First Person: My Nearly Perfect Credit Score Helped Me Obtain a Loan for a New Car

Yahoo Contributor Network

When my 1993 Oldsmobile broke down last June, I needed to take out a $15,000 loan from my bank to purchase the new car I wanted - a 2012 Scion IQ.

Due to my 825 credit score, I was quickly approved for the loan, and given a great interest rate.

Having a great credit score was essential in this situation, and I knew from a young age that building it up over time would come in handy for situations like this. Less-than-stellar credit can hurt, as great credit is needed to make a large purchases that require a loan.

It took me close to a decade to achieve near-perfect credit, and there are some financial rules I live by to ensure that my credit score stays high.

I only have one credit card -- the Chase Freedom Visa signature card.

I always pay my bills on time, and one thing that helps me is online banking. Instead of making one large monthly payment like most credit card holders do, I pay off my credit card once every four or five days. This helps me pay my bills on time, which in turn, raises my credit score. By making a payment once every few days instead of once a month, it reduces the overall debt on my credit report.

A common myth is that you have to pay credit card interest to achieve a great credit score, but I believe that is false. I never paid interest and I maintain an 825 credit score.

I also use my credit card very often, and I never hesitate to charge very small purchases. Even when I pick up my daily coffee from Starbucks, I pay via credit instead of cash. It may sound silly to use your credit card for purchases less than two dollars, but it's a quick and easy way to build up your credit score.

You can't raise your scores if you don't make purchases using credit. Credit scores predict how well you're likely to use credit in the future by how you've used it in the past.

By making dozens of small purchases with my credit card and then paying it off in a timely manner, I show lenders that I handle my credit well enough to earn a good score.

I also never max my card out. I have an $8,000 monthly limit, but I keep my payoff balance at approximately 25% of my credit limit. This builds my credit score, while also preventing me from racking up a huge payment that I wouldn't be able to pay in a timely fashion.

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