Is it possible to have achieve a high credit score and maintain it in today's economy? Yes, you can, however it takes having a frugal mindset and consistency in how you handle your finances. As of Oct. 18, 2012, my credit score was 813. I have been completely debt free, including my mortgage, for at least five years. I would like to share with you how you can accomplish this by sharing the financial principles I have consistently followed since I was a teenager. I am fifty now. Building a high credit score is a process that takes years, it does not happen overnight. It requires patience and diligence!
Five Financial Principles I Live By To Achieve and Maintain a High Credit Score
Lower Debt and Pay all Bills on Time
- Refinance your car loan and home mortgage to get a lower interest rate, when it falls 2 points or more, and make extra payments whenever possible. By doing these two things, you can pay off your loans in half the years of the original loan or mortgage. Keep purchases of your car and home within your budget. You should never buy a Cadillac on a Beetle budget, as the old saying goes! Paying all of your bills on time over time will help you maintain a high credit score.
Keep an Eye on Your Credit Report
- Check your credit report annually. Make sure you are responsible for what appears on your credit report. If there are many errors, you may be a victim of ID theft. Report errors you find immediately to the company from which you acquired the report, and get corrections made as soon as possible. Visit How to Order Your Annual Credit Report.
Keep Level of Debt Low On Revolving credit cards
- Revolving credit cards are helpful in building a higher credit score, but only if you can use them wisely. Do not own too many cards and never charge more than 30% of your credit limit on each card in any given month. My motto is "the less debt, the better!" I have never charged more in one month than I am confident I will have the funds to pay for when the bill comes. My favorite cards are the ones that offer cash back, such as Discover. Open accounts only when you need them.
Limit Credit Applications
- Limit the number of credit and loan applications. Each time you apply for new credit, whether it is a card or loan, your credit score will lose points. I own no more than three credit cards and use them sparingly.
A Monthly Budget
- A monthly budget is crucial to building and maintaining a high credit score. Overspending and not paying your bills on time will always harm your credit score. "Do not live beyond your means" is the best advice I have to offer if you want financial success. Never buy a big-ticket item on a whim. Take a few days to mull it over first. Many times when I do this, I find the craving for the item I really did not need in the first place diminishes, and the unnecessary purchase usually does not come to fruition.
If you faithfully follow these five principles, you can also build and maintain a high credit score!
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
- Banking & Budgeting
- credit score
- credit cards
- Credit Report