An excellent credit score, which according to FICO is above 800, can help you get at the top floor of improved financial perks. This is a coveted status that goes beyond the very good range between 740-799.
But in order to achieve this, you need to make sure that you are following good credit management practices every single day.
This can be a little difficult, but learning what other people with excellent credit scores do can help you get a handle on your own activities. This makes sure that you are able to get the results that you want and build a better future for yourself.
To support you along this path to financial freedom, here are 8 habits of people with excellent credit scores.
1. Making Payments on Time
Making credit card payments on time is the most important thing that people do to improve their credit scores. Besides creating a budget for yourself, you can follow tips for buying clothes online, getting groceries every month, and managing your utility bills to smoothly handle your finances and be able to make all your credit card payments on time.
2. Being on Top of Their Reporting
There are times where incorrect transactions like delayed payments get reported to the three major credit bureaus who calculate your credit score. People with high credit scores go through these errors in their credit report and file a dispute as soon as possible. This helps remove these transactions from their credit and improves their score.
3. Not Depleting Their Credit Cards
People who get high credit limits incorrectly think it warrants a high credit score for years to come. But if you have a credit utilization ratio above 30%, it can negatively impact your credit score. That’s why some people follow the advice of keeping their credit utilization ratio even lower than 10%. To follow this tip, you can start saving your own money in a high-yield savings account to use in emergencies.
4. Applying For Credit Carefully
When you apply for new credit, it creates a “hard inquiry” on your credit history. This can lower your score for up to a year and also stay on your credit report for two years. That is why, when people with high credit scores apply for new credit, they do it only when they absolutely need the funds. This applies to flexible business lines of credit cards.
5. Holding a Good Credit Mix
While people with high credit scores don’t blindly apply for credit and use solutions like a notes app budget template to keep track of finances instead, they still have a good credit mix. This means holding at least one revolving credit like a line of credit account. This contributes to elevating their credit score.
6. Not Closing Their Oldest Account
The average age of your credit history holds a significant weight for your credit score. The older your first credit account, the better it works out for your credit score. That’s why people with excellent credit scores often do not close their oldest account.
7. Reporting Rental and Utility Payments
Many people with excellent credit scores go above and beyond to achieve this feat. This means that they take steps further than making their payments on time, like signing up with a service that reports their rental and utility payments for an improvement of their credit history. The effect here is minimal, but it still contributes to establishing their financial prowess.
8. Regularly Checking Their Report
Those who have an excellent credit score are mightily aware of how even the smallest change can affect their history over time. That is why, they make it a habit to check their report at least twice a year and see how their score is coming along. You can also use a reminder app to make sure that you don’t forget this practice throughout the year.
By learning about these best practices, you can adopt the habits of financially responsible people to improve your credit score. This works wonders for enhancing your financial well-being in the long run.
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