A credit score of 800 or more seems like an unattainable goal to most people. Despite the challenges, it is possible to earn a credit elite status and join a group of financially strong consumers. Although there is no magical formula to success, there are a few roadblocks members of the 800 Club avoid.
- Accruing Interest
Credit card interest helps lenders earn a profit, but certainly doesn’t benefit consumers. When consumers only make minimum payments, their balance grows. But members of the 800 Club avoid this credit-buster at all costs. Follow their example by paying your revolving balances in full at the end of the billing cycle.
- Co-signing Loans
Helping another person secure credit is kind, but it isn’t always wise. Co-signing a loan for someone else means assuming their debt if they fail to pay. It will also add a new account to your credit reports. Consider your debt utilization, debt-to-income ratio and future goals, and then decide if co-signing is worth the risk.
- Using Credit When Cash Will Do
Credit use is a smart move if your goal is to build a payment history. On the other hand, using your plastic every time you need to buy gum or finance a big purchase can be a sign of a risky habit. Charging too much can negatively impact your credit utilization ratio, or the amount you owe vs. your total credit limit.
- Ignoring Credit Accounts
Those with good credit understand how to strike a balance between credit under-usage and credit abuse. Don’t ignore your accounts — the result could cause your score to stall.
- Forgetting to Pay the Bills
Sometimes the fact that a bill is due simply slips your mind. But forgetfulness can cost you several credit score points over time. Consider signing up for auto pay or scheduling your bills’ due dates for the same day to help you stay organized.
- Living Beyond Their Means
Keeping up with the Joneses is expensive and exhausting, and living off credit can lead to a lifetime of stress and trouble. Financial planning is a great way to learn how to live within your means and work toward the things you want.
- Ignoring the Facts
Your credit reports house many answers to your credit-related questions, and you are entitled to free copies each year, which you can get by visiting AnnualCreditReport.com. Take advantage of this opportunity rather than ignoring the facts surrounding your creditworthiness.
- Paying Full Price
Overspending doesn’t always equal opulence; in many cases, it simply means paying full price. Learning how to save money is essential when it comes to building an emergency fund, reducing debt and pursuing other goals that aid in building good credit.
- Forgetting the Five Factors
The Five Factors of scoring act as a rulebook for credit health. You can’t play the game well without the rules, and the credit elite know them by heart.
- Giving Up
It’s easy to feel defeated and helpless in the face of credit damage. Don’t get discouraged, though: there are plenty of ways to earn a better score with everyday habits and a fresh budget. Talk to a professional about your concerns and learn more about credit on our blog (don’t worry, it’s free). It may take time to improve, but your long-term stability is well worth the effort.