An excellent credit score doesn’t just end with a number on a page: it can be a means to an end when it comes to securing the best interest rates and terms on loans, which can save you big bucks in the long run. Two of the biggest consumer credit scoring companies are VantageScore (created by the three major credit bureaus Equifax, Experian, and TransUnion) and FICO, whose scores are most commonly applied in lending decisions.
Remember that, generally, a credit score of 750 or higher is considered excellent. Follow these five steps — then give yourself some credit for taking charge of your finances.
Getting and keeping a great credit score? Plan on making these steps a habit.
Do Pay What’s Due On Time
Being timely when it comes to paying bills pays off. The most influential factor in your credit score is payment history. Even one late payment — overdue by 30 days or more — can deal a blow to your credit score.
If you tend to forget that it’s time to tender payment, consider signing up for automatic payments from your bank account or set up reminders on your smartphone.
Keep Balances Low For A Score That’s High
Maintain good control over your spending — especially when it comes to charging only what you can afford to pay in full each month on your credit cards. You’ll avoid incurring interest, which quickly adds up every month and adds to your debt.
Individuals with FICO scores of 800 or higher have a median total revolving credit balance of $1,446 compared with $2,040 for the United States population overall.
Don’t Overdo Credit Card Applications
Apply for several credit cards in a short period and you may be viewed as a risky credit prospect. When potential lenders check your credit score the action shows up as an “inquiry” on your report and can ding your credit score; in other words, too many inquiries may not be in your best interest.
Monitor Your Scores And Credit Reports
Know the score when it comes to protecting your credit. Keep an eye on your credit report and you stand a good chance of becoming aware of any negative changes when they happen and addressing them promptly.
Card issuer Discover found that 76% of consumers who checked their credit score at least seven times in a year saw their score improve as compared with 38% of those who checked their score only once annually.
Choose A Credit Card That Rewards Your Spending Patterns
Dining. Shopping. Traveling. Fueling up. Choose a credit card that offers cash-back rewards on the things you purchase most frequently. Cash-back cards often allow using accumulated rewards as a statement credit toward purchases, which can lower your bill.