7 Habits To Earn Yourself A High Credit Score

Posted by: KHTS FM 98.1 & AM 1220 in Financial February 6, 2019 - 9:15 am 0 446 Views

When it comes to credit score, most people aren’t very informed. Your credit score doesn’t only affect your chances of getting a loan, but it also impacts your job, your apartment rent, your insurance premium, and even your neighborhood.

But most importantly, it affects your financial situation and subsequently your peace of mind.

If you adopt these 7 Habits of Earning A High Credit Score, you will have all the above:

Keep a check on your Credit Score

Most people find out their credit score only when they go applying for a loan. Some don’t even know that their credit history is being scored. Keeping a track of your credit score will help you understand your financial position. You can sign up with a credit monitoring service to keep track of your credit score. It will help you improve and regulate your credit score. You won’t have to take any last minute actions to improve your credit score when you go applying for a loan.

If you are looking for credit repair, read this review from Credit Repair Companies before making any decision.

Keep credit utilization low

Getting a credit card doesn’t mean you get access to all the money listed in the credit limit. Even though you can take out all that cash, you don’t want to do that. To keep your credit score high, you should only be utilizing 7% of that credit limit ideally. Never go above 25% of that limit. If you don’t know your limit, call the credit card company and ask them.

If you need more cash, you can always take out another credit card. Rather than burden one credit card, keep an extra credit card. The extra credit card won’t negatively impact your credit score, rather it would help your score if you can pay it off easily.

Setup Automatic Payment Systems

A good part of your credit score is determined by your loan payment history. Whenever you miss a payment for any loan, it goes into your credit report. It affects your credit score. Missing payments isn’t something you would want to do. But it happens. You forget. An emergency comes up. To deal with all this, you should be setting up an automatic payment system. If setting up automatic payment isn’t an option, set up reminders on your phone. Simply remember to pay up on time.

Pay Balances in Full

Once you keep your credit utilization low and your pay your bills on time, you are generally good. The next step is to pay your balances on time in full. When it comes to credit card payments, most people usually pay minimum payment and consider them safe. Even though they won’t be landing in any trouble for this, your credit score will be affected.

By just paying your minimum balance on time, you are scraping by. Credit monitoring agencies won’t consider you financially stable if you keep doing that. This means you won’t be getting a high credit score. Another problem with sticking to minimum payment is that your average balance rises your time. And this will definitely affect the credit score.

Don’t Get a Loan You Can Pay Off Easily

There’s always something we want or need to buy. If you can’t afford a new house or a new car, getting a new loan isn't the best idea. Think about how you are going to pay back the money. If you get a loan of $10,000, you won’t be just paying back the $10,000 but much more. The interest will amount to a lot. Don’t take any hasty decisions just yet.

Take out your budget sheet. List down your expenses. Compare it with your income. Will you be able to pay off the loan easily? If yes, then it’s okay to take out the loan. If not, then you should either consider putting off the loan for now or explore an alternative income source to pay off that loan.

Choose the right credit cards

Not all credit cards are made equal. Get your credit card from a major brand, rather than retail outlets. These usually have e low limit. This means you will be utilizing more than 7% of that credit card limit.

If you are going to get a credit card, it’s a smart move to compare it with other credit cards. Look for a secured credit card. A secured card would require a deposit to the credit card company, but it will improve your credit score.

Another option is to look for credit cards that offer good benefits. Find out what benefits your card company is offering. Will you be using them? Using those benefits will give you points that will help you get major discounts and other facilities.

Don’t Close Accounts

When you pay off a loan successfully, you don’t have to close that account. Your previous loans actually help your credit score. They show that you have a history of paying back your loans. This goes will with credit scoring agencies.