Most of us might already think that our credit score is top-notch, and there is no work to be done there. Perhaps you should look again. Without being aware of it, you could be damaging your credit score,which will affect your ability to apply for credit. So, we have a choice to make. We can either max out our credit cards or max out our credit score.
Most of us might already think that our credit score is top-notch, and there is no work to be done there. Perhaps you should look again. Without being aware of it, you could be damaging your credit score,which will affect your ability to apply for credit. So, we have a choice to make. We can either max out our credit cards or max out our credit score.
By rights, we should be practicing these techniques as often as we can on an ongoing basis. These tips will be helpful for you irrespective of your good or bad credit score.
Pay on Time
One would think that this is the easiest and most obvious thing in the world to do. Personal experience tells me otherwise. Paying on time is vital to building longevity with your credit. Being late with payments will hurt your credit score. Only one late payment will inflict damage.
An important note to remember:If you can only pay the minimum amount, then by all means, do so. What is critical here is that you MADE a payment regardless of the amount that is paid.
Constant, reliable payment is incredibly telling,and it goes a long way to reducing your ‘risk’ factor. Being overshadowed by this will follow you wherever you go, making it difficult to shake off. You start to build a reputation, if you will, for being a great and timeous payer, which dovetails neatly into building a lengthy credit history.
Limit the Number of Hard Inquiries Per Year
There are two types of inquiries: hard inquiries and soft inquiries that will reflect on your credit report.
Hard inquiries can impact your credit score negatively. The word ‘can’ is critical. It doesn’t always happen, but the possibility remains. The first example is applying for a credit card. When you apply for a credit card, the issuer of said credit card will pull a credit check. This check will determine how ‘risky’ you are deemed to be. The second example would be an application for a home loan. The same procedure of pulling a credit check would apply. Rule of thumb – keep the hard number of queries limited to two per annum. The upside is that there is an expiry date for these queries. The downside is that each question takes two years to expire, that is a fair amount of time for a single question. Once the query expires, it falls off your credit record, gone.
Hard inquiries can impact your credit score negatively. The word ‘can’ is critical. It doesn’t always happen, but the possibility remains. The first example is applying for a credit card. When you apply for a credit card, the issuer of said credit card will pull a credit check. This check will determine how ‘risky’ you are deemed to be. The second example would be an application for a home loan. The same procedure of pulling a credit check would apply. Rule of thumb – keep the hard number of queries limited to two per annum. The upside is that there is an expiry date for these queries. The downside is that each question takes two years to expire, that is a fair amount of time for a single question. Once the query expires, it falls off your credit record, gone.
Charge Less on Your Credit Cards
Pay as you go. Many subscribe to this policy withcash or a debit card. Cash remains king; zero cash equates to zero spends. If you run low on your debit card, your spending will be curbed,and you should ONLY spend what you have left. This strategy would preferably be a debit card that does not have an overdraft facility.
Keeping your charges on your credit card to two or three per month is prudent, but ensuring that you pay the debt in full come month-end is informed. Debit card payments are not tracked by any credit bureaus, but credit card payments always are. Minimal monthly charges show restraint while using the card, and it continues to build your positive credit score. This feature is known as the debt-to-credit ratio and is a clear indication of being or not being financially savvy. Your debt-to-credit ratio accounts for a sizeable 30% of your credit score.
Build Up a Lengthy Credit History Record
Credit history begins as soon as you are legally old enough to open a bank account, which is when you turn 18. At 18, nobody tells you about the essential things, like a good credit score or a lengthy credit history, and if they did, you might be disinclined to given advice.
The history that you build over time is yours and remains with you forever. It is built up over time, though, not overnight. There is research that indicates that the older an account is, the better it is for you. The older the report, the more history it has attached to it, and history is the fabric of our very existence.
Note: Closing an old account (which could be 15 years old) will not improve your credit history. If the account is closed, any history built up over time for this account will die with it.
Apply for Credit Only When Necessary
At some point in your life,it will be necessary to apply for one of a few things: a credit card, a home loan, a car loan, or even a personal loan. These applications will be staggered throughout the various stages of your life. It is paramount to have a ‘healthy’ mix of credit lines.
It demonstrates that you are not in trouble of any kind and that you are an excellent candidate for borrowing money. It is indicative of your reliability, and the various companies that lend the money to you will trust you to take care of this money. Contact us 844-829-2292
