Tuesday, July 22, 2014

How to get in the 800 Credit Score and Above Club in Eight Steps

Ever wonder what people do to get credit scores that are off the charts?  Well I can tell you because my score is over 800.  

Here's a sampling of what I've done.

1. Open a revolving credit card account albeit with a small limit ($450-$600) first thing in college

2. Take out student loans - but think long and hard about getting student loans where the total amount exceeds the amount you expect to earn in a year with that education.  That is why I picked accounting instead of art.

3. Pay the revolving credit card balance in full, every month.  Never pay the minimum.  Why pay interest?

4. Upon graduation, start paying off the balance of your student loans every month.  Start with the minimum, and then increase the monthly payments little by little when you get a job.  Set up automatic payment and get a discount off the fixed interest rate.

5. After being upset that I wouldn't get a credit increase on my first card, despite proving I paid on time and in full for many years, I applied for another revolving credit card with a higher limit and CASH BACK.  Eventually the first card closed on its own.  So far I have not applied for another card because they kept extending my limit so I did not need another card.  

6. Charge any expense I'd be making anyway to the credit card - groceries, bills, gas, etc BUT I PAY IN FULL AND ALWAYS ON TIME.  I NEVER EVER pay the minimum and I never pay interest.  I also NEVER have anything go into collections including medical bills, rent, magazine subscriptions etc.  

7. If I am eligible for an increase in my credit on my card, I always say YES.  I want to prove I can borrow more and still pay back in full what I borrow.

Last but not least...

8. NEVER CHECK YOUR OWN CREDIT.  It lowers your score no matter what you read online saying that it doesn't.  It does.  Sounds extreme but I assure you people in the 800 club don't do this.  There are better and practical ways to prevent identity theft such as reviewing statements on all your accounts every month, sometimes weekly.  And when you do apply for a loan, you get your credit checked there and can clear any discrepancies from reviewing the report. 

Follow these steps and enjoy the best interest rates offered on loans that do matter - a car and a house. 

PS:  Anyone who tells you to never get a credit card is clueless with managing money in general.