There’s no trick to building an excellent credit score, and there is no one action that will help you achieve such a score. The following are seven habits of people with high credit scores:
1. Never Pay in Cash - People with great credit scores want every purchase to count. And an investment doesn’t count unless the three credit reporting bureaus know about it! The only way to make sure that the bureaus know how much money you’re spending is to pay for everything on your credit card(s.)
Rather than deposit your paycheck and spend, think of your spending as a monetary cycle: Put your paycheck in the bank, spend with your credit cards, and pay off the cards with the funds you’ve already deposited. It’s one extra step that pays off big with the added security and boosts to your score that credit cards provide.
2. Don’t Use a Debit Card - You won’t find a debit card in the wallets of people with great credit scores. Debit cards provide you absolutely nothing that a credit card won’t, and credit cards will build your credit score! Furthermore, if someone steals your credit card, you’re protected against fraudulent purchases, while with a debit card, you’re out of luck! People with high credit scores take every opportunity to build their credit going to the grocery store, buying gas, or renting movies!
3. Pay Off Your Balance(s) - People with great credit scores don’t typically carry high credit card balances. The easiest way to emulate this is to make sure that you don’t carry ANY balances. People with great credit scores make sure to use their cards, but pay the balance off every month.
4. Put Yourself on a Bill Payment Schedule - For the credit bureaus to reward your good spending habits, you have to pay your bills on time. The easiest way to stay on top of your bills is to pick one day out of the month to take care of everything.
5. Request Higher Credit Card Limits - Because people with excellent credit scores habitually borrow money and immediately pay it off, the credit card companies are very comfortable raising their spending limits. People with great credit scores.
You will have the best credit score if you keep the balances of your cards below roughly 35% of the spending limit of each card. People with great credit scores don’t habitually spend over 35% of the limit of their cards. Furthermore, if you have high ceilings, you can take advantage of the promotional offers that the banks offer from time to time.
6. Never Close a Credit Card Account - The credit bureaus take into account the age of your credit lines and people with great credit scores know this, and exploit it. That card has a great history behind it! You’ve shown the bureaus that you’re willing to borrow a large sum of money and then pay it down to zero.
7. Never Rent - Your home is probably the largest purchase you will ever make in your life and is the one purchase that can make the most significant impact on your credit score. When you purchase a home, you’re showing the bureaus that you can consistently budget yourself to pay a large portion of your income towards an account on a monthly basis. There are some reasons people with great credit scores refuse to rent, and the impact of pay- ing a mortgage on their scores is one of them.
People with great credit scores haven’t achieved anything too difficult, they’ve merely adopted some fantastic spending habits. If you would like to earn a great credit score, borrow these habits and watch your score climb? Along with your score, your financial health should benefit, as well!