Some people might believe that a credit score should not be focused on because you should be paying for everything with cash, however, there are many times when a good credit score is needed. I am one of those people who do not see credit scores as something bad.
A good credit score and loans have allowed me to go to both undergraduate and graduate school and earns degrees, obtain a reliable and nice car, buy a house and many other things.
A good credit score can allow you to buy things with credit and hopefully get a very good interest rate. Our credit score was good, and therefore we were able to score a great rate on our car loan.
Yes, we could have paid for the car with cash, but we chose not to because we would be earning more by investing this extra cash instead of putting it all directly towards our new Jeep. Have a low interest rate on your loans can be very helpful because even just a small difference in your interest rate can equal a savings of hundreds or even thousands of dollars a year.
I put nearly everything on my credit cards, and it is all to gain rewards points mainly. My credit score is still good and high because I follow many of the tips that are listed below.
There are many things that you can do in order to increase your credit score:
1. Make sure your utilization rate does not go above 30%.
I have a friend who recently told me that she has one credit card and she has owed around $450 on it for months, and her credit line is $500. She thought by always paying the minimum payment and not over-withdrawing on her credit that she would be fine, until I told her otherwise!
One thing that many people do not know about is that your utilization rate must be watched. If your total credit limit is $1,000, try not to spend more then $300 on your credit cards.
2. Pay your balance in full.
Not carrying a balance every month is key. I put a lot of expenses every month on my credit cards, and I still make sure to pay them off completely every month, and most of the times before the months is over and anything is reported to the credit bureaus. You should also keep in mind that even though you pay your balance in full every month, that this amount will still be reported to your credit bureaus, and this is why you do not want your utilization rate to be too high as well.
We make sure to pay our balances in full every month so that my utilization rate stays low and also because I do not want to pay any fees due to carrying a balance over and then owing money due to interest.
3. Look at your credit report.
Different people have different timings for when they like to look at their credit report. Maybe look at it every other month, every quarter, twice a year, and AT LEAST once a year.
You should be looking at your credit report and make sure that everything is reported correctly and that nothing is on your credit report by mistake. There is always the chance that something was reported incorrectly and is now negatively affecting your credit score.