You do not have to be rich to have a killer credit score. A score over 800, for example, most likely lies within your reach, even if you have only modest means.To achieve a really high score, you have to understand the factors that go into it. And you need the discipline to manage your money and your credit properly.
Keep Credit Use Ratio Low
Keep your credit use ratio low. This ratio represents the percentage of your available credit that you have in use. Writing for Kiplinger, a noted publisher of personal finance advice, Kimberly Lankford recommends using less than 20 percent of the credit you have available.
Lower Credit Card Balances
Get your credit card balances down. Liz Pulliam Weston of MSN Money says that lowering your credit card balances will affect your score more than paying off other loans, such as a car loan, will. For the purposes of your credit score, the best cards to pay down first are the ones that are closest to your card's credit limit.
Fix Mistakes in Your Credit Reports
Get copies of your credit reports (see Resources), find errors and get them removed. "Pay It Down" author Jean Chatzky recommends reporting the mistakes in writing and submitting proof for your claims.
Pay Overdue Bills
Pay off any overdue bills you have accumulated, finance expert Jane Bryant Quinn suggests. With unpaid accounts, you can't have a good score, let alone a great one.
Pay Bills On Time
Start paying bills on time. This sounds obvious, but the Experian credit bureau lists this technique first. Experian also suggests paying your bills off completely rather than passing them around from card to card. To accomplish this, you need the financial discipline to spend less than your income on a regular basis so you won't be caught short.
Raise Credit Limits
Get more available credit by asking your current banks to raise your limits on your credit cards. If you don't charge more, having higher credit will improve your use ratio and thus your score, according to Kiplinger.
Don't Open Extra Accounts
Don't open extra accounts you don't need. Experian states it probably won't help to open additional credit card accounts even though it increases your use to available ratio. Too many credit inquiries in a short time may lower your score.
Use Older Accounts
Keep using your oldest cards. Those long-standing accounts give your credit record desirable stability. They will benefit your credit score more when they update regularly in your credit report.
Total Monthly Obligations
Get your monthly payments down to less than 40 percent of your gross income each month, including the mortgage. Creditors want to know you can afford your payments and will continue paying bills on time. Good habits, such as living within your means, will maximize your credit score over the long run.
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