Last post we talked about how to save money FAST. Staying on the money trend let’s talk about credit scores. Credit scores are something you hear more about when you start becoming an adult, and if you wait till you’re already and adult to think about it, it’ll be tough to catch up. This is how I built my credit score to nearly 800 in less than 2 years.
What is Credit Score?
Google defines credit score as ” A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of the person. … Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt.” aka good credit gets you lower interest rates on loans, higher credit limits, and approval for special loans.
Can Credit Cards Hurt Your Credit Score?
Yes and no. Credit cards, credit card limits, and limit utilization can increase your score faster then anything else, but they can also hurt it even more. I have 2 cards with a combined $11,000 limit that I use in place of debit cards. If I am putting $20 worth of gas in my car, I’ll move $20 from my checking account to pay off the credit card balance. I never carry a balance over from month to month. This style of card usage takes discipline and a little effort, but it has raised my credit over 172 points in less then 18 months.
Building Credit From Your Bills.
For some people building credit is really hard because it takes credit to build it. My favorite tool for builidng credit when you have no card is to sign up for a service like eCredable. “eCredable® uses all the bills you’re currently paying like rent, utilities, mobile phone, cable/satellite TV and insurance to create a credit report and credit score you can use to help you qualify for credit and loans. AMP stands for “All My Payments” It is basically a service that tracks your bill paying from month to month and can generate a report for lenders to prove you have a track record of bill paying on time. There is no annual fee for the basic plan, plus they work with major companies to offer things like car loans and credit cards through the site.
Credit Is a Skill
Getting a 800 credit score is no easy task. It takes years and years of building, monitoring, and working your debt to reach that mark. Credit building is also a skill that takes time to master. Learning how to juggle debt and income is not easy but with the right tools, even you can learn to be a credit ninja. I personally use Credit Karma to watch how my weekly actions effect my score and what makes it change from pay period to pay period. Things like hard pulls, soft pulls, loan payments, credit utilization, account ages, and number of accounts can be seen there. The website also gives me suggestions on cards and loans I qualify for and the likelihood I will get them.
Those are my tips, what are yours? Do you believe in credit cards? Let me know below.