We all use credit cards.We use them for shopping, paying bills and what not.
With most of the societies turning cashless, it is must to have a credit card.Since you are reading this article, I am going to assume that most of you actually use credit cards.
You are here to discover ways to boost your credit score.Well, congratulations, because the knowledge you will get from this article, if applied properly will keep you ahead in the credit game.
Once you know how to get an insane credit score, and for the better part maintain that, you will be like a Hollywood star for bankers and credit agencies.
You will get amazing perks everywhere, which are usually denied to the ‘common folk’.
While others may struggle for credit, for you credit will be available at command.
Feels great!Of course, it should feel great.Who does not like to be treated like a king or a noble.
Many of you many now appreciate the importance of a good credit score in our world, which apparently is becoming increasingly credit based and cashless.
But before moving to the tips, let me what a credit score is and how is it composed?
A credit score is a score awarded to a user of the card( that’s you)based on your past performance against certain heads.
A credit score basically reflects your credit worthiness to banks ans similar financial institutions.
Let’s look at this pie chart.
The chart shows the various heads and the weight-age assigned to each head.
You can read more about it here
There are many technical aspects that go into credit score computation, but I am not going to go into the details here, as it will not help you much.
I want you understand the underlying fundamental concept that makes you ‘credit worthy’
So get ready readers, for my top 5 advice, to achieve an awesome credit score.
1) Have multiple credit cards
Having multiple credit cards is a great way to boost credit score.Owning multiple credit cards should be your number one strategy to begin with.
When you have multiple credit cards, you are able to consume more without upsetting the mathematical relations that go into your score computation.
Let me explain to you with an example.
Suppose you want to buy an iPhone worth $500.You also want to finance your utility payments and rent worth, say, $1000.
With two different credit cards, you can finance both these needs, simultaneously, without the obligation to pay back at the same time!
Read carefully in here.With a sing card, you will have to pay $500+$1000=$1500, in order to get rid of the debt at any set time of the month(usually decided when card is awarded ).
If you pay using two credit cards, you will have to pay back on two different dates and two different amounts!
Great Right.You will also be able to enjoy benefits provided by different companies in the credit card market.
Be careful though, do not acquire more than 5 cards as it will become very difficult to manage.
Also ensure that you increase the number of credit cards you possess slowly.
You would not want yourself to be someone who goes from pillar to post requesting a credit card!
That gives a very negative impression about yourself.
Let’s now jump to my next tip.
2) Push your credit limits
If you are going to apply for your first credit card, there is a good chance that your limit will be low.
By limit I mean the amount of money worth goods that you can buy.
That makes perfect sense.
See, by offering you a credit card, someone out there (the financial institution) is taking a risk.
Since you have no history of credit, they know nothing about you, which makes you as a customer ‘risky’ to them.
Credit score is nothing but a trust score
To enhance your trust score, you must start maintaining a good credit history.
By increasing your limit on each of your card, slowly and periodically, you set up a system, which ensures you always have a high credit score!
Let me explain this to you using an example.
John has credit card with a limit of say, $3000.
Charlotte on the other hand, owns a card with a limit of $5,000.
Lets say both of them decides to go on a vacation.
The cost of vacation per head comes out to be say, $2000.
Now you see the math unfold.
John utilized about 67% of his credit limit!
while Charlotte enjoyed her trip utilizing only 40% of her limit.
This puts her in a very comfortable position, both financially and psychologically.
I hope you got my point in here.Make a request and get an increase in your limit.
You can get further information on credit limit increase here
Lets now move on to tip#3
3) Card isolation
Friends, let me give you an important insight.
In financial matters, isolation is important to ensure disciplined growth and avoid excess.
You can go to my article on saving money, where I had discussed bank isolation here.
With credit card isolation, you will create a system which will prevent you from abusing your card limit.
You may designate one card for utility payments, one for miscellaneous purchases, and one for important purchases of your life.
You see, in this way you are programming yourself to use your credit for specific purposes and hence, your score will always be high.
It also helps you prioritize your finances and time your purchases in advance to avoid any credit burden around your neck.
Nothing makes you feel better than being financially free
4) Make strategies for your purchases
This one will not be easy.
In my previous tips, I provided you with systems, but in this case you have to build this habit.
Friends, good habits leads to great wealth.
This one habit is something you have to work upon.
Make a habit of creating a wish-list of items that you want.you can use spreadsheet or paper.
Prioritize the items on the list and time the purchases accordingly.This will allow you to use your credit card very efficiently.
It will not only boost your score, but also inculcate a good value of minimalism in you.
You are never going to buy stuff that you hardly use or throw after using a couple of times.
By the way you can thank me for this by sharing this article!
OK friends, lets head towards the final tip.
5) Pay on time.
This is the most important tip that I can give you.
If you cannot follow this step, forget everything I just said, close the tab, and browse something else on the net.
On time payment is must for maintaining a good credit score.
Don’t give me or yourself any excuse for not paying on time.
If you can’t pay back on time, better not own it.
Don’t let your hard work in building the systems, be jeopardize by non-payment of dues.
If you follow theses tips, trust me you will never have a huge debt to worry about in the first place, hence you will be having no concrete reason to default on payments.
That’s it people, I hope you liked my tips and will follow them.
Please share it on social media if you liked my article.
I will appreciate the love.