Skip to main content
Whistleblowing Contact Branches ATM's

Understanding credit scores

In today's financial landscape, having a good credit history is more important than ever. Whether you're looking to take out a loan, apply for a credit card, or even secure an overdraft, your credit score plays a pivotal role in determining your financial future. In this article, we'll explore why building and maintaining a healthy credit score is essential and provide practical tips on how to achieve this.

  • 9 min read

Building a Good Credit History is Essential: Learn How to Build and Maintain a Healthy Credit Score

Why Your Credit Score Matters

A credit score is a numerical representation of your creditworthiness, based on your credit history. Lenders, including banks and other financial institutions, use your credit score to evaluate the risk of lending you money. A good credit score indicates that you are a reliable borrower, which can result in more favorable loan terms, lower interest rates, and higher credit limits. Conversely, a bad credit score can lead to loan rejections, higher interest rates, and less favorable terms.

The Importance of Timely Repayments

One of the most crucial aspects of maintaining a healthy credit score is ensuring that you repay any borrowed money on time. This includes loans, credit cards, overdrafts, and any other form of credit. Timely repayments demonstrate your ability to manage your finances responsibly, which positively impacts your credit score. On the other hand, missed or late payments can significantly damage your credit history, making it difficult to secure credit in the future.

How to Build and Maintain a Healthy Credit Score

Building and maintaining a healthy credit score requires a combination of responsible financial behaviors and strategic planning. Here are some tips to help you achieve this:

  • Pay Your Bills on Time

    Consistently paying your bills on time is one of the most effective ways to build a good credit history. This includes not only credit card and loan payments but also utility bills, rent, and other monthly obligations. Setting up automatic payments or reminders can help ensure you never miss a due date.

  • Keep Your Credit Utilization Low

    Credit utilization refers to the percentage of your available credit that you are using. It's generally recommended to keep your credit utilization below 30% or one-third of your monthly income. High credit utilization can indicate to lenders that you may be over-reliant on credit, which can negatively impact your score.

  • Diversify Your Credit Mix

    Having a mix of different types of credit, such as credit cards, installment loans, and mortgages, can positively impact your credit score. This demonstrates your ability to manage various forms of credit responsibly.

  • Monitor Your Credit Report Regularly

    Regularly checking your credit report allows you to identify and address any errors or fraudulent activities that could harm your credit score. You can request a free credit report from major credit bureaus annually. Look for inaccuracies and dispute any discrepancies you find.

  • Avoid Opening Too Many New Credit Accounts at Once

    While having a variety of credit accounts can be beneficial, opening too many new accounts in a short period can negatively affect your credit score. Each new application results in a hard inquiry, which can temporarily lower your score.

  • Keep Old Credit Accounts Open

    The length of your credit history is another factor that influences your credit score. Keeping older accounts open, even if you don't use them frequently, can help lengthen your credit history and boost your score.

The Long-term Benefits of a Good Credit Score

Building and maintaining a healthy credit score is an ongoing process that requires diligence and responsible financial behavior. By paying your bills on time, keeping your credit utilization low, diversifying your credit mix, monitoring your credit report, avoiding excessive new credit applications, and keeping old accounts open, you can achieve and sustain a strong credit history. Remember, a good credit score opens doors to better financial opportunities and provides a solid foundation for your future financial well-being.

Pay your bills on time

Paying your monthly bills on time is easy with Raiffeisen ON. Simply download the app, and you'll never miss a bill payment again.

ron download

These topics might also interest you.

  • Open a current account

    Start with a solid foundation. We recommend one of our current accounts packages, ideal for students and young adults. 

  • Develop a savings habit

    Secure your future by setting aside funds. Developing a saving habit early is crucial for your future.

  • Budgeting and Financial Planning

    Effective budgeting is the key to managing your money wisely. Walk through how to track your income and expenses, adjust your budget, and set financial goals.

  • Investing in your future

    It's never too early to start investing. Starting to invest early can significantly impact your financial future.

Let´s discuss your needs

Get advice at a branch

Our experts are available to discuss with you at our branches.

Find a branch

Contact our call center

From any mobile network (normal rate).

Call Us

Arrange an appointment

Arrange an appointment with us in one of our branches using our online form.

Make an appointment