Got a good credit score? If not, do you want to improve your credit score? Without good credit, getting a credit card, a car loan, or a mortgage is difficult, and even if you are able to get the credit you seek, you’ll have to pay a higher interest rate than someone who has good credit.
One of the easiest ways to maintain your good credit score, or even to improve a less than perfect score, is to manage your credit cards responsibly, and the good news is, you can start today!
If you have no credit history, or even a bad credit history, the first thing you need to do is to actually establish credit. The easiest way to establish credit is to get a credit card. Even if you’ve been denied credit in the past, or have bad debts, charge offs, or late payments on your record, you can still get a credit card.
Begin by comparing the different types of credit cards available for your current credit score – don’t know your credit score? Find out your credit score with this free trial. Once you know your credit score, simply compare credit card offers based on your current credit score, and choose the one that has the lowest APR, charges little or no annual fee, and offers the best opportunity to improve your credit score. (If you have bad credit, you may need to consider a secured credit card, but even these cards report regularly to the major credit bureaus, and can help you improve your credit score over time.)
Once you’ve decided on the best credit card in your scoring category, simply fill out the secure online application and await the delivery of your credit card.
Keep Track of Your Purchases
Once you have succeeded in obtaining a credit card, you actually do want to use the card – just make sure that you use it wisely and keep track of your purchases. Never charge more than 2/3 of your total credit line, which means if you have a $300 limit, never have a balance greater than $200. Carrying a balance greater than 2/3 of your credit limit can actually harm your credit rating.
Pay Your Bill on Time Every Time
In order to maintain a good credit rating, and even to build your credit over time, you need to make sure that you pay your credit card payment on time, every time. Paying late, or even missing your credit card payment, can negatively affect your credit score, and will can stay on your credit report for up to seven years.
And, if at all possible, always pay more than the minimum payment. Not only does this reduce your balance faster, but as some credit card providers look at your ability to pay, paying more than the minimum payment can actually lead to an increase in your credit line.
Ask for a Credit Limit Increase
Over a period of time, and with a responsible history of managing your credit card, many companies will automatically increase your credit limit. However, if this is not the case, you can also request a credit limit increase simply by calling the credit card issuer and speaking with a representative.
Increasing your credit limit is normally a good thing to do, as the higher amount of credit available, combined with the lowest overall credit usage, can significantly raise your credit score. However, be advised, if you increase your credit limit, and also increase your credit usage by charging more purchases to your card, you may not see the desired improvements in your credit report.
Adding New Credit Lines
Once you’ve proven your credit worthiness, you will begin to see an improvement in your credit score, and you may even begin to see new credit card offers arrive in your mailbox. Opening a new line of credit as the need arises is a good rule of thumb – for example, if you need to buy a new washer or dryer, replace the dishwasher or refrigerator, etc., then applying for a new line of credit is a necessity. Just remember to pay it off as quickly as possible to keep your overall debt limit as low as possible.
It’s also important to keep in mind that too many credit inquiries on your credit report can also negatively impact your credit score, so once or twice per year should be your limit!