Maintaining a high credit score comes with a lot of financial perks. For one, it can save people plenty of money in the long run. This is because banks and other lending institutions usually grants people with good credit scores better interest rates on loans and credit cards. According to Experian, a credit reporting company, an excellent credit score is anything above 800 while scores above 700 are considered to be good.
If yours doesn’t quite make the cut, don’t worry. There are many ways you can increase it while doing things you may already be doing anyway.
KEEPING OLDER ACCOUNTS
Having multiple accounts remaining open is one way to boost one’s credit scores quickly. This is because the average of these accounts actually make up a vital part of a person’s score and average account age. However, if one or some of your older cards are just starter ones, consider calling your bank to ask if an upgrade is possible without having to get a new account.
AND OPENING MORE
Similarly, opening new accounts is also encouraged. Having more credit cards to your name, although it seems counterintuitive, can actually decrease your average credit utilization. This is because having more credit cards can result in each of them being used less frequently.
There’s also the fact that using multiple accounts can show lenders that you can be financially responsible across different credit providers.
TAKING OUT A LOAN FOR A CAR
Planning to buy a new car? Consider taking out a car loan even though you have the cash to pay for it. This way you can take advantage of the excellent loan rates that some credit unions have which target people like you who are trying to build or boost credit. Car loans also come with lower risks compared to other types and are a fast way for a beginner to quickly increase their credit score.
PAYING OFF BALANCES
Avoid sabotaging your credit history by maxing out a new credit card and then ending up just making minimum payments on it. Instead, make sure to pay off balances regularly as it would decrease one’s utilization rate and eventually boost the credit score. After all, banks usually want to see a good balance between one’s available credit and the credit being utilized.
BUYING A HOME
If you’re already mulling over finally buying your home, knowing that it can bump up your credit score in the future may convince you once and for all. There’s nothing that shows a person’s financial responsibility like a credit history of payment mortgage payments made on time over the span of a couple years.