Do: Pay your Creditors on Time

This seems obvious but is a struggle for many individuals. This is actually the single worse thing you can do to your credit score becuase your payment history carries such a large weight.

Don’t: Close Old Accounts You Don’t Use

First, closing old accounts could hurt your credit history. More specifically the average of all your accounts. This is a another major factor in your credit score and closing old account will skew the average. Also, you will lower the total available credit you have and thus raise your debt to credit ratio. Another factor that will weight against you in the credit score formula.

Do: Use a Budget Each Month

You need to know where your money is going at all times. A budget is essential to ensure you pay everything on time and pay down any debt you have. This will prevent you from saying at the end of the month where did my money go?

Do: Check Your Credit

You are allowed access to your credit reports free one time a year so take advantage of it. Creditors sometimes make mistakes and you need to check to see if your report is accurage. Cleaning your report of potential errors is a great way to get an instant boost to your credit score.

Don’t: Think You Can Close An Account To Make It Go Away

Many times individual will have an account that has many delinquencies and other issues, but thinking if you close it to make not appear on your credit report is wrong. It will stay on your credit report so there are many times no reason to close it and again you might be hurting your debt to credit ratio.

Do: Shop for Auto Loans and Mortgages

Sometimes you might hear the credit myth that shopping for credit will kill your score because of the credit inquires. Well, this isn’t exactly true. Consumers are allowed to shop for loans that represent a large purchase such as a mortgage or auto loan. They are not suppose to shop for unsecured loans like credit cards. These you know the terms up front and there is no need to shop.

Well, again these are just a few and there are many more, but hopefully there will be more of these down the road for me to write about.

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The argument is sometimes made that a credit score above 800 is the same as getting a credit score in the high 700′s.   You will be classed in the same group getting the same interest rates.  The evidence can be found on sites like MyFICO where they give mortgage rates based on your credit score.  760 to 850 are all grouped together and get the same interest rates.  This makes getting a score this high there will be diminished rewards.

There is the pride aspect of having a credit score above 800.  You are one of the elite consumers in the country.  You are one of few maybe even top 5% of the population.  You can brag about how great you are with credit and you know what you are doing.  Or you could even take what you did to get a credit score above 800 and spread the word.  Help people achieve a better credit score.  Hell, why not write a book.

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To start the average American consumer is somewhere around a 680 credit score.  A good credit score is usually above this level.  This will get you a nice rate on a loan and will help to make sure you are approved for a loan.  For the best interest rates you need to be in the excellent credit score range.

You should know that scores can be as high as 850 but there is no one with a score that high.  Usually the excellent credit score range is recognized being above the 720 to 730 mark.  This will get you the best rates of interest on your loans.

Sometimes you will here the agrument that you don’t need to have anything in the 800+ range beacuse this will not get you any better interest rates.  I think it is more a matter of accomplishment.  It shows that you are one of the top consumers in the country.  Actaully individuals in the excellent credit score range make up only 13% of the population.

To get here it is not an overnight thing.  It takes dedication and time.

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