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High Credit Scores Rarely Just Happen

Posted on 2015-07-01 09:00:49

High credit score rarely just happen. It is usually those who conscientiously think about their credit habits who have the highest credit scores. And it pays off. A high credit score will get you better terms on a loan that can keep money in your wallet instead of a creditor’s. That should be motivation to work hard and be responsible with your financial obligations. Here are habits of high credit score achievers. Always pay bills on time. This is a “no exceptions” rule. On most credit score scales, your payment history accounts for about 35 percent of your credit score. Even a single late payment can cause a significant drop. Surprisingly, the impact will likely be more serious for someone who already has a good credit score. Keep account balances low. In other words, avoid overspending. Most experts recommend keeping your account balances below 25% of your credit limit; some recommend as low as 10%. Even if you pay bills in full every month, most credit score models look at the balance reported by card issuers—usually your statement balance. If you use credit cards to earn rewards, consider paying down the balance before the statement closing date.

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Keep older accounts open. There is certainly room for debate on this one with several things to consider. Every time you close an inactive credit card account you risk shortening your credit history, and that is one of the factors used in calculating your credit score. If you have other active accounts of a similar or older age, closing an account probably won’t impact your credit history. Closing an account can also affect your credit score by lowering your overall available credit. That means whatever credit you use suddenly becomes a higher percentage of your available credit. Don’t collect credit cards. Don’t apply for credit you don’t need. Those with the highest credit scores are actually those who use credit the least. When you open a new credit card, you may be doing it to get 15% off your purchases, but creditors view it as more credit available for possible misuse. Don’t impulsively open a credit account for a small savings on your purchase. It is rarely worth it. A high credit score is a reward for responsible use of credit. The reward is well worth the effort. Credit score tracking with MyFreeScoreNow will help you see how your credit score is improving over time.
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