sometimes when your chip stops working it’s because there’s an issue with your account. Common reasons include going over your credit limit, the billing info doesn’t match with your account, or you’re making purchases in locations where you don’t normally shop.

To steer clear of this potential issue, watch your credit limit. You can log on to your account or check your card balance on your card’s mobile app. If you’re using your card while on a business trip or vacation, set a vacation alert.


💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.

What to Do if Your Credit Card Chip Stops Working

Here’s how to fix your credit card’s chip if it’s not working:

Clean the Card

If your chip is malfunctioning because of dirt buildup, try to clean your card. Gently wipe it down with an antibacterial wipe, alcohol pad, or microfiber cloth. You can also gently wipe around the edges of your chip with a cotton swab.

Swipe Instead

The magnetic stripe on your card also contains your account data. If the problem is with the checkout terminal, try swiping instead of tapping your card. There’s a chance that your transaction will go through without a hitch.

Get a Replacement Card

If the chip on your card regularly doesn’t work and no amount of cleaning fixes the problem, you might need to reach out to your credit card issuer and ask for a new one. You can do so by calling the number on the back of your card or on the issuer’s website or app. You can sometimes request a new card directly on the app or issuer’s website.

How long it will take for you to receive a replacement card depends on the credit card issuer, but you can expect it to take anywhere from one to seven business days. There might be a charge for a replacement card and a charge if you want shipment to be expedited.

Recommended: How Many Credit Cards Should I Have?

The Takeaway

There are a handful of reasons why your credit card chip stopped working. By doing a bit of investigating, you can get to the root of the issue and troubleshoot accordingly. Most likely you’ll just need to clean the card, but sometimes you may need to request a new one or address an issue with your credit card account.

FAQ

What do you do if your credit card chip doesn’t work?

If your credit card chip isn’t working, there’s usually a simple explanation why. It could be the result of normal wear-and-tear, heat or water damage, or grime buildup. Or it could be an issue with the card terminal or your account. Try to clean your card to see if that helps. If you’re in the middle of a purchase, swipe your card instead of inserting it into the terminal. In some instances, you might need to replace your credit card or address an account issue.

What can ruin a chip in a credit card?

There are a few ways a credit card chip can get ruined: regular wear and tear, grime buildup, or extreme heat or water damage.

Can you still use your card if the chip is broken?

You can still use your card by swiping. However, swiping your card instead of going the “chip-and-PIN” or “chip-and-signature” route reduces its security. You may want to request a replacement card.

Photo credit: iStock/Juanmonino

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOCC-Q325-004

You may have heard of no-limit credit cards and wondered how they work. What are referred to as no-limit cards typically mean that there is not a preset spending limit, as you find with most cards. Rather, your limits may fluctuate over time, and each purchase is evaluated on a case-by-case basis for approval. As long as you are using the card responsibly and regularly paying down your balance, you shouldn’t have any problems with purchases being declined.

Do No-Limit Credit Cards Exist?

While most credit cards do come with specific credit limits, there are cards that intentionally have no preset spending limit. Those card holders never have to worry about managing their available credit. Instead, the issuer will evaluate each purchase as it’s made to determine whether to approve it. The issuer may also provide a tool where you can check beforehand to see if a purchase will be approved.

Where Does the Idea of No Limit Cards Come From?

To “average” people who stick to a budget and pay their bills each month, there is something aspirational about a magical no-limit credit card. If you have an average credit limit, you might wonder what it is like to not be encumbered with one. Pop culture plays into this common desire to know what it would be like to be obscenely rich and not have to worry about money.

The Myth of the Black Credit Card With No Limit

In pop culture, the no-limit credit card always seems to be black, and there are indeed ultra-luxury black credit cards. For example, American Express has the Centurion Card, which is a black credit card that is only available by invitation. But while the Centurion card (and other similar cards) don’t come with a preset spending limit, that doesn’t mean there is no limit at all.

Rather, purchases may be approved in real time, based on factors such as current balance and spending limit, income indicators, and size of the purchase.

Recommended: What Is a Luxury Good?

Pros and Cons of Cards With High Spending Limits

Here’s a quick overview of some pros and cons of high limit credit cards:

What Does It Take to Have a High Limit Credit Card?

Most credit card issuers use a variety of factors when deciding both whether to approve you for a credit card and what credit limit to extend. Here are a few factors that may come into play:

A Good Credit Score

Most cards that come with no preset spending limit are considered premium or luxury credit cards. That means that you will likely need good or excellent credit to be approved.

Some of the factors that build or maintain a good credit score include always paying your bills on time, having a long history of responsible credit usage, using a mix of credit products, and not making too many applications for credit in a short period of time. In addition, keeping your credit utilization ratio low is wise as that also shows that you aren’t relying too heavily on credit.

A High Income

Another factor that can help you to get a high limit on a credit card is a relatively high income. Banks generally use an applicant’s income as one factor in determining a credit limit for a card. If you have a low annual income, a bank may be hesitant to issue you a credit card with a high spending limit.

An Existing Relationship With the Bank

Many banks are interested in building a relationship with their customers, especially ones they consider to be high-value. Showing that you are a loyal customer can encourage a bank to extend you additional credit. Ways to build your relationship with a bank might include opening checking or savings accounts, taking advantage of their credit card rewards program, or responsibly using existing accounts with them.

The Takeaway

While some credit cards come without a preset spending limit, all credit cards have some limitations in place. There is no publicly available credit card that will allow you to spend and spend with no checks and balances or consequences. If you have a card with no preset spending limit, the issuer will decide on a case-by-case basis whether to approve each purchase.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is there a credit card that has no limit?

There aren’t really credit cards with no limit at all, but there are credit cards that don’t have a preset spending limit. Instead, the credit card issuer will evaluate your overall financial information to determine whether to approve any purchases. This might include your income, net worth, relationship to the bank, and previous spending and payment history.

How do people get no-limit credit cards?

Most cards that come with no preset spending limit are luxury credit cards, which means that you’ll typically need to have good or excellent credit. Having a high income is another factor that can improve your odds of being approved. You might also consider strengthening your relationship with the issuing bank, like opening a checking account or other credit cards.

What does no-limit credit card mean?

A no-limit credit card generally does not mean a credit card with absolutely no limit at all. Instead, many times people are referring to a credit card with no preset spending limit. When you have a card with no preset spending limit, you won’t have a specific available credit or credit limit. Instead, the card issuer will determine whether to approve each transaction based on your overall financial information and/or past spending history.

Photo credit: iStock/Delmaine Donson

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOCC-Q325-006

Credit card interest and fees are tax-deductible in some cases. That means every dollar you pay in credit card interest might reduce a dollar of your taxable income.

If that sounds too good to be true, there is a catch — credit card interest and fees are typically only considered tax-deductible if they are legitimate business expenses. If you don’t run a business or the interest and fees were not incurred in the operation of a business, you generally won’t be able to deduct them on your tax return.

How Credit Card Interest Works

When you make a purchase with a credit card, you don’t have to pay for it right away. Instead, you are borrowing the money for the duration of your statement (usually one month). At the end of your statement balance, you must make at least a minimum payment. But if you don’t pay the full statement amount, you will be charged credit card interest on any outstanding balance.

Charging this interest is one way that issuers fund credit card perks and benefits like credit card rewards.

Is Credit Card Interest Tax Deductible?

Whether or not credit card purchase interest charges are tax-deductible depends mostly on whether it is personal or business credit card interest.

Business Credit Card Interest

Business credit card interest may be tax-deductible in certain situations. Generally speaking, in order to deduct any expenses, they must be incurred in the regular operation of the business. The IRS does not have requirements about what type of credit card is used, as long as the interest is incurred on business expenses.

You may be able to deduct credit card interest on a personal credit card used for business purchases. However, most credit card agreements prohibit the use of personal credit cards for business purposes on a regular basis.

Not surprisingly, you cannot typically deduct credit card interest on personal expenses charged to a business credit card. And if you pay for personal and business expenses with the same credit card, you may not be able to deduct the full amount of interest. Consult with your accountant or tax advisor if you have questions about what can and cannot be deducted.

Personal Credit Card Interest

Personal credit card interest is not tax-deductible under any circumstances. You cannot deduct interest that you pay for personal expenses on a credit card. That’s one more reason to always pay your credit card statement in full, each and every month. That way you aren’t charged any credit card interest.

Recommended: How to Do Taxes as a Freelancer

Are Credit Card Fees Tax Deductible?

Just like credit card interest, the deductibility of credit card fees largely depends on whether they are for business expenses.

Business Credit Card Fees

Credit card fees that are incurred as business expenses are generally considered deductible. This includes credit card annual fees, overdraft fees, foreign transaction fees, late fees, and balance transfer fees. As long as the credit card is used for business purposes, any fees charged by the credit card issuer will be tax-deductible.


💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.

Personal Credit Card Fees

In contrast, personal credit card fees are not generally considered deductible. Any fees that you are charged by your credit card issuer that are not business expenses cannot be deducted from your taxable income.

Recommended: Can You Use a Personal Checking Account for Business?

Avoiding Interest and Fees vs Tax Deductions

While it’s important to understand that you may be able to deduct credit card interest and fees if they are business expenses, avoiding credit card interest may be the more prudent thing to do. If you are in a 30% tax bracket, that means deducting one dollar of interest will save you 30 cents. But if you pay your balance in full, you won’t be charged any interest and save the full dollar.

The Takeaway

Some credit card fees and interest is deductible on your annual tax return. Generally speaking, you cannot deduct personal credit card interest or fees. You may be able to deduct interest and fees if they are legitimate business expenses. Keeping your business and personal expenses separate can help you determine which fees and interest you may be able to deduct.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can you deduct credit card interest as business expense?

As credit card interest rates rise, the amount of interest that you’re charged each month on any unpaid balances also rises. So you may be wondering if you can deduct credit card interest from your taxable income. The good news is that as long as the interest is a legitimate business expense, you can generally deduct the interest.

Are credit card fees tax-deductible?

It’s important to understand how different credit card-related items affect your taxes. Credit card rewards are generally not considered taxable, while some credit card fees may be tax-deductible. You may be able to deduct most credit card fees as long as they are considered legitimate business expenses. Personal credit card fees are not generally considered deductible.

Can you write off personal credit card annual fees?

No, in nearly all cases, you cannot take a tax deduction for personal credit card fees. Only credit card fees that are legitimate business expenses are tax-deductible. However, it’s important to understand that the IRS does not make any distinction between what might be marketed as a “personal” card or a “business” credit card.

Photo credit: iStock/Cameron Prins

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOCC-Q325-005

Learning how to build and maintain a good credit score is a crucial part of your financial health. Not only can it be a badge that says your financial life is in good shape, it can also help you access credit and get approved for loans and insurance at more competitive rates. Being approved for lower interest rates and premiums can in turn save you tens of thousands of dollars over your lifetime.

A solid credit score can also have other perks, such as helping you get approved for products with better features, such as rewards credit cards. Read on to learn how to maintain a good credit score.

What Is a Credit Score?

A credit score is a three digit number ranging from 300 to 850 that is an indicator of your credit behavior. Your score is calculated based on your credit history from all three credit bureaus — Experian®, Equifax®, and TransUnion®. Your score communicates how lenders may perceive your risk as a borrower.

What exactly does that mean? By reviewing your past use of credit, your score reveals if you are more or less likely to pay back your loans on time. If you are more likely to repay your debts in a timely manner, the less risky you are.

The higher your credit score, the more creditworthy you typically are in the eyes of lenders.

What Affects Your Credit Score?

Several factors can affect your credit score, such as your payment history, the number of loan or credit applications submitted, and the age of your accounts you hold. There are also different scoring models, such as FICO® vs. VantageScore. Each weighs factors differently to arrive at a credit score. Meaning, there may be some differences in your credit score.

Lenders may look at one credit score or all of them, plus different qualification criteria when deciding whether to approve you for a loan and at what interest rate.

How Is Your Credit Score Calculated?

Though there are different credit scoring models, most use similar financial behaviors to calculate them.

They’re grouped in the following categories:

•   Payment history: This factor is one of the most important factors in your credit score as it assesses whether you’re likely to pay your loan on time. Credit scoring models will look into current and past account activity, including any late or missed payments.

•   Amounts owed or available credit: The percentage of the available balance you’re using is your credit utilization. The more you are using available credit in your revolving accounts (like your credit cards and lines of credit), the more it could appear you rely too much on credit. This can make you look like a risky person to whom to lend.

•   Age of credit history: The longer your credit history, the more a lender can look into your credit behavior. It’s usually considered good to have a long credit history vs. a very short or recent one.

•   Account types: Having a mix of credit (such as installment loans as well as lines of credit) offers more insight into how you handle various accounts. Credit-scoring models may not, however, use this as a major factor when calculating your score.

•   New or recent credit: The more recent applications you submit for new loans or credit accounts, the more risky you may appear to be. That’s because it may look like you need to rely on credit; that you are quickly trying to acquire different forms of access to funds.

(There are some exceptions, such as shopping around for mortgages within a short span of time.)

Recommended: Breaking Down the Different Types of Credit Cards

8 Tips for Maintaining Your Credit Score

Understanding the importance of a good credit score and what goes into it can help you protect the one you have. The following are eight suggestions on how to maintain a good credit score.

1. Pay Your Credit Card Bills on Time

Ensuring you’re on top of your bills (not just your credit cards) will help keep a positive payment history in your credit reports. This is the single biggest contributing factor to your credit score at 30% to 40%. Consider setting up automatic payments or regular reminders to ensure you’re paying on time.

2. Keep Your Credit Utilization Low

Your credit utilization is the percentage of the available limit you’re using on your revolving accounts like credit cards. Basically, you don’t want to spend close to or at your credit limit. A good rule of thumb to follow is to use no more than 30% of your overall credit limit; ideally, you’d keep that number under 10%.

So if you have one credit card with up to $10,000 as the limit, you want to keep your balance at $3,000 or lower.

3. Maintain Credit History With Older Credit Cards

Even if you don’t use your older credit cards that often, keeping them open means you can maintain your long credit history. Consider charging a small or occasional amount, whether an espresso or gas station fuel-up, to ensure your account stays open. This can reassure prospective lenders that you have been managing credit well for years.

4. Apply for a New Card Only When Important

Consider this as you try to keep a good credit score: Go slow. Since credit-scoring models look at the number of times you apply for new credit, only open one when you really need it. Stay strong in the face of offers to get free shipping or 10% off if you sign up for a card that many retailers promote.

Spreading out your applications is a good idea rather than regularly or heavily putting in a lot of card applications. By moving steadily and choosing a credit card and other types of funding carefully, you likely won’t raise red flags, such as that you need to rely heavily on credit.

5. Frequently Check Your Credit Reports for Errors

Mistakes can happen, and errors in your credit reports could negatively affect your score. You can get your credit reports for free at AnnualCreditReport.com from all three credit bureaus.

It’s wise to check your credit scores regularly, which won’t impact your score. If you see that something is amiss — whether it’s an account you don’t own or a bill marked unpaid that you know you took care of — dispute the credit report error as soon as possible.

6. Make Payments in Full When Possible

Making payments in full will help you maintain a positive payment history and lower your credit utilization. Both of these can maintain your creditworthiness and save you money on interest charges.

7. Don’t Close Old Credit Cards

Closing your old credit cards could shorten your credit history. It could also increase your credit utilization because it will lower your available credit limit. Even if you make the same amount in purchases, your credit utilization would go up when your credit score updates.

For example, if you currently have an overall credit limit of $28,000 and you have $7,000 in credit card balances, your credit utilization is 25%. If you close a credit card which had a $7,000 limit, you then lower your total available credit to $21,000 your credit utilization will go up to 33%.

8. Live Within Your Credit Means

It can be hard to say no to an invitation to try a pricey new restaurant or to not tap to buy when scrolling through social media. But when you let your spending get out of hand, you may use your credit cards too much. It can feel like free money in the moment — but you still have to pay it back. If you overextend yourself, you may find it hard to pay your balance on time and risk a late or missed payment.

Instead, spend only what you can afford and try to avoid lifestyle creep (having your spending rise with your pay increases or even beyond them). That can help provide some guardrails for using credit cards responsibly.

Establishing a Credit Score for New Credit Card Users

Trying to establish a credit score can be a challenge since, ironically enough, you need credit to build credit.

If you are in this situation, there are several options to pursue, such as the following:

•   Open a secured credit card: A secured credit card is one where you’ll put down a refundable cash deposit that will act as your credit line. You can use this to establish credit and apply for an unsecured credit card. Some issuers will upgrade you once you make consistent on-time payments for a predetermined amount of time.

•   Apply for a credit builder loan: These types of loans are specifically geared towards helping you establish and build credit over time. Instead of getting the loan proceeds like a traditional loan, the funds are held in an escrow account until you pay back the loan in full.

•   Become an authorized user: You can ask a loved one, like a parent or even a close friend, if they’re willing to add your name on their credit card account as an authorized user. Doing so means the credit account will go in your credit history. Of course, that doesn’t give you access to use their account without restraint. The guardrails can be established between you and the original card holder.

The Takeaway

Maintaining a good credit score comes with perks such as increasing the likelihood of getting approved for loans at more favorable terms. You might qualify for lower interest rates, saving you a considerable amount of money over time.

Using a credit card wisely is one of the ways you can build and maintain your credit score.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How can I maintain my credit score?

You can maintain your credit score by consistently making on-time payments, keeping a low credit utilization, and limiting applications for new credit.

Why is it important to maintain a good credit score?

Maintaining a good credit score can help increase the chances of getting approved for loans with more favorable rates and terms. It can also mean lower insurance premiums.

How can I maintain a good credit score without debt?

You can maintain a good credit score by paying off all your credit card balances each month so you don’t carry that kind of debt. Keeping older accounts open and using them occasionally can also contribute to a good credit score.

What can I do to build a good credit rating?

You can build a good credit rating by ensuring you’re making payments on time, not using all your available credit limit, and being careful in applying for new loans (that is, don’t apply for too many lines of credit too quickly). These are some of the best ways to achieve and maintain a good credit rating.

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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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