How to Follow the Steps to a Great Credit Score

Do not underestimate the value of a great credit score in today's world. A person's credit score is used in many more ways than simply to allow a lender to determine whether to approve a new line of credit for you.

It is used by many employers to decide if they to hire someone or to promote them to a level of management responsibility. It is used by car insurance companies to determine how much to charge you for your car insurance premiums. People will likely use it in other ways in the future to evaluate you, because the mindset is that your financial habits are a reflection of your overall character.

Whether your credit score reflects your character or not, it is definitely and clearly to your benefit to have a great credit score. There are steps you can take starting right now to get that great credit score. Be aware that despite what some people might tell you, it does not happen overnight. That is why they call it a credit history , because you need to establish and confirm a trend for yourself, which takes time.

There are things you can do and should be doing on a regular basis to keep your credit score as high as it can be. This will be beneficial for you and well worth your time and effort, both now and in the future. Those steps include:


Review and understand your credit report. You need a copy of your credit report from each of the three credit reporting bureaus. Since they do not share data, each of them has a very different view of your credit history. Be sure to check for errors, since the majority of consumers have inaccuracies in their credit reports, which do not get fixed automatically. They are only corrected when you point out the mistake.


Pay your financial obligations on time. This may be obvious, but cannot be overstated. The lion's share of your credit history is how you pay your bills, and payments made on time with at least the minimum payment amount will give you the best leverage to raise your credit score.


Use credit wisely. If you do carry a balance from month to month, you get the most benefit by keeping that outstanding balance to about 25-30% of your credit limit. Do not go over your credit limit ever if at all possible.


Maintain job stability. Sometimes changing jobs is not your decision, like in the case of a layoff, but staying within the same job, or if not, the same industry, is a sign of stability and will keep your credit score high. The same factor applies to your home address - longevity at the same address is a sign of stability.

Another reason for reviewing your credit reports from the credit bureaus regularly (at least twice annually) is the dramatic rise in identity theft, which is one of the fastest growing crimes of this century. You may not know it is happening to you, but keeping a close eye on your credit reports can alert you to financial activity that you do not know about.

Take the time and effort to keep your credit score as high as it can be. Consider it a labor of love, and you can only benefit from doing so in the future.