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How to Strive for Perfect Credit

While sure, you can spend your time taking in any penny stocks to watch, but what you really should be doing is making sure your credit is in good shape so you can get the best interest rates on the market and save the most per month on your mortgage, loans, credit cards, insurance, and even securing a job these days with some potential employers taking a look at credit.  Your credit score is the first (and lasting) impression that you make with a lender, which will decide your approval or declination, not to mention the interest rate associated with it.  If you think in terms of a mortgage, a percent difference can be significant and add plenty to your monthly payment, so it’s important to strive the best credit score you can, unless you don’t care about saving money of course.

Check Your Credit Report

With as much fraud as there is these days, you can do your best to prevent your info from getting stolen like not leaving it out for too long when you’re getting gas or paying your restaurant or bar tab, but you often hear about stores getting hacked with customer info being leaked out, not to mention even a credit bureau not being secure enough, so it’s a good idea to check your credit report often, if not at least once a year where you can pull your report for free from the major credit bureaus.  In addition, you can see your score on your credit card monthly payments to make sure it is trending up instead of down.

Make Regular On-Time Payments

One of the largest pieces of your credit score comes from the payments that you make on your accounts.  Now while even missing a day past the due date could cost you a late fee or an interest rate interest, it will not be reported to the credit bureaus until thirty days late.  Even if it was a mistake and you were late that long, that blemish can stay on your file for up to seven years, making it all more important to make your payments on or before the due date, scheduling auto-payments if needed.

Reduce Debt

Just as important as payment history is the amount of debt that you have charged up compared to the available credit.  As you use up your credit utilization the lower your score will get, so if you do charge up the account, making sure you pay the full statement balance by the due date is good to keep your balance low and reduce the risk of carrying over a balance and being charged interest going forward, which could send you down a path where it can be tough to get out, the deeper you get.

Leave Zero Balance Accounts Open

If you have been in a period where you have been in debt and have overcome to pay off the account(s), it can be a huge relief and one to certainly be proud of.  It may have been a while since you have seen a zero balance and may be tempted to close the account so you don’t risk going on another spending spree or two, but you should actually avoid and keep the account open.  By closing the account, you will reduce that available credit could decrease your credit score.  Instead, try keeping the account open but cutting up the card.

Limit Credit Applications

Although it may be a small portion of your credit score, but every point matters, so every time you apply for credit and have your report pulled you can get dinged by a few points for the inquiry.  While it may not make or break an approval, that inquiry can stay on your report for a couple of years so it’s a good rule of thumb to just have your credit pulled if you are pretty certain you are going to proceed.

Try Using Cash Instead of Credit

Sure, there are good reasons to use a credit card such as good protection against fraud, not to mention earning rewards just by making the purchases that you were going to make anyways, but I understand that credit cards aren’t for everyone, especially when it comes to discipline in using the cards.  To avoid charging up your account and lowering your score, you can keep the account open but start using cash for some purchases so you can stay within your own budget and once the money is gone, it’s gone.  Sure, it may not help your credit profile, but your own finances can be more important.

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