By: Bill Rice
How to Achieve Excellent Credit There's a big difference between knowing and achieving.
Stephen R. Covey understood this significant gap when he penned his timeless guide to becoming more effective in attaining your life goals. In his classic, The 7 Habits of Highly Effective People, he outlines the seven habits that help effective people achieve more frequently and with greater consistency.
That's really the secret to translating goals into realization. Building the right habits will translate into predictable outcomes... outcomes aligned with your goals.
In this case, let's consider folks with excellent credit scores. Maybe there are a few habits you can pick up to help improve your own credit score.
1. Spend less than you make. It all starts here. Credit scores are most heavily weighted on how much you owe and how you pay back what you owe. Naturally, if you make a habit of spending less than you make, you will rarely have a problem paying your bills.
2. Use credit, but don't rely on it. One of the common mistakes people make with credit is looking at it like cash. People with excellent credit rarely buy things they can't afford on credit. Instead, they use credit to leverage their money.
3. Never miss a payment, ever. Paying your bills is the single biggest factor in determining your credit score. Those with excellent credit scores never jeopardize their score by delaying or shorting a payment. If you're absent minded or forgetful, set up reminders and alerts! If you're running short this month, skip eating out or grabbing drinks after work. Make sure you never, ever miss a payment.
4. Open only the credit you need. There are a few games you can play with opening multiple credit accounts and credit utilization; however, folks with excellent credit rarely stockpile credit accounts. Ultimately, having a couple of good credit cards and only adding credit when and as you need it is the best strategy.
5. Are super choosy with credit accounts. Not all credit accounts are created equally. Mortgages, auto loans, and premium credit cards (often offering lower interest rates and rewards programs) are viewed more favorably by lenders and credit score algorithms than a report full of prepaid or high-interest retail credit cards.
6. Prepare for rainy days. For most of us, rainy days will come. A job loss, unexpected medical expenses, or life simply heads downhill for a bit; whatever the reason, money can get tight from time-to-time. Unfortunately, your credit history never takes a time-out. Most people with excellent credit scores have weathered these temporary storms during their credit history. And they were saved by an emergency fund. Make sure you are stashing a little of cash for the unexpected.
7. Watch your credit like a hawk. Even the best money managers can have mistakes on their credit reports. Those with excellent credit scores never let someone else's mistake blemish their good name. You should frequently check your credit report and score for any signs of tarnishing.
What do you think? Do you have an excellent credit score? What's your secret? Leave a comment below.
By: Bill Rice