How to Achieve Good Credit
While having good credit may be part of your plan in getting your financial picture in the pink, credit health is not something that will come about simply by wishing it. There are measurable, strategic steps to take to reach that milestone-and to stay there.
The most important step towards taking charge of your credit comes with taking responsibility. It’s easy to get swallowed up by debt, but remember you hold the balance of power- you just have to take it. Owning your credit means knowing what you owe and committing to paying it regularly- in your thoughts and in your actions.
There are multiple benefits to this approach, including achieving good credit and pride in knowing that your actions paved the way to reach your financial goal.
Pay on Time. Always
While it seems fairly obvious, it is imperative that you pay your credit bills on time to maintain your credit rating. When possible, pay balances off in their entirety. Realizing that is not always possible, budget for minimum payments, and try for more.
Part of paying on time goes back to responsibility. Know that you are responsible for credit bills every month, and commit to paying them, whether you receive a bill in the mail or not. Mark on your calendar when you typically receive your credit bills (each card/debt will run on a monthly cycle, with a similar due date every month). If you’ve not received the bill by a certain date, be proactive and contact the company.
Bills do get lost in the mail, but the debt remains- and so does your responsibility to pay it. Avoid the mail confusion and sign up for electronic bills, which many creditors (and utility companies) offer.
Don’t take out too Much Credit
Having multiple cards (or multiple credit applications in a short period of time) will actually hamper your credit score. Centralizing your credit, managing it well and paying it responsibly is your best bet to a good credit score, and towards the ability to secure other debts (like buying a house).
Don’t Max out
Same idea. Creditors are looking for your attitude towards debt as demonstrated in your credit behaviours. Does your credit bill show you being maxed out every month? What this may show is either you have a spending habit that brings you beyond what you can afford or that your income doesn’t support your current debt load- or in some cases both.
Regardless of the reasoning, this will lower your credit score.
Establish Credit History
Your credit score may be low, simply because you have no credit history. Good credit is something that has to be achieved over time, with consistency. Having credit is kind of like an audition or an interview. Creditors want to see how you manage it before they award you more.
There are numerous reasons that you may not yet have a credit history, but if your goal is credit health, than the time to start now.
Take out a small limit, pre-paid credit card, on which you make small, regular purchases that you can manage to pay in full every month.