Credit Score Essentials: What Everyone Should Know

If you want to set yourself up financially, it starts with some basic things like saving your money and building up your credit score. If you want to achieve financial stability that will give you peace of mind, here are a few things that you should know as you start building up your credit:

On-time payments matter

If you’ve opened up a line of credit already, then you’ve heard just how important it is to pay your credit payments on time. However, if you’re new to this rodeo, you may not realize just how important on-time payments are.

You can improve your credit score in an instant by being faithful with your credit payments, but if you’re late on those payments, you can bring all that hard work down—not to mention, you can also get a credit check and your actions reported to a credit bureau. While it may be hard to stay on top of your payments, it makes a world of difference for your future.

Opening up too many cards isn’t smart

While you want to have more than just one card as you strive to build better credit, you also want to avoid opening too many cards that it’s hard for you to keep up with. Be mindful when it’s time to get a new credit card and pay attention to things like interest rates and more. While you will want to have a few credit cards, instead of just putting all of your credit eggs in the retail CC basket, diversify your credit through things like payments for utilities, mortgage loans, and auto loans.

Try to avoid spending too much of your limit

How much you use your credit cards also matters. While you may have a high limit available to you, that doesn’t mean that you should use it all. Using a high amount of your credit limit doesn’t bode well for your credit score. The rule of thumb is typically to use less than half of your credit limit. A lot of people tend to use 50% and more, but for those striving for a better credit score, it could be wise to try to keep it at a base of around 30%.

Try to avoid applying without certainty

Here’s the thing about applying for new credit cards or loans—the inquiries appear on your credit report. So, just willy-nilly applying may not be the best idea if you’re trying to avoid getting too many inquiries. A good rule of thumb is to try to avoid opening more credit cards or applying for loans unless you could benefit from them for your financial well-being and future. You will be offered credit cards everywhere you look. Be mindful of accepting ones that you don’t need.

Time matters


While you may not be able to help your credit history length if you just started working on your credit, make sure you stay with it. Say that you’re just getting out of school and that you’re ready to start building towards a stable future. Getting started with your credit, even if it’s just opening up one credit card, is a good idea.

Take your time making financial decisions so that you’re making the best choices for a financially sound future. It’s easy to see credit cards as free money, but young people tend to get into CC debt without some good financial planning, so consider talking to a financial advisor to help you plan for your future.

In Conclusion

If you want to succeed in financial planning and building up a good credit score, take time to understand the pitfalls that many people fall into when it comes to credit card use and striving to achieve a great credit score. It will save you financial heartache down the road.