When a person has no need to borrow they find multitudes willing to lend. — Oliver Goldsmith
Let’s face it, unless you’ve hit the jackpot or you have patience to save enough money to buy your home or a car, you have no choice but to build kick ass credit score.
Whether you want a credit card or a mortgage, you will need to go through a credit check and general approval process.
If your credit score is about 740 and you do not have a high amount of debt, it is unlikely that you will be denied credit. If you aren’t certain what your credit is, credit scores free and credit history reports can tell you what your rating is.
With that said, life is not a fair game. If you have bad credit — likely due to financial hardship or poor choices you have made in the past — you will pay much more in interest so that same financial institution can offer amazingly low rate to someone with excellent credit score.
No matter how difficult your circumstances are, you can take charge of your financial future by taking very bold steps not only to free yourself from the ball-and-chain of debt but also to build a kick ass credit score – to become a recipient of the benevolence bestowed by the very same financial institution that once punished you for your poor choices of the past.
Tips to Develop Kick Ass Credit Score
I am ceaselessly amazed at the growth of credit card counseling industry in the recent years. Most of these companies claim that they have magic wand to move you from a poor house of credit in matter of days or months. Be ware! Building kick ass credit requires discipline and persistence for a long time. In fact, it requires you to change your financial habits forever.
1. Old is gold.
In pursuit of getting out of the abyss of debt, it might be satisfying to bid adieu to the credit card you opened right after you received your first paycheck. But more history you have as a borrower or rather a prudent borrower, the better your score should be. Closing an old card not only makes you look like a newer borrower but it also reduces your overall available credit.
Instead of closing your account, cut your credit card in half!
2. Be a prudent borrower.
A prudent borrower pays off entire credit card balance at the end of the month. You should not have borrowed more than 30% of your available credit limit. Over leveraged credit is a sure sign of the risk for the lending institution, so spend only what you can pay off monthly. Make a habit to treat your credit as your cash so that you won’t spend when you run out of your cash.
3. Pay on time.
Your credit score is based not only on your credit history but also on how consistently you pay your credit card bill on time. Persistence is the key virtue to build a kick ass credit score.
4. Check your credit history.
No one has more vested interest in your financial well-being than yourself. Assuming that the world works perfectly can cost you hundreds of dollars due to something fishy on your credit report, such as loan application you never filled out or a magazine subscription you never knew about. You can get one free credit score every year from all three credit card bureaus. Read each report carefully and dispute any errors with these bureaus.
5. Ask for a credit increase.
After you establish a good credit history, call your creditor or lender and ask for a modest increase in your revolving credit line — one which requires no application process. Assume that you owe $300 on a $1000 credit limit. If you get an increase from $1000 to $1200, you just went from about 33% maxed out to 25% maxed out without spending a nickel more.
I strongly believe that paying interest is a sure path to a poor house. If you make a firm commitment not to pay a dime in interest ever for the hedonistic pleasures, you can build a kick ass credit score no matter how difficult your financial circumstances are today.
photo by: Jannet162012