While many would prefer to believe otherwise, it is nearly impossible to function in today’s society without some form of credit. The lower your credit score, the more difficult it is to obtain personal loans, mortgages, credit cards, and more.
While repairing a low credit score is possible, it is often better to simply take action to build a strong credit record from the start. Here are some things to keep in mind on your quest for the perfect credit score.
Pay Your Bills on Time
This should go without saying, but paying your bills late will have a negative impact on your credit score. Don’t overextend yourself and make sure all of your payments are made on time. A late payment can reflect on your credit report for periods of up to 24 months.
Don’t Have Too Much Credit
There is really no need for you to have 10 credit cards in your wallet. Two is optimal – especially if they are from two different card issuers (American Express, MasterCard, or Visa). The amount of credit available to you can have a negative impact on your credit score, even if you aren’t making late payments or carrying large balances. For the same reason, you should not have any more than 2 small store cards, or gasoline cards, either.
Review Your Credit Regularly
You may not think about your credit as much as someone in a difficult financial situation, but it is still important to take advantage of credit reporting company offers for free reports at least once per year. This will give you the opportunity to make sure there are no mistakes on your report – things that could damage your credit later on if not caught promptly.
Have a Car Loan or Mortgage
Car loans and mortgages are great for your credit score – but only if you pay your bills on time. Mortgages prove you are stable and car loans are great because they prove to lenders that you are capable of making payments on an items that could easily be stolen or abandoned.
Be Optimistic
Hit a bump in the road and made a few late payments? Don’t let your financial hiccups turn into an avalanche. Pick up, start making future payments on time, and do what you can to keep up going forward. You’ll eventually bring your credit score right back up to where it was to begin with.