A vast majority of people are understandably confused when it comes to credit score and credit ratings. In essence, credit score is nothing more than just a history of all the purchases and payments a person has made. This recorded history is the first thing that credit card companies look for when they are considering applications. If a person has an excellent score, he is often perceived as someone who can manage his finances well, therefore, he will be qualified to get credit cards.
Good management skills include making timely payments, the amount of money owned or the debit to credit ratio and the length of the credit history. These major factors will come into play when you are trying to obtain a loan, rent or buy a house or apply for credit cards. So how can you ensure that you are able to build or maintain an excellent score? Consider these tips:
Pay On Time
Paying on time will account for roughly 35% of your credit score. If you want to maintain or build a better credit score, then you must make an effort to pay your balance before the due dates. How can you ensure that you will pay on time? Do the following:
• If you are paying your bills via mail, pay it in advance, preferably within 7 to 10 days prior to the due date.
• Consider making online payments
• Many credit card companies allow automatic payment of credit bills at no extra cost
• You can also request to move the payment dates on days that are suited for your lifestyle
• Sign up for an email alert that will remind you when the next payment due date is up
Do not Exceed Your Credit Limit
The general rule of thumb is, the less the total credit limit you use, the better it is to your debit to credit ratio. It is recommended that you only use about 30% of your available credit on your credit cards.
Maintain A Long Credit History
What most people do not know is that a long credit history can account for nearly 15% of their credit scores! For this reason, try to keep all your old card account active and make occasional purchases on them. This way, you can maintain a significant amount of total available credit. In turn, this will have a positive impact on your credit score.
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