Having an excellent credit score adds huge financial value to your life. Not only does it help you get approved for big loans, such as mortgages and auto loans, but it also ensures that you’ll get a lower interest rate and monthly payment. And, you’ll be able to qualify for better credit cards with higher credit limits. Just make sure to use your credit wisely with these tips!
How to Get an Excellent Credit Score
- Make more than the minimum payment. Even if you make your payments on time, it’s not enough to just pay the minimum. Paying the minimum will only increase the amount of interest you owe over time and increase the duration of your loan. But it is important to always make your payments on time. Payment history makes up 35% of your FICO Score.
- Reduce the amount of debt you owe. You may want to take out a consolidation loan if you owe a balance on various credit cards. This way, you can wipe your credit debt clean and just make one monthly payment on your loan. This will, in turn, increase your credit score.
- Keep a low credit utilization rate. Alternately, you can transfer your balances onto one credit card with a larger credit limit that has little to no interest. This way, you can make higher payments without accruing interest and pay off your debt faster. Increasing the amount of credit you have to your name only works if you’re committed to paying off your debt and not spending your available credit.
- Don’t open too many cards. Lenders don’t like to see too many credit inquiries on your credit report. It makes you look desperate for a loan.
- Dispute errors on your credit report. Check your credit report periodically to make sure there are no mistakes. If you do notice errors, make sure you report them to Equifax, Experian or TransUnion.
Make sure to keep these credit tips in mind when monitoring your credit. Although it may be a dream come true to have your credit score be above 800, it usually requires a long history. But if you continue to pay your credit card bills on time, don’t make too many credit inquiries, and keep a low credit utilization ratio, you will be well on your way to getting an excellent credit score!