Getting & Maintaining Good Credit
In this frantic, post-crisis state of our economy, a good credit score is becoming almost necessary to anyone planning on making a large purchase, rent an apartment, or apply for a high level job. Credit scores aren’t just used to measure how good you are for a loan anymore, but many professionals actually consider your credit score before accepting you to work for their company, or rent an apartment in their building. Getting your credit score up and keeping it there isn’t necessarily hard to do, but will require some willpower on your part.
The FICO scale ranges from 300-850 and the average consumer has a score of about 720. After the economic crisis, lenders have started looking for even higher credit scores, such as those in the 740s and above. You will want at least a 740 score to get favorable terms on loans and other purchases. There are some key steps you need to follow to keep your credit score steadfast and strong. To start, don’t carry a balance on your card. Interest rates are monstrous these days, and putting more on your card than you can afford to pay off at once will come back to haunt you. However, if you do become stuck with a balance, try to make at least the minimum payment each month so your score doesn’t free fall. The key to not getting stuck with a huge balance and building your credit at the same time is saving up for your large purchase as if you were to buy it in cash, putting it on your card, and paying it off in full at the end of the month. Consistently paying your bills on time will not only save you money on interest payments, but will get you closer to reaching the mid 700s.
Don’t forget to monitor your activity. Use your cards, but don’t overuse them. Check your credit score every few months to make sure you haven’t become the victim of identity fraud, which will greatly damage your score and make it difficult to recover. Try not to open too many lines of credit, because this will reflect poorly on your score and will make it seem as though you are a liability. Keep the accounts you have open and don’t constantly open and close accounts. Push for higher limits on your cards, and keep your credit utilization ratio around 10%, even if you pay your balance in full every month.
