Learn From People Using Credit The Right Way…
A strong credit score is undoubtedly a critical tool for anyone looking to be approved for loans (e.g. cars, houses, financial aid), but how do you get that strong score and maintain it? Here’s a list of seven of the most important habits you can practice to practiced get you own your way towards a better credit score. Before you begin, it is important to remember that everyone is coming from a different place and will be judged based on their own financial background and credit history.
1. Pay Your Bills!
The best way to boost and/or maintain your credit score is, unsurprisingly, to pay all of your bills on time, every time. The plurality of most credit scores comes down to payment history (especially more recent history), so stay on top of your bills! If you’re unorganized, get due dates in front of you (online calendars are great).
2. Manage the Amount of Money You Owe
A close second only to paying your bills on time is managing the money you owe. Two factors are considered here: First, what is the grand total of money that you owe across all of your debts? Second, how close are you to ‘maxing out’ each individual line of credit? Obviously if you carry a ton of debt, that may raise some red flags. However, even if your total isn’t all that high, it does not look great if you are approaching the credit limit on some or all of your accounts.
3. Build your Credit History
Another important factor is the lifespan of your credit history. How long have you had one or more credit accounts? Every one of your accounts is examined for its length and the timing of activity, and an average is totaled for all accounts. However, a relatively short credit history will not necessarily kill your overall score, provided the other factors are in good order.
4. Don’t Go Crazy with New Credit Accounts
It is definitely unadvisable to open multiple credit accounts too quickly, especially if you are somewhat new to using credit. Even those with a longer credit history should exercise caution when opening new accounts, as a sudden rush for large amounts of credit may look suspicious to a credit bureau.
5. Consider the Kind of Credit You Use
You should carefully think through the kinds of credit you really need and what you can realistically manage. If you are able to properly oversee a credit card, that is great for your score, while those without credit cards cannot point to that track record of dependability. Of course, it is entirely possible to have too many different types of credit, especially if you do not manage them well and/or do not use them at all.
6. Protect Your Credit
Don’t let crooks ruin your credit score by stealing your identity. Guard your social security number with your life, both the physical card and online. Make sure you are checking your credit card statements as soon as they arrive to make sure that everything lines up with your actual spending. Be careful of scammers who may pose as banks, retailers, or financial service providers in order to lure people into providing personal information.
7. Take Charge of Your Credit!
Schedule regular check in times for yourself to check your credit score and reassess your current and future financial picture. Consider future goals (e.g. a car or a house) and figure out if you are on track to achieving a good credit score to achieve them. It is never too early to start planning for the future!