5 Habits of People with Excellent Credit
Habits like regular exercise, eating a balanced diet and getting enough sleep can keep you healthy. But what can you do to keep your credit score healthy, too?
A lot, in fact. And a healthy credit score pays dividends.
With healthy credit, you could receive lower interest rates on credit cards and loans, swifter approval when you want to refi, better card benefits, stronger bargaining power with lenders and even cheaper cell phone plans.
How do you do it? Below, five habits of people with excellent credit:
They pay bills on time, all the time. About 35% of your FICO® Credit Score is determined by your payment history. If you miss payments, it could result in a black mark on your credit report for up to seven years, although the impact diminishes as time goes on. Sign up for automatic online payments whenever possible, and set alerts on your calendar for any other bills.
They don’t close any credit cards. Whether or not you use all your credit cards, once you’ve opened them, it’s best to leave them be. When you close even one card, you can negatively impact your revolving credit utilization, the ratio of how much you owe compared to your total credit limit.
They think twice about applying for new credit. Every time you apply for new credit, it often results in what’s called a “hard inquiry,” which could lower your credit score by a few points (typically, 10% of your FICO® Credit Score is based on new credit opened, which includes inquiries and other data about new accounts). If you need new credit, be sure to pick the right card for you.
They under-use their cards. Just because you have a $10,000 (or $5,000 or $1,000) credit card limit doesn’t mean you should charge that much each month. Think about that credit utilization ratio: you want to spend as little as realistically possible percentage-wise of the amount of credit available to you.
They fact-check their credit reports and dispute any errors. Per the federal government, you’re entitled to a free copy of each of your three major credit reports once every 12 months. If anything on the report is incorrect or incomplete (such as account balances or missed payments), dispute it with the credit bureau that supplied the report.
Maintaining a great credit score is just like other healthy habits—it’s something you build up over time. And the better off you are financially, the more resources you’ll have to devote to the other areas of your life. Give credit to your credit!
It’s easy to know the score—your credit score—with Discover’s new Credit Scorecard. Get your FICO® Score, a score that 90% of top lenders use, for free, even if you’re not a customer. *See Credit Scorecard info.
FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.
Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.
Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.
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