Credit Score can be built by many ways. First of all, person should know the meaning of perfect credit score. Or is it achievable or not?
Credit Score (800-850) is considered perfect. Yes, it is achievable. But person has to be disciplined and calculative. It’s not too tough or not too easy. It’s all about following some rules and simple process and be consistent.
- Pay On Time (POT)
Credit Card, Loan, Utility Bill, or any payment.
Do not miss payment (one late payment 60-100 points drop)
NEVER miss due date. (if possible set up auto pay)
*Whenever you make a purchase, have same amount in your saving account, it means use credit card as a debit card. Credit card money is not your money. Use card wisely.
- Credit Card Utilization (10%-15%)
This is a key factor to build perfect score. Never spend more then 10-15 %.
Get more credit cards (3-4) But keep spending below Max. 30%
*When you will spend less than 15%, Its mean you are not using 85%. Which you can use. So your credit reporting will be perfect which will give you higher credit score.
- Don’t Carry Debt.
Use credit card monthly. But pay full balance every month.
Carrying amount will not help to build score.
*Paying full balance is very crucial because it shows you are wise spender and it shows you are purchasing only as much you are able to pay. It makes you secure customer for credit company.
- Credit Mix. (to achieve perfect credit score)
Multiple credit card (open end credit)
House loan, Auto Loan/ personal loan (instalment)
*More credit accounts, More credit reporting, More credit score. But do not have too many credit account and not able to pay.
- Need to build long credit History. (Mini. 5 years)
Do not close any old credit account.
Keep old credit card open forever.
Average credit age matters
*This is very important factor, do not close your credit account. If you have old credit card and you are not using that, just use once in 3 or 6 month. So it stays active cause your credit history is equally important like your credit score.
- Minimum Hard Enquires
Do not apply too many credit card one time.
Space out Credit application 4-6 month apart.
*Avoid hard enquires, when you are applying for a loan, company will your credit. Sometime its soft enquiry and sometime its hard enquiry. Soft enquiry will not affect your score but hard enquiry will effect and it will stay on your account for 2 years.
Summary: Payment before due date/ card utilization (15%)/ More card, more credit reporting (limit card 4-6)/ Average credit history matters/ These rules I followed to build my credit score. If you have any questions email me at