How good your credit score determines what loans you will qualify for and the interest rate you will pay. A high credit score means that you will pay a much lower interest rate over a lifetime. Hence, with a high credit score you will save more money by keeping more cash in your wallet. Here are 7 steps to achieve high credit score by Bankrate:
- Watch those credit card balances. One major factor in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating.
- Eliminate credit card balances. “A good way to improve your credit score is to eliminate nuisance balances,” says John Ulzheimer, a nationally recognized credit expert formerly of FICO and Equifax. Those are the small balances you have on a number of credit cards.
- Leave old debt on your report. One of the ways to improve your credit score: Leave old debt and good accounts on as long as possible, says Ulzheimer. This is also a good reason not to close old accounts where you’ve had a solid repayment record.
- Use your calendar. If you’re shopping for a home, car or student loan, it pays to do your rate shopping within a short time period.
- Pay bills on time. One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.
- Don’t hint at risk. Sometimes, one of the best ways to improve your credit score is to not do something that could sink it. Two of the biggies are missing payments and suddenly paying less (or charging more) than you normally do, says Dave Jones, retired president of the Association of Independent Consumer Credit Counseling Agencies.
- Don’t obsess. You should be laser-focused on your credit score when you know you’ll soon need credit. In the interim, pay your bills and use credit responsibly. Your score will reflect these smart spending behaviors.