Updated: Feb 5
Having a good credit score and healthy credit profile is very important into today's society. You need credit for almost everything. If you apply for a house or apartment your credit will need to be pulled. If you are approved for either your credit will still need to pulled for insurance purposes and utilities. In some cases your credit score determines the amount of a deposit you will have to put down to get your utilities turned on.
If you apply for a car your credit is going to get pulled. Your credit score will also determine the rate you pay for your car insurance.
If you apply for a credit card, most of the time your credit will be pulled and your credit score will determine the amount you are approved for as well as what your interest rate will be. Now since you know why you need to maintain your credit we're going to discuss how to get a healthy credit file and above average credit score.
Pay ALL of Your Bills On Time
Did you know that payment history is thirty five percent of your credit score? Did you know that is more than 192 points? Did you now a recent derogatory, such as a recent late payment, charge-off, bankruptcy, repossession, or collections could cause your credit score to decrease 100 points or more?
If you have more negative payment history showing than positive payment history it would be wise to look into opening starter accounts, revolving and installment. Adding more positive payment history will help to outweigh some of the negative payment history and help reverse some of the damage that may have been caused.
Look into opening a Self Lender account if you are just starting out and are having a hard time getting approved Self Lender will allow to build credit and save money at the same time. All the money that you pay monthly for Self Lender will be given back to you in the form of a check at the end of your agreement.
If you have a charge-off appearing on your credit report that is still in the statute of limitations, and the original creditor still has it, which means that have not sold your account to an outside collector, please reach out to them and see about making a payment arrangement or pay for delete, because they are still able to sue you for the debt and you do not want it to get sent to a third party collection agency because your credit score will take another hit.
If you are thinking about going to a debt settlement company - DON'T!!! All they are going to tell you to do is stop paying your credit card bills so that they can go into default and then they are simply going to make a settlement agreement on your behalf. While you are in there program your score will decrease because you will be getting recent 30, 60, 90, 120, and CO added to your payment history.
Maintain Your Credit Cards
Maintaining your credit cards is thirty percent of your credit score, which is 165 points. If you have a credit card it is important that you keep your balances below thirty percent of your credit limit. The ideal percentage is less than 10.
If you are having a hard time paying your credit cards down to proper utilization you can get a GUARANTEED UNSECURED CREDIT CARD HERE that has a $10,000 credit limit. You will be required to pay a $149 membership fee, but you can't beat that for a $10,000 credit limit.
If you do not have a credit card you also missing points in this category. If you are having a hard time getting approved I found a list of credit cards for people with bad credit or less than perfect credit that can be found HERE.
It is also important for you not to close old credit cards. I know once you pay them off you want to get rid of them but closing credit cards could cause your credit scores to drop. Average High FICO Score Achievers has accounts that have been opened for a minimum of 10 years. So when you close an account you are causing your credit age to drop.
If you have one credit card open you are on a good start. Please remember you will need to have at least 3 credit cards opened. You will need more than one credit card opened.
Good Account Mix
Having a good account mix is also important. That means you are able to show creditors you are responsible and can handle different types of accounts. Credit mix is important but it is not as important as payment history and credit utilization, but it does make up about 88 points of your credit score.
You will need different types of credit cards, such as revolving or store, different types of installment loans, car loans, student loans, and unsecured installment loans.
No matter where you are in your credit journey, whether you are a beginner or been at it a while and thinking about to giving up, please keep pushing and learn as much as possible until you reach your goals. Never give up. If you are having a hard time getting approved for auto loans or installment loans please check out THIS LIST that I found HERE. They can also help you to lower your interest rates on your car loans if they are to high.