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How to Build Kick-Ass Credit Score

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 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


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Comments (15)

I’d also like to add, if you decide to keep a credit card dormant, make sure you set up alerts on the card. If you’ve set up auto pay or if there are any fraudulent charges, you’ll know right away.

Excellent tips and well written Shilpan!

I like your tip, MC! You should not allow identity thieves to ruin your credit score.

Great tips, Shilpan!

I’m a big fan of credit cards because of the ridiculous sign-up bonuses available to American citizens.

I signed up for a British Airways Visa a few months ago that gave me 100,000 frequent flyer miles. Since it only costs 25,000 miles to fly roundtrip from Boston to Dublin on Aer Lingus, one credit card signup bonus gave me enough miles for four roundtrip flights to Europe! My wife is Scottish and we visit her family at least once a year so these miles will save us thousands of dollars!

I pay off my balances in full every month and I don’t need to use my credit for anything else in the near future (I don’t take out car loans or anything and I already have a mortgage) so I am able to take advantage of these great credit card perks, all thanks to my excellent credit score.

As you mentioned though, “old is gold” so I rarely cancel cards and I limit how many new cards I sign up for in a year so that I don’t decrease the average age of my credit by too much.

I completely agree that having a kick-ass score is a very important and worthwhile goal. Nice post!

Agreed. You can use credit cards to your benefit by being a prudent user. Thanks Brandon!

Adding multiple types of credit helps a lot too. My credit score got a nice boost a few months after I got my first car loan & jumped again once I added a mortgage to my credit report.

Regular mortgage payment definitely propels your score upward! Congrats!

Thanks for sharing these great tips!

Thank you for stopping by!

Old is gold is a great tip that I don’t think people pay attention to. I can’t tell you how many people I’ve bumped into talking about how they closed all their old cards and signed up for new ones because they didn’t know they could call to extend limits, change rates, etc. Great tips to get someone started if they are looking to get that credit score higher or just healthy!

Agreed! Most people don’t think about the fact that length or history of your credit plays an important role to create a kick-ass credit score.

Great advice! Paying on time is definitely one way to boost your credit score. A friend of mine recently told me that his credit score can’t be perfect because he pays all of his bills on time, probably isn’t true though.

I can’t agree with you more, Brett!

[…] How to Build Kick-Ass Credit Score | Street Smart Finance on Street Smart Finance […]

Good tips. The thing that always gets me is that when I check my “credit report card” it tells me I don’t have enough sources of credit. I have three credit cards, a mortgage that was paid off, a car loan that was paid off, and an installment line open. How many more lines am I suppossed to open before I have had enough sources? Crazy to me!

Here’s my principle on borrowing money. Pay before you borrow again.