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What Does It Take to Have a Good Credit Score?

Aug 18, 2007
A good credit score is a huge advantage when it comes to borrowing money. It can mean the difference between paying 5-6% interest on a mortgage and paying around 9% on a mortgage. It can have similar or even great impacts on other kinds of loans. It's worth having good credit.

A the best credit scores are in the 720-850 range, although scores over 700 are still pretty good. Go beneath a score of 560 or so and you are looking at paying a lot more when you owe money.

How Do You Get a Good Credit Score?

Be good with your credit, of course. That's the simple answer but there's a bit more to it than just that.

If you have no credit at all, start out by establishing your credit with a card you use monthly and pay off. It will show that you know how to use credit. If you want to buy a home, having some sort of credit history is vital. Just one card is necessary, and avoid paying a fee if at all possible.

If you can't avoid paying a fee, deal with it for six months to a year, then ask for it to be removed or choose a new card that won't charge you a fee. There's no point in paying a fee any longer than necessary.

The one vital ingredient to having a good credit score is treating your credit right. The first thing you need to do is use it wisely. Most important is to always, always pay your bills on time.

You also should do everything you can to keep your debt load down. This means try not to use more than 30% or so of your total credit limit available on your cards. Do not max out any of your credit cards.

Go Beyond How You Use Your Credit Cards

There's one very important step to maintaining a good credit score that all too many people skip. In the past it was no doubt in part because it cost money to do so.

But now it's free. This would be checking your credit report annually. Everyone has a right to get their credit report for free once a year from each credit bureau. If you want to be sure that your credit is where you think it is, you need to do this.

Annual Credit Report was created by the three credit bureaus to offer a centralized place for you to ask for your reports. You do not need to ask for all three at the same time, although you can. This is the only authorized site for ordering the free credit reports that you have a right to every year.

Read over your credit report. Note any discrepancies. It is not uncommon to have several. Dispute these as necessary.

Doing this will also help to protect you from identity theft, or at least stop the problems early on. If you become aware of an issue with fraudulent use of your identity early on, there should be fewer issues to fix. It's well worth the effort.
About the Author
Stephanie Foster blogs at http://credit-blog.findcreditonline.com/ about using your credit wisely. Her site offers a variety of credit cards for good credit .
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