Your credit score is vital to your financial health. This number measures your money management skills, credit capacity and fiscal responsibility. An excellent credit score can open the door to large loans and with better interest rates, as well as employment opportunities and more.
Let’s explore the best ways to build and maintain an excellent credit score.
Consider a Credit Card
Building and preserving a healthy credit score may mean owning a credit card and keeping it active. If you’re just starting out, consider signing up for a card that features easy eligibility requirements and very little available credit.
Pay Down Debt
First, choose your debt-crushing method: The snowball method works by putting all available funds toward paying off the lowest debt first, and then the next-smallest, until you pay off all debts. The avalanche method works the same way, but focuses on paying off the highest interest rate debts in descending order until you pay off all debts. With the snowball method, you’ll get faster results, but may end up paying more in overall interest payments on all debts. Showing the credit bureaus that you’re on track to pay off your debt can do wonders for your score.
Pay Bills on Time
Paying credit card bills when, or before, they’re due is a major factor in your score. Continually carrying an outstanding balance, and/or owing lots of interest, can be a red flag to creditors. Remember, you can set up automatic monthly payments for your bills, so you’re always on time.
Bring Down Credit Utilization Ratio
Your credit utilization ratio refers to the amount of credit you use. Try to keep your utilization under 30%, or even 10% if you can. Make sure you’re using some of your available credit each month. In addition, consider accepting offers for increased credit—as long as you know you won’t rack up enormous bills simply because of having all that credit.
Use the tips outlined here to build and maintain a great score.
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