The number of Americans with bad credit dropped during the COVID-19 pandemic. What’s behind this drop? Americans spent more time paying off debt than racking it up. Overall, subprime consumers were also able to reduce their total average debt, shrinking their outstanding balance across all accounts from an average of $55,135 to $52,628 – a reduction of 5% between Q1 2020 and Q1 2021, according to market reports.

Subprime is a term used by lenders and others in the financial space to describe credit scores that fall below a certain threshold. In the United States, nearly one in three consumers have a subprime score – but this population has shrunk by 12% since last year. Where do you fit in on the credit spectrum? Your credit status can change often so joining a credit report monitoring service is an essential step to reaching your credit goals.

Overall, consumer’s credit scores are performing better in the one year since the pandemic began. Both serious delinquency rates and consumer credit balances remain low. These recent trends have been buoyed by government and lender programs, which have provided the market with significant levels of liquidity.

So how can you best take advantage of the current, positive credit environment? Working toward your credit goals is important because it lets you access more borrowing opportunities at better terms. It can determine whether you land your dream apartment, what cell phone plan you are eligible for and even the interest rates you can pay on loans. Considering the prices of homes these days, that last point can save you thousands of dollars over the life of a new mortgage.

3 Tips to Work Toward Your Credit Goals

There are steps you can take to keep on the road toward positively impacting your credit. Most importantly it’s key to remember that derogatory marks can be the most damaging. Things like late payments, bankruptcies and collection accounts can severely negatively affect a consumer’s credit and remain on credit reports for up to seven years.

1. Make sure you pay your balance (or as close as possible) on time, every time. Payment history is the most significant factor on your credit history influencing your credit score. Missing a single payment or paying past the due date can bring your score down significantly. Showing that you pay back what you borrow on time reduces your credit risk and can help your score. Setting up autopay can be immensely helpful when you get a new credit card; it helps you demonstrate that you are a reliable borrower.

2. Keep your balance manageable. If you have a credit card with a $10,000 limit, you don’t want to max it out. Ideally, you don’t want to carry a balance higher than 30%, in this case, above $3,000, of the credit that you have available. If you exceed that, it may be a sign that you don’t know how to handle credit or that you rely on credit too much to make ends meet.

3. Constantly review your credit report. Credit report monitoring is good to have for better financial planning.