Good Credit? 5 Tips to Keep it That Way

You worked hard to build up your credit and were rewarded with one of the best credit cards for good credit.

But now you have the challenge of keeping your credit score up.

A good FICO score ranges from 690-719. Credit cards for good credit have low interest rates and include opportunities to earn rewards.

But, little financial mistakes you make can add up to big negatives on your score. If you want to maintain your good credit, here are five ways to do it:

Pay all of your bills on time

Don’t wait until the last minute to pay your bills or let due dates pass. You need to pay all of your bills on time, including your credit card, car payments, student loans, utilities, internet, cell phone, rent or mortgage and more. Late payments will be reported to credit-reporting agencies, and before long you’ll see dings to your credit score.

An easy way to make sure your bills are paid is to set up automatic payments on all accounts.

Keep an eye on the amounts you owe

The amounts owned category of your credit report is based on your total debt and credit limit-to-debt ratio. Carrying a high limit that creeps too closely to your credit limit can hurt your credit score. It’s more important to pay your bills and keep a low debt. You should aim for a credit-limit-to-debt ratio of 70:30.

Don’t open several accounts at once

Just because credit cards for people with good credit are available to you, that doesn’t mean you should open too many at once. Even if you want to collect different rewards credit cards or you want to get a retail credit card to save a percentage on your order at checkout, you shouldn’t do it. Opening a few different accounts at once means hard inquiries will be made on your account, which dings your credit score. It also doesn’t look good on your credit report to rapidly increase your credit limit.

Don’t take out cash advances

There are always scenarios where plastic just won’t cut it and you’ll need some cash. Your good credit credit card may offer cash advances, but it’s not a good idea for you wallet or your credit score. Fees and immediate interest accumulation make these cash advances more difficult to pay back, which leaves you vulnerable to default.

If you do use a cash advance, make sure you have the money elsewhere to pay it back right away. Otherwise, lenders will report your default to credit reporting agencies, which will lower your credit score.

Don’t ignore your credit report

You may have good credit now, but if you don’t keep a close eye on your credit history, you might miss errors that could seriously affect your score. Remember that you can check your credit report three times a year, once at each of the three credit-reporting agencies: Equifax, Experian and TransUnion.

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Good Credit? 5 Tips to Keep it That Way

You worked hard to build up your credit and were rewarded with one of the best credit cards for good credit.

But now you have the challenge of keeping your credit score up.

A good FICO score ranges from 690-719. Credit cards for good credit have low interest rates and include opportunities to earn rewards.

But, little financial mistakes you make can add up to big negatives on your score. If you want to maintain your good credit, here are five ways to do it:

Pay all of your bills on time

Don’t wait until the last minute to pay your bills or let due dates pass. You need to pay all of your bills on time, including your credit card, car payments, student loans, utilities, internet, cell phone, rent or mortgage and more. Late payments will be reported to credit-reporting agencies, and before long you’ll see dings to your credit score.

An easy way to make sure your bills are paid is to set up automatic payments on all accounts.

Keep an eye on the amounts you owe

The amounts owned category of your credit report is based on your total debt and credit limit-to-debt ratio. Carrying a high limit that creeps too closely to your credit limit can hurt your credit score. It’s more important to pay your bills and keep a low debt. You should aim for a credit-limit-to-debt ratio of 70:30.

Don’t open several accounts at once

Just because credit cards for people with good credit are available to you, that doesn’t mean you should open too many at once. Even if you want to collect different rewards credit cards or you want to get a retail credit card to save a percentage on your order at checkout, you shouldn’t do it. Opening a few different accounts at once means hard inquiries will be made on your account, which dings your credit score. It also doesn’t look good on your credit report to rapidly increase your credit limit.

Don’t take out cash advances

There are always scenarios where plastic just won’t cut it and you’ll need some cash. Your good credit credit card may offer cash advances, but it’s not a good idea for you wallet or your credit score. Fees and immediate interest accumulation make these cash advances more difficult to pay back, which leaves you vulnerable to default.

If you do use a cash advance, make sure you have the money elsewhere to pay it back right away. Otherwise, lenders will report your default to credit reporting agencies, which will lower your credit score.

Don’t ignore your credit report

You may have good credit now, but if you don’t keep a close eye on your credit history, you might miss errors that could seriously affect your score. Remember that you can check your credit report three times a year, once at each of the three credit-reporting agencies: Equifax, Experian and TransUnion.

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When to Apply for a Credit Card for Bad Credit

Applying for a credit card is dangerously easy. It only takes a few minutes, whether you do it online or fill out a paper form. But it’s a serious financial decision that should not be undertaken lightly.

If you’re a candidate for a credit card for people with bad credit, that’s even more reason to proceed with caution. Every time you apply for a credit card, your credit score takes a five-point hit. That’s no big deal if your credit is a healthy 750, but can make quite a difference if you’re trying to rebuild your credit from the low 600s or below.

Another part of your credit score—15%—is determined by the length of your credit history, which is calculated by looking across all your accounts to see how long they’ve been open. That means opening a new account brings down the average age of your accounts, and that can hurt your score.

Credit cards for people with poor credit serve an important purpose. Their value is not in the buying power they extend, but in the opportunity they represent to rebuild your credit. The best way to rebuild credit is to pay your bills on time and reduce the amount of available credit you’re using. That’s why your first move, if you already have credit card accounts open, is to make it an ingrained habit to pay the bills on time. Paying down debt is also very important, both for your credit score and for your overall financial well-being.

But if you don’t have any credit cards at all, it may be worth the small hit to your score to apply for a bad credit credit card. Once you’re approved, you must exercise iron control and charge no more than a third of the card’s available credit at a time. If you need to spend more than that in a given month, pay off the balance early so your new purchases don’t push your balance above that magic number even temporarily.

The bottom line is that you shouldn’t apply for credit cards you don’t need. Your score will take a hit when you hit the “apply” button, and cards for people with bad credit don’t tend to offer high credit limits, generous rewards or low fees anyway. So you should only apply for such a card if you really need one—especially if you don’t have any credit cards at all.

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When to Apply for a Credit Card for Bad Credit

Applying for a credit card is dangerously easy. It only takes a few minutes, whether you do it online or fill out a paper form. But it’s a serious financial decision that should not be undertaken lightly.

If you’re a candidate for a credit card for people with bad credit, that’s even more reason to proceed with caution. Every time you apply for a credit card, your credit score takes a five-point hit. That’s no big deal if your credit is a healthy 750, but can make quite a difference if you’re trying to rebuild your credit from the low 600s or below.

Another part of your credit score—15%—is determined by the length of your credit history, which is calculated by looking across all your accounts to see how long they’ve been open. That means opening a new account brings down the average age of your accounts, and that can hurt your score.

Credit cards for people with poor credit serve an important purpose. Their value is not in the buying power they extend, but in the opportunity they represent to rebuild your credit. The best way to rebuild credit is to pay your bills on time and reduce the amount of available credit you’re using. That’s why your first move, if you already have credit card accounts open, is to make it an ingrained habit to pay the bills on time. Paying down debt is also very important, both for your credit score and for your overall financial well-being.

But if you don’t have any credit cards at all, it may be worth the small hit to your score to apply for a bad credit credit card. Once you’re approved, you must exercise iron control and charge no more than a third of the card’s available credit at a time. If you need to spend more than that in a given month, pay off the balance early so your new purchases don’t push your balance above that magic number even temporarily.

The bottom line is that you shouldn’t apply for credit cards you don’t need. Your score will take a hit when you hit the “apply” button, and cards for people with bad credit don’t tend to offer high credit limits, generous rewards or low fees anyway. So you should only apply for such a card if you really need one—especially if you don’t have any credit cards at all.

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How Long Will It Take to Go from No Credit to Good Credit?

When you have no credit, working your way up to a good credit score can make you feel like an impatient child on a long road trip, asking, “Are we there yet?” The difficult thing about credit scores is that they take a long time to build up but mere seconds to ruin.

If you start with zero credit and get a loan or a credit card, you’ll have a credit history but not a FICO score. This can make it tough to qualify for good credit credit cards. After six months of having a line of credit, you’ll have a FICO score, but it won’t be a perfect 850. If you make all your payments on time and borrow wisely, though, you could have a score over 700.

What can I do to improve my score right now?

Here are some ways you can give your limited credit history a boost:

Inherit your parents’ good credit

If your parents have good credit and one of their cards reports authorized user activity to the three credit bureaus, ask if they’ll add you as an authorized user. If they do, it will help diversify the types on credit on your report and improve your score.

Learn what counts

If you just got a credit card, take the time to learn how credit scores are calculated so you won’t make a rookie mistake, like forgetting to make a payment or hitting your limit.

Keep up the good work

Unlike bankruptcies and late payments, a good credit history stays on your credit report forever, as long as the accounts stay open. Make sure that you’re putting your best foot forward, even when no one’s pulling your score.

Age matters for credit scores

There’s one thing that all borrowers with perfect FICO scores have in common and younger borrowers lack: age.

Among the 0.2% of credit card users who have a perfect 850 credit score, the average age was 61, according to a 2011 report by SubscriberWise, a risk management firm. These elite borrowers had credit card files that were 30 years old, on average.

If you just got your first credit card, you’re not going to have a score over 800, no matter how hard you try. Instead of getting frustrated, make building your credit a long-term goal.

Keep accounts open — even ones you don’t use that often — so lenders can see your good borrowing behavior over time. Pay your bills punctually. Use less than 30% of your credit limit. By starting all these good credit habits early, your credit score will improve down the road.

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How to Transfer a Balance from a Bad Credit Credit Card

If you’ve racked up some debt on a credit card, but have also improved your credit score by making consistent, on-time payments, you may be wondering: How do I transfer a balance from a bad credit credit card to a regular card with a lower interest rate?

A balance transfer can save you some serious cash on interest costs, especially if you transfer your debt to a card that offers a 0% APR period. Here’s what you need to know.

How balance transfers work

When you do a balance transfer, you are basically paying off your existing credit card(s) with a new one, hopefully with a lower interest rate. This will help you save on interest costs and hammer down the principal of your debt.

For example, if you’ve been paying 20% interest on your bad credit credit card with a $5,000 balance and paying just the minimum monthly payment of 2% ($100), you’ll end up paying $5,840 interest, according to TheCalculatorSite.

Transfer that balance over to a regular credit card with a 0% APR period of 12 months or longer, and you can take a big bite out of your credit card balance before any interest is charged.

Find a card that best suits you and apply

Keep in mind that balance transfers typically cost 3% to 5% in fees on the amount you are transfer, so a $5,000 balance transfer could cost anywhere from $150 to $250.

Factor in the length of the 0% balance transfer period versus the fee. If it’s going to take a while to pay off your debt, it’s best to look for the longest 0% period possible, because the interest savings will likely outweigh the fee.

If you plan on carrying a balance after the 0% period ends, you’ll need to consider what the ongoing interest rate is. And if you plan on making regular purchases on the card, see if the card offers any rewards on your spending.

Transfer your balance to the new card

Once you apply and get approved for the card, you’ll be able to do the balance transfer. Most banks allow you to complete a balance transfer online, but you can always contact the bank that you are transferring the balance to and ask them to help you.

Keep in mind that you’re still required to make minimum monthly payments on the new card. Failure to do so can result in a cancellation of the 0% APR promotion, so this is crucial. Consider setting up automatic monthly payments to be drafted from your checking account.

When it comes to your old card, continue making the minimum monthly payments if you still have a small balance after the transfer. If the card’s paid off in full, don’t cancel it: you’ll want to keep it open to maintain a low credit utilization ratio, which should help your credit score. But avoid running up new debt on the old card at all costs, as you’ll cancel out the benefit of the balance transfer and put yourself back where you started.

Transferring a balance from a bad credit credit card to a traditional card with a 0% APR promotional period can be a very smart way to pay down your debt. You just need to find a card that’s a good fit for your own personal situation and continue to make payments on time.

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Credit Card Debt vs. Student Loan Debt: Which to Pay Down First?

For college graduates with student loans and credit card debt, paying off what you owe can be a daunting task. But with a solid plan, it doesn’t have to be. One of the first things you’ll have to hammer out is what you’ll pay down first—your credit card bill or student loan debt.

How to get started

Financial experts agree that you should always make at least the minimum monthly payment on both your credit card and student loan accounts. Paying on time will ensure that your credit history remains in good standing.

After that, credit card debt should be your top priority when it comes to making extra payments. The reason is simple—federal student loan rates are almost always lower than the interest you’ll pay on credit cards. The average interest rate on new credit cards in December topped 14%. By comparison, federal student loans for the 2014-2015 school year carried a rate of 4.66%.

If you can’t pay

Keep in mind that if you run into a financial hardship, you’ll have the ability to defer your student loan without hurting your credit rating. In some cases, the federal government will also pay your interest fees during a deferment. These options are not available with a credit card.

On the other hand, in the unfortunate event that you have to file for bankruptcy, your unsecured credit card debt can be discharged, or forgiven, by a court. Student loan debt can almost never be dismissed through a bankruptcy filing.

Verdict

On balance, it’s clear that paying down credit card debt, starting with the card that carries the highest interest rate, should take precedent over your student loan.

One method that will help you reduce and manage your debt is to apply for a 0% balance transfer card. That will allow you to transfer your high interest credit balances to a card with 0% APR introductory period.

But keep in mind that your 0% interest rate will eventually expire. That is why it’s important to pay off all or as much of the debt you transferred before the expiration, or you won’t be saving much money at all—money that you could have put toward paying off your student loan.

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