getting a good Credit Score

[bhakta]

What would be the first step to getting a good credit score? Also any tips on how to correctly manage it and increase it?

[bjl584]

Credit scores are over rated. In order to have a good credit score, you have to have debt. I would much rather have no debt and a bunch of cash in the bank or invested than have a credit score.

That's not true.

You don't need to carry debt to have a good credit score. You can be 100% debt free and have an excellent score if you manage your finances properly (charge purchases on a cc and pay off the balance in full every month for example.)

[disneysteve]

Credit scores are over rated. In order to have a good credit score, you have to have debt. I would much rather have no debt and a bunch of cash in the bank or invested than have a credit score.

I'll respectfully disagree. Credit scores affect your insurance rates. They affect your ability to get certain jobs or rent apartments. They affect your ability to get a mortgage and the interest rate you will pay. They impact other things as well.

How do you get a good credit score? Stop doing the things that gave you a bad credit score. Don't carry a balance on your credit cards. Pay all of your bills on time. Don't take on any debt unless absolutely necessary - a mortgage and maybe a modest car payment if needed.

[SeanH]

I think its a topic with a lot of misinformation. As indicated above, there are definitely benefits to having good credit - such as lower rates on insurance and mortgages. That said - I'm always a little amused when someone holds up their credit score, credit limit, or number of credit cards as some sort of substitute for wealth. None of those things are truly yours and you will lose them a lot quicker than you built them up if you don't play by the rules. A good credit score is just a indicator of consistent behavior and payment. Use credit cards in a specific manner and your credit score will increase. You do not have to pay any interest to increase your score. Once you cease to behave in the manner indicated above - consistent payment - your credit score will plummet. There's no magic to it and anyone who wants to can succeed and benefit. Are you in debt? Your credit score will be lower. Do you make consistent, timely payments on your credit card balances while maintaining low balance? Your credit score will increase. I'll repeat it because its worth saying - you don't have to pay interest to build up your score. You don't have to have "skin" in the game or give the credit card company a little bit of interest each month.

[Petunia 100]

What would be the first step to getting a good credit score? Also any tips on how to correctly manage it and increase it?

1. Pay your bills on time. Always.

2. Do not carry excessive debt. (You don't have to be in debt to have an excellent score. You do lose points if you do not have at least 1 installment debt, but not so many points your score falls out of the "excellent" range.)

3. Check your credit report every 4 months (by rotating amongst the big 3 credit agencies). Review for accuracy. Report any inaccuracies immediately.

Notice that following #2 makes it easier to follow #1.

[Johansen8]

1. Self discipline.
2. Plan on how to pay your bills.
3. Budget
4. Follow your plans

[asapcc]

Agree with the other posters who mentioned all the benefits to having a good credit score. If you ever want to buy a home, start a business or borrow a big sum of money for any reason, you'll want to ensure that you build up a positive credit history. Although it's possible to get by on cash alone, you'll definitely be limited in all your future endeavors. Employers, insurers and other entities may also use your credit score to determine rates and / or eligibility.

Others have made some good recommendations to help build your credit score. Paying your bills on-time is the key, but only certain bills will have a direct affect on your credit score. Any money that's been borrowed (ie: credit card, auto, student or home loans, etc.) will impact your score. So if you haven't taken out a small loan or applied for a credit card, this might be a good start. Of course, if you apply for a credit card with no / limited credit history, you'll pay additional fees and interest, but it will get you moving in the right direction...

[Max G]

1. Pay your bills on time. Always.

2. Do not carry excessive debt. (You don't have to be in debt to have an excellent score. You do lose points if you do not have at least 1 installment debt, but not so many points your score falls out of the "excellent" range.)

3. Check your credit report every 4 months (by rotating amongst the big 3 credit agencies). Review for accuracy. Report any inaccuracies immediately.

Notice that following #2 makes it easier to follow #1.

What she said. #1 is the key. Its the easiest to do yet so many people can't seem to do it right.

[snafu]

FICO won't give exact details but generally they divy it...35% credit history, 30% debt utilization ratio, 15% length of history, 10% new credit, 10% type of credit.

[CoolHandLuke]

beginer credit card yuk

I know one thing about credit cards, they are not here to help you, you must be smarter than the plastic. One big mistake I've made was getting a credit card that was an introductory card meaning the credit limit could never be increased, that sucks, so what do you do.... Not what I did, mistake number 2, canceling the credit card... Who knew right?!? Yeah that put a good dent in my newborn credit history, its better to just cut it in half and forget about it (after its paid off in full that is) ... I'm doing great now tho, that is about 4 years behind me, one of the ways I got back on track was by getting a card with a limit that could be increased and stuck with it, that's the thing you have to ride it out because 5 years after your first card you decide you don't like it and want another, the day you open the new card you have effectively cut your history in half, that's right because its averaged, cool huh! Gotta love it. Any way when I started anew I just used the card for gas at first, for about 2 years then my limit was raised to 5k and it didn't look so bad when I made a bigger purchase. For example: 1500.00 limit 500.00 purchase - 33.3% 5000. 00 limit, 500.00 purchase 10%, whew, had to bust out the abacus for that one! You get it.

[kellogg9]

I found the best and easiest way is to get a bunch of credit cards and learn to dilligently pay back the FULL BALANCE just a few days before the end of the grace period. That way you dont get charged any interest and you show you are good with paying back your debts.

Also, by having many cards you increase the amount of reporting by several companies to equifax/transunion which helps reduce the time in updating your score. Also assuming that you dont use much of your available credit its ideal to increase your credit limits as high as possible on each card. This pumps up your utlization ratio which is very good for your score. Again in this case its about carrying a low balance to the actual available limit.

I did this for 5 years straight and my score went to 805. That was a time when i had no other debt like mortgage or anything else. Carrying different types of debt and showing you can repay them consistently also affects your score...so my guess is my 805 had reached its peak and to push it higher i would have to seek out other types of debt.

[Bob B.]

I posted a very similar question almost two years ago. I simply paid my bills on time, and raised my score from 580 to 705 in 20 months. So, yes, do the opposite of what dropped your score.

[kayt]

Yes, paying your bills on time makes up like 35% of your credit score. Doing that right is probably the easiest way to boost it.

Also, don't close that first credit card of yours that you ever opened because it'll shorten your credit history. The exceptions are either if you've got another card that you still use frequently that was opened around the same time, or if your history has been long enough that one 20-year-old account closed won't make much of a ding.