A perfect credit score is 850. For most people that’s pretty far out of reach and not even necessary. The goal — at least my goal — is to have a great credit to secure a good rate on my home mortgage or similar things. So let’s talk about how to get into the 750+ credit score club and stay there.
Building off of Josh’s last post – How to Fix Your Credit Score Now– let’s bring it all together. Here are some simple tips (which are sometimes hard to abide by honestly) to get you on the right track:
Make payments on time
If nothing else, make it a goal to pay everything ON TIME. There will be times when something comes up, but if you have the goal to pay everything every month on time and stick to it, your credit score will be happy. AND if you do pay everything on time every month, for those rare emergencies when something comes up, you can easily call your mortgage company, credit card and talk to them about it. Simply explain what happened and ask nicely if there’s any way that they can wave any fee associated with being late. And also ask them nicely to have it not reported as a late payment on your credit. If you are constantly paying late, this isn’t an option.
Live within your means.
Yep. Captain Obvious here. I know it can be so.dang.hard. But it’s a must if you want good credit. You have to work with what you’ve got.
Make sure to go over your budget and assess things each month over every few months.
—–> Get the Ultimate Budget Binder to help you with this.
I like this post from View Along the Way where Kelly talks about how they paid off their house in 5 years. They definitely lived within their means.
Lower your debt to credit ratio
How do you do that? Pay down your credit cards/lines of credit. Like I’ve mentioned in other posts, lenders want to see that you are responsible with your money (and the money they are lending you!). If you have a lot of credit but it’s all close to maxed out, this will cause your credit score to drop. Try to keep your credit card utilization to 10 percent or less.
—–>You can get the snowball printable to help with paying things down as a part of my All Inclusive Binder.
Don’t open a ton of credit.
This is a fine line- because in order to have good credit, you have to open credit lines/cards, etc. I have a relative who doesn’t have good credit because for a long time he paid for everything in cash. That is amazing! But it’s hard to buy a house, a car, all of the big expenses without any credit. So— open some credit cards/lines but sparingly.
Having said that – if you have a bunch of credit cards, DON’T close them. Josh talked about this in his last post. He explains more of the reasons why not to close your accounts.
So what I’m saying here is — you need to have some accounts open, but don’t need to use them. You also shouldn’t close them but just don’t add more if you already have a lot. Clear as mud?
I opened a credit card in my freshman year of college. It had a crazy high APR of like 23% or something. They like to get clueless college goers to open accounts at high rates because they have no credit. Sneaky, sneaky. While I had no idea what I was doing with a credit card then, I still have that line on my credit report, more than 20 years later. They can see that way back when I was responsible with my credit and that I have had a good history of opening, paying and repeating. Again, credit scores live for stability. To get a higher score, they want to see accounts that have been open for 10 years or more. Refer back to my “don’t close your credit cards” tip above.
Think big picture.
While your credit might not be great at this moment, you can do things NOW that will make it better in the long run. The time is going to pass anyway- might as well get things moving in the right direction. Right? Decide today to make changes and go for it, then track what you are doing so that you can make sure to reach your goal. You can do it!
Looking for other credit tips? Check these posts out: