What is the best way to go about obtaining a good credit score? Credit has become an important and often contentious issue in our society. Getting and maintaining a credit rating is becoming increasingly important for those who wish to purchase a home.
Establishing a Credit Rating
It Takes Time.
To establish a good credit score it takes about two years. It doesn’t matter how many cards you have or what kind of credit you have obtained, a two year history of your credit is mandatory to building a great credit score.
The Fewer the Better
When it comes to establishing credit, less is more. You only need two credit cards to establish your credit rating. Use the card once every few months and pay it off right away. Avoid store cards or private cards as they reduce your credit score.
No Missed Payments
Whatever credit card you use, be sure not to miss a payment. Missing payments is a great way to hurt your credit rating so be sure you pay your card off every month or at the very least pay the minimum payment.
What Damages a Credit Rating?
Once a credit rating has been established, there are some things to avoid to ensure your rating stays excellent.
Don’t miss a payment. This is the #1 rule of having a good credit score.
Operating your Card near or Over the Limit
Even if your card has a $10,000 limit, try not to operate near your limit. If your card is constantly maxed out this can negatively impact your credit score.
The Wrong Kind of Credit
As mentioned above, store cards and private cards have a negative effect on your credit rating. Just by having these cards your credit score can be reduced.
Too Many Cards
For a good credit rating you only need two cards. It is unnecessary, confusing and bad for your credit score to own many, many cards.
Many Many Inquiries
Having your credit bureau pulled once or twice by one company will not negatively impact it. All the same, applying for credit in many different places and having your credit bureau pulled many different times can decrease your credit score.
Avoiding these common mistakes when it comes to managing credit will ensure you have a great credit score! If you have any questions about how to repair damaged credit you can listen to the radio show here, or call our office!