It’s Harder Than It Seems, But It Can Be Done. Here Are The Keys To Achieving (and More Importantly, Keeping) a Fantastic Credit Score

imagesYour credit score is very important. The reason a high score is so desirable is that it gives you the opportunity for the best interest rates on a loan. Here are some ways that you can start building and keeping a great credit score.

Always make on-time payments. Payment history is the top factor in just about all of the credit score models. Even if you can only afford to pay the minimum, always pay on time because that will have a bigger impact on your score than the amount you pay. Set up automatic bill pay right when you activate the card, that way you’ll never miss one. amex-platinum-300x199

Credit card utilization. One of the largest factors of your credit score is your credit card utilization. People with the best credit scores keep their credit card utilization below 30%. The way to calculate your utilization is to calculate the percentage of your total available credit that you are currently using. Here are the best ways to get an keep an amazing credit score.

Be sure to carry low or no balances. People with excellent credit almost always keep low balances on their credit cards; most of the time, they don’t pay interest because they pay their balances in full every single month. Basically, they only buy things that they’d also be able to otherwise pay with cash. Another habit of people with great credit scores is that after they charge a purchase to their card, they’ll log into their account and pay it right away.

Have a long credit history. Opening lots of new accounts at once can shorten the average age of your credit history. And closing old, inactive accounts also can hurt it as well. This move can increase your credit utilization ratio since closing an account means you no longer have access to that available credit. Always keep your oldest credit card open. unknown

Apply for credit as needed, and not before. You should have a few different mixes of lines of credit, such as revolving credit cards, car loans, mortgages and even personal loans. This is so that you can show lenders that they’ll be able to trust you with their money. And, the more available credit you have, the lower your credit utilization ratio will be. The trick is to not say yes every time you get a credit card offer. Every time you apply for new credit, your score goes down.

Choose credit cards responsibly. People with excellent credit usually get the best credit card offers; but whats more important is the card you choose. People with great credit generally are very wise when it comes to choosing their cards. They tend to avoid cards that have annual fees unless the benefits of that specific card will pay back big-time, or at least pay off the annual fee and then some. You should also look for a card that waives the fee the first year, that way you can reevaluate it later to see if you still like it.

In conclusion, the best way to keep your credit score fantastic is this: don’t ever miss a payment, always keep your low balances on all of your credit cards, and only open new lines of credit when and if you need to.

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2 Comments

  1. I don’t understand why some people have bad credit. I don’t think its all that difficult. Pay off your balance each month (on time), and be sure to pay any outstanding loans you have on time as well.

  2. For some people its not that easy. Especially if you have children. With a mortgage, car payment, tuition, books, summer camp, etc. it can be impossible to NOT carry a balance. I think this comment is ignorant.

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