A good credit score lets people know that you’ve been responsible with managing borrowed money. A high credit score can improve your chances of having the best financial opportunities, such as loans and credit cards at attractive rates, which can save you money over time. A good score may also help you get an apartment or a job. If you’re wondering how to get a good credit score, read on.
Paying Bills on Time
Your credit score is made up of a combination of factors. One of the most important factors is your payment history. Potential lenders expect to see a history of bills paid as agreed, which means they’re all paid on time. If a payment is more than 30 days late, it shows as a negative item on your credit report, and it stays on your report for seven years. Setting up automatic payments is a great way to be sure you won’t accidentally miss a payment. Another option is to sign up for reminders from your creditors to let you know that the due date is approaching.
Credit Card Use
Credit cards make it easy to buy now and worry about paying later. If you’re not careful, you can end up with a high balance on your credit cards, struggling to make the minimum payments. The percent of available credit that you’re using is known as your credit utilization. The lower your credit utilization is the better. Aim to use no more than 30 percent of your credit limit to have the best possible credit score.
Total Debt
Keeping your total debt low is another sign of being financially responsible. Only apply for new credit when you need it. Whenever you apply for new credit, the potential lender pulls your credit report, which is shown as a hard inquiry on your report. Too many hard inquiries in a short amount of time can make you appear to be desperate to borrow money.
Age of Accounts
The age of your accounts has a small impact on your credit score, so don’t be in a hurry to close your oldest accounts. Closing credit cards that you aren’t using shortens your credit history and also reduces your total available credit, which affects your credit utilization. It’s a better idea to leave old revolving accounts that you aren’t using open, unless you’re being charged an annual fee or if you’re likely to overspend.
Keeping Track of What You Owe
You should always have a good idea of what you owe each of your creditors. Check your credit report regularly to make sure that the information on it is correct. If you find wrong balances, accounts you don’t recognize, inaccurate payment history, or any other errors, file a dispute with the credit bureau right away.
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