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3 Simple Tips for Building Good Credit

posted Oct 20, 2010 1:46 PM by Asinka Fields   [ updated Oct 28, 2010 4:57 PM ]

In today's society, having a good credit score is very important for leading an easy life. To check my credit, last week I got an Equifax 3-in-1 Credit Report (from 3 major bureaus). While purchasing my credit report, I used an Equifax Promotion Code which saved me a few dollars. I love to save money. Why? It buys me time which I can spend doing things I am passionate about. 


Since I have an excellent credit score, many friends ask me about its secret. The good news is that there is no secret. I simply follow these three easy tips:

1. Pay Bills on Time 

Pay Bills on TimeI always pay my bills on time. Automatic online bill payment is my saviour. At the end of a month all my bills are paid automatically from my online checking account. Most banks provide free online bill payment. It's a life saversince I don't have to spend time tracking all my bills and manually scheduling or mailing payments.

Failing to pay bills on time severely impacts one's credit score. And once it appears on your credit history, it sits tight for 7 years after which it gets erased. So for 7 years you have to bear the brunt. I'd suggest you to use automatic bill payment service or online reminders (via Yahoo or Google calendar) to get your payments in on time. 

2. Not too many credit cards or loans 

I usually have about four to five credit cards at a time. They constitute my revolving credit. I rotate my credit cards and use them for purchasing everything that I consume. I never use cash. Most of my cards have rewards program so I make sure that I get at least 1% cash back on my purchases.

Usually three credit cards, two loans and a mortgage are seen as a responsible amount of credit. However each creditor is different and might have a different set of metrics for evaluating their interest rates based on credit scores. 


3. Carry a balance on my card which I pay off in full at the end of the month  

Carry a balance on your credit cardI carry a balance on my card for the card's grace period which is usually 30 days for all of my cards. At the end of a month I pay off my balance in full. Also, I usually never go over 30% of my credit limit with my purchases. Borrowing till you max your credit limit usually has a negative impact on your credit score.

Here my intention is to show credit card companies that I buy on credit and then pay off my bill responsibly. In short, I have driven home the message that I am a responsible borrower. Lenders love that :). 

Now that you know my three simple ways to a stellar credit history, I wish you all the best to a fabulous credit score.

EasyPeasy Tip: To track your progress, remember to check your credit history at least twice a year. And if you are a saver like me use an equifax coupon. After all your money is precious. So is your time!