Achieving a high credit score, one that is over 800, is not something just for the privileged or wealthy. Plenty of people on a budget have been able to maintain a high credit score. It’s even possible to have a high credit score and carry some debt. Here are some tricks to getting and keeping a high credit score throughout your life.
Follow a Budget
The most important thing people with higher credit scores have in common is a realistic budget. Staying within your budget will help you reign in your spending and avoid some common debt pitfalls. That means you may have to live without every popular streaming service, a fancy car, a house you can’t afford, the latest electronic gadgets, and luxury vacations.
Check Your Credit Score Often
Next, you need to have an idea of where you stand with your credit score. Monitor your score by requesting a free credit score every few months. You can also check out your entire credit report from the three credit agencies for free, once per year. Make sure there aren’t any errors or negative marks that could bring your score down.
Pay Off Credit Cards Each Month
Using credit responsibly is a big part of your credit score. The most effective way to use a credit card and maintain a score in the 800s is by purchasing items and paying off your entire balance each month. With this strategy, you won’t pay expensive interest charges or add debt to your portfolio. Instead, you can simply buy the things you can afford rather than paying for them little by little over time.
Keep Credit Accounts Open
A high credit score also comes from having a solid history of using credit. Younger people can open credit cards once they turn 18. If you have older credit accounts with stellar payment history, avoid closing them. Keep these accounts open so your credit file reflects a history of paying on time and being responsible with credit.
Limit Applications and Inquiries
Your score can lower a tiny bit if you submit a credit application or an inquiry. While it’s necessary to apply for credit cards and loans at some points in your life, avoid overdoing it and making your score go down. Make sure you are serious about getting a loan and only submit an application if you plan on using the lender. Ask credit card companies and loan operators about their credit inquiry practices before applying.
Have Low Balances
There will be times in life when you do need to carry some debt on your financial portfolio. If you want to buy a car, purchase a home, take on a big remodeling project, or pay for something else that is necessary, you may need to finance it. The key is to keep your balances low in comparison to the actual available credit you have. If the ratio of your debt to your available credit is poor, this could negatively affect your credit score.
The final tip to getting a high credit score is to be consistent in your financial history. Maintain responsible purchasing behavior and a steady job history to keep your score in the 800s. Show lenders that you are dependable, responsible, and capable of settling your debts. When you are ready to make a big purchase, like a home or a vehicle, you may be able to qualify for the best loan rates.
Some people don’t realize how simple it is to get a high credit score in the 800s. There is no magic formula. You need to strategically use debt and make a solid budget to keep your score high and get the best results with your financial future.
Krishna Murthy is the senior publisher at Trickyfinance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.