How to Keep Your Great Credit Score

It can take years to build a high credit score, but it can disappear in what feels like an instant. I heard from many people who experienced this during the recession. Sounding almost shell shocked, they’d tell me about how their credit scores had dropped, adding “Before this I had an 800 FICO” or “I had great credit for 35 years.”

There are certain unpreventable things that can derail a good credit score: a terrible accident or serious illness, for example, or a natural disaster.

But for most people with good credit, there are relatively simple things we can do to minimize the chances that we’ll experience a serious slide in our scores. Here are five of them.

1. Pick Your Battles

One of the easiest ways to mess up your score is to get involved in a dispute over goods or services and refuse to pay. You may win the battle, but lose your score when the bill you are fighting about is sent to collections.

Two examples I hear time and again are billing disputes over cellphone/cable/Internet charges and medical bill snafus. I know it’s annoying to have to pay a bill you think you shouldn’t have to pay (that extra month of cable service charged after you canceled or the lab test your insurance company should cover) but sometimes it’s best to pay the bill under protest then try to wrangle a refund. It’s your call, but if the bill winds up in collections, that one collection account can hurt your scores for years to come and cost you thousands of dollars in additional interest on your next loan.

2. Don’t Let Others Drag You Down

If you have great credit, then there’s a good chance that at some point someone is going to want to “borrow” it by asking you to co-sign a loan. Or your partner/spouse/child with bad credit may ask to be added to one of your credit cards because they can’t get one on their own. You’ve heard about the dangers of joint accounts, but when someone you love is asking, it’s very hard to say no. Instead, you may want to lend them the money yourself if you can, or even consider giving it a gift.

Just keep in mind that even if things go well and payments are made on time, that debt affects your credit scores as well as your debt-to-income ratios if you apply for another loan.

3. Borrow Like Your Grandparents Did

A number of years ago. I was a speaker at a conference for “seniors.” When they learned I was there to talk about debt and credit cards, they looked at me like I had two heads. “I’ve never carried a balance on my credit card,” they’d say, “but let me tell you about my grandson (or my granddaughter) …”

Of course, not everyone in our grandparents’ generation was financially secure and avoided debt. But overall, they were certainly conservative and cautious. They did get mortgages to pay for their homes, and probably took out a car loans from time to time, but they tried to avoid credit card and consumer debt if at all possible. We would all be wise to follow their example.

With little debt, you’re less likely to miss a payment when times get tough. You can even take on a little debt if needed without finding yourself deep in debt. And since one late payment can cause your credit score to drop by 50 to 100 points or more, you’re in a better position to avoid damage to yours.

That doesn’t mean you have to avoid credit cards entirely. Get a great rewards card and pay your balances in full and you’ll be ahead of the game.

4. Save for Emergencies

If your credit card is your emergency savings account, then it’s easy to wind up in over your head when those “rainy days” happen. And they always do at one point or another.

True, it’s not easy to save in a time when wages have stagnated and the cost of living has gone up, but every penny you can stash in a “life happens” funds means you are less likely to have to run up your credit card balances to pay for essential expenses. It’s important to save even while you are paying off debt.

5. Watch Your Credit Like a Hawk

One mistake many people with great credit make is to assume that because they pay their bills on time, their credit reports and scores are fine.

I’ll confess to nearly falling into that trap, even though I write about credit for a living for heaven’s sake. But the last time I checked my three free annual credit reports I discovered that a mistake I had successfully disputed a couple of years ago is back on one of my credit reports. It’s quite a serious mistake: One of my mortgage lenders has reported me 30 days late six months in a row.

I monitor my credit scores for free each month using Credit.com’s free Credit Report Card. But I still check my credit reports annually and it’s a good thing I do, since this mistake showed up on a report from a bureau that doesn’t offer free monitoring. I may not have caught it the problem if I hadn’t taken the time to pull my free reports. It’s just one example of why it is a great idea to monitor your credit even if — or I should say especially if – you have good credit and don’t miss payments. Your good habits may lull you into a false sense of security.

How do you maintain your good credit score? Share your thoughts in the comments below.