How to get excellent credit…
Getting great credit is easy if you’re disciplined.
If your credit score is low now, don’t worry. Anyone can improve their credit rating — all it takes is discipline, patience, and time. If you are young and just starting out on your credit journey, then pay attention as well. Because this advice applies to both groups.
Credit scores can range from 300–850, the higher the better. [i] While your actual score depends upon a mysterious mix of ingredients, there are 5 basic factors that go into your score.
Pay on time.
The most important factor in your credit rating are your payments. You MUST pay your credit cards and loans on time. And yes, that’s each and every time. [ii]
Use the least amount of credit possible, or none at all.
The next most important factor is how much of your credit are you using. Of course, this is judged differently on installment loans (like a car loan), but in general, credit agencies look to see how much of your credit you are using. The more you use the lower your score gets. Yes, it seems ironic you get punished for using the credit limits you are given.
Keep your cards.
A longer credit history makes a difference. Credit companies like to see how you use your credit over a long period of time. So, if you’re young and just starting out, this factor does hurt you. But remember that credit is a long-term game. Just keep using credit at responsible levels.
Mix it up.
Credit companies like to see a variety of credit use including loans as well as credit cards. If you can get and responsibly pay a loan back, that will increase your credit score. A good trick here is to get a loan and pay it back early.
Don’t be a credit card collector.
You can and should get new credit cards every now and then, but if you get too many inquiries on your record that will reduce your score quickly. Try to be very picky about getting new cards and use only a few lenders if you shop around for a loan.
Getting and keeping credit shouldn’t be challenging in your life. Use it wisely and almost everything will be cheaper.
As always, I’m not a financial advisor. This article is for entertainment only. Consult your licensed financial advisor for any financial advice and always do your due diligence. Hire me to be your next content or technical writer.
