Five Habits of People with Excellent Credit Scores
You already know how crucial your credit score is. And, if you’re in the process of getting out of debt, you know the road to improving it can be a long one. At times, it may feel hopeless. But luckily, your credit score doesn’t have to stay the same forever. A few good deeds can go a long way. If you’re trying to improve your credit score, make these habits a priority.
Always be on time
Set alarms, reminders and anything else that can help you remember when you have a payment coming up. A consistent record of on-time payments can really do wonders. Payment history is the biggest influence on your credit score, so the more often you can pay all your bills on time the better.
Pay everything in full
One of the habits people with excellent credit share is that they don’t have a balance. Paying your balance in full each month not only will help you avoid spiraling into endless debt but will also have a favorable impact on your credit score.
Stay well under your limit
Just because you have a high-limit credit card doesn’t mean you have to reach that limit. There’s not a prize for getting close to it. In fact, many experts suggest only using about 30% of your available credit each month. This will help increase your chances of being able to pay your balance in full each month and will keep your credit utilization ratio low. Typically, lower credit utilization results in a better score.
Reestablish a positive credit history
If you’re trying to rebuild your credit, don’t set yourself up for failure. Use your credit card for purchases you know without a doubt you can afford to repay. Rather than using your card for purchases you normally can’t afford, stick to using your card for expenses you know you can cover in full every month. This will help you practice responsibility and show a more positive credit history of low credit utilization and on-time payments. The more responsibly you use your credit, the higher the score you’ll have to show for it.
Keep your accounts open
If you’ve struggled with debt, it may be tempting to close cards you’ve had trouble with or ask for a lower credit limit. In some cases that may be a wise idea if having the card is too tempting. But, in most cases this can do more harm than good. If you have fewer accounts (shoot for 3) your credit utilization ratio is likely to go up and your score will go down. Plus, you’ll want to stick with the accounts you have for now. Opening a bunch of new accounts when you’re fresh out of debt can cause there to be too many hard credit inquiries on your report. Stick to maintaining what you have.