Everyone knows that a great credit score is important. After all, your credit score is used to determine everything from what you can get credit for, such as a car, college tuition, or a home, to how much credit you qualify for, what your interest rate will be, and what type of loan you quality for. If you are determined to get a great credit score, here are several types that will help you.
- Ensure your payments are made on time.
While not all of your monthly payments show up on your credit report, there is the potential for any bill to wind up on your credit report if you become delinquent and it is referred to a collection agency. This includes phone bills, power bills, hospital bills, and much more. To build a great credit score, keep delinquent accounts off your report. They can be very difficult to overcome.
- Don’t borrow more than you can really afford.
While you may qualify for a large mortgage, this doesn’t necessarily mean you can afford it. Before you apply for any type of loan, look carefully over your monthly budget to determine exactly how much you can afford, without having to stretch your budget. Don’t allow yourself to get caught up in the hype of a beautiful new car or home and exceed your budget. It will only cause trouble.
- Don’t use all of the credit you have available.
To get and maintain a great credit score, you should stay below 30% of your credit limit, though you can potentially push it to 50% on occasion. Lenders are well aware that borrowers who consistently max out their credit cards have a more difficult time repaying what they owe and this will be reflected in your credit score.
- Carry a credit card balance the right way.
Maintaining a balance on your credit card isn’t necessarily a bad thing. You should make every effort to pay more than the minimum balance each month to pay your balance off quickly. In addition, you should also avoid making a credit card payment late, while maintaining your balance below 30% of your credit limit.
- Allow your accounts to mature.
The length of time you have had an account is reflected in your credit score. Keep old accounts open because they increase your credit age, which in turn builds great credit. Closing an account doesn’t mean it will be automatically removed from your credit report, but it will be removed over time. Then, no one knows how well you maintained your credit in the past.
Having a great credit score can be very beneficial. By following the tips above, you will see your score begin to rise.
*Editorial Note: Any opinions, analysis, reviews, or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
