You may have heard about credit scores all your life, but improving and maintaining a good one isn’t always as easy as it may seem. If you want to master a good credit score, it takes some planning, discipline, and research. Here are some things to work on to achieve a great credit score:
Be mindful of how often you apply
A mistake that people often make when they’re not aware of how credit scores work is that they apply for a lot of credit cards and loans. While you do want to have a few credit cards for different things, as this shows lenders that you’re reliable, you also want to avoid trying to open up new ones so often that you’re getting hit with all kinds of hard inquiries.
A credit check that shows too many loans or credit card applications could raise some eyebrows. So, when it comes to your credit planning, be strategic in the options you consider.
Pay on time–always
When it comes to your credit, on-time payments do matter. If you’re looking to get an excellent credit score, you’ll want to be committed to achieving on-time payments all the time. While things may come up and one late payment may not be the end of the world, strive to not let it happen often. This can bring your credit score down and won’t do much for your future loan applications. Even if it means staying on top of a strict budget while you work to stay on top of payments, it’s worth it.
Consider debt consolidation
If you have built up some credit card debt and you want to fix things up, it’s a good idea to consider debt consolidation. Instead of having your credit card debt spread out all over the place, which can make on-time payments difficult to manage, you’ll have your debt in one place, allowing you to stay focused on paying it off. Your debt hasn’t disappeared; it’s just now in one place, which could make it easier to budget for.
Diversify it all
When it comes to building a good credit score, lenders want to see that you not only pay on time, but you pay different things on time. So from mortgage loans to auto loans and utility payments, there are different things that you could be paying off to show that you can handle anything that comes your way in the world of credit. As you start planning for a better credit score with a financial professional, keep this in mind. Be strategic about the way that you use credit options so that you’re doing your best to get the things you need while also working towards the kind of credit score that is worth bragging about.
Don’t use too much of your limit
You may be offered $2,000 on your new credit card. However, if you want to win at the credit score game, you won’t want to go all out with using as much as possible of that credit score limit. Even using $1,000 of that isn’t the best idea. Many people are using up to 50% of their credit limit, and that isn’t going to show up well on your credit score report.
Strive to use less of your credit options so that you can get the kind of credit score that will make a difference for your future. It may be difficult when you’re so tempted by that “extra money,” but learning spending discipline is a key factor in financial success.
An excellent credit score is the result of excellent financial planning. To get to where you want to be, you’ll need to start taking a look at things like your spending and credit card applications to see where you can start cutting back. You can succeed in getting the credit score you want. Start planning for it today!