Great credit is key to getting good loans. In this market where lending is tight and money isn’t freely flowing, the only way to get someone to lend you money is with good credit. Here are a few ways to achieve this.
Credit monitoring services like ones from myFICO is very good because it automatically keeps track of your credit report and alerts you whenever there are any changes. You can of course choose to do it yourself but that’s 1000x harder.
Every year, you can get one credit report from each agency (there are three total). If you spread it out and get one from each company every couple of months, you can theoretically keep track of your scores and stay on top of it without much time in between.
You need to make sure you don’t use up all your credit all the time. This is because part of your credit score is dependent on your utilization rate, a measure of how much credit you have available versus how much you use.
Every time you apply for credit, they will ding your credit report. If there are too many within a short period of time, the score will be affected because no one with a good financial picture will keep apply for credit. If it’s not absolutely necessary, space out your applications so it doesn’t look suspicious!
Don’t let any credit card be inactive because credit card companies are starting to cancel them now. If your card is canceled, the utilization rate will automatically go down because your available credit will go down. Therefore, you should use your cards every once in a while even if you don’t need it.
Having more than one credit card will actually help your credit. Lenders will sometimes look at your credit report and deny you because you don’t have enough different forms of borrowing. They see a lack of information as a negative so even though you may have a ton of cash somewhere to pay off any loan, the absence of proof is a big drawback.
Having multiple types of debt (car, mortgage, credit card, student loans) among others is good because it shows that you are able to handle bills that come due every month. It also works the same as having multiple credit cards.