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In today’s current economy, its much harder to qualify for a loan. Now you need a very good credit score to qualify for most types of credit. So what’s a good credit score rating?

850 is perfect credit and the highest credit score rating possible, though I’ve never personally seen anyone with an 850. A good credit score starts in the 670 range. Scores lower than 670 are not considered good credit.

How to Get a Good Credit Score:

There are 5 criteria that your credit is scored upon, and they’re rather simple to follow.

1. Payment History accounts for 35% of your credit score.

Do you pay your bills on time? If you do nothing else but make timely payments, you will have a good credit score in two years. Obviously, avoiding new collections, court actions, and most easily late pays will help your credit.

Past delinquency plays the largest role in hurting your credit score. One recent 30 day late payment will lower your credit score, most likely by 20 points! A couple of late payments, and your score will drop very far, very fast. 60 day lates hurt your score even more and 90 day lates are a real issue. It is important to know that the more recent the delinquency, the more negative the effect on your score. One 30 day late last month will hurt more than even a 90 day late 4-5 years ago (5-10 points).

Make sure to stay on top of your debt. Take caution to make timely payments and take care of accounts before they are late or go to collection. Do not overextend yourself in such a way that it hurts your chances of making timely payments. If you have old late pays that cannot be disputed off your credit report, know that time does heal old wounds and your score will increase given that no new delinquencies are reporting.

Pay before the Grace Period on your Credit Cards. Creditors charge additional fees for late payments. This is a very large profit center for a bank. Now, not only is there a due date, but there is also a due time. A bank may charge a $30-$35 fee for being 2 hours late on your payments! (make sure to look at the fine print of all agreements) Also, many banks have implemented under 20 day grace periods, shortened from 30 days, to increase overdue charges. Don’t wait for the due date! Get your payments in fast or sign up for automatic debit payments online.

2. Amount Owed accounts for 30% of your credit score.

The credit scoring model calculates credit balance against your high credit limit. This is calculated in percentages. It’s important to keep your balances as low as possible. If you have a card with a $5,000 credit limit, keeping your balance below $500 puts you in the 10% range of available credit. There are thresholds in debt ratio that will make your credit score jump higher. These thresholds are 70%, 50%, 30% and 10%. If you can’t pay off your credit cards all the way, pay them down BELOW the next possible threshold. Calculate your credit limits in this way.

If you have a card with a $5,000 limit, multiply 5000 x.10 (or.30,.50,.70) You will want to pay your balance below these amounts. In this case – less than $500 (or $1500, $2500 or $3500).

Remember, the first thing to do is to check your credit report for credit limits. If your high limit is not reporting, the scoring model will use your balance as your credit limit. This means you’re using 100% of your availability. Call your creditor and make sure they correct it. Distribution of debt is an easy way to make sure you maintain a strong score. Try to have a good spread of debt with lower balance to limit ratio. For example, its better to have $2,000 on five cards than it is to have $10,000 on one card with four others paid off.

If you’re bumping up towards your credit limits, apply for more credit, or ask for an increase in credit from your existing accounts. This criteria is based on total availability, not size of availability. It doesn’t matter if you borrow $500 or $50,000. It’s how you handle it that matters. Distributing debt onto additional cards or credit lines can help you raise your score quickly.

3. Length of Credit History accounts for 15% of your credit score.

Length of credit history means how long you’ve had your credit accounts. If you’ve had an account for 15 years, it is stronger than a having a new account open for only two months. An important tip here is to never close your credit cards. Keep your old accounts open if they are in good standing, even if you don’t use them and there’s a zero balance. Remember though, you do need to use your credit lines at least every 6 months.

Accounts unused for 6 months become inactive and are ignored by the credit bureaus, unless there is a delinquent activity attached to that account. Keeping your credit lines open also aids in improving your credit availability, explained in the previous section.

If seeking to add credit, ask your card company to increase your credit limit. The best place to increase your credit lines, aside from getting a new card, is to extend your line on an old account with a good long history. Make sure they report the credit amount increase to the bureaus accurately.

One common factor of extremely good credit scores are long credit histories. Credit reports that have old accounts with a 15-20 year history are likely to have much higher scores. It is, however, possible to add an old tradelines to your credit report.

4. Amount of New Credit accounts for 10% of your credit score.

New credit means brand new accounts recently open. You do have to start somewhere, but build slowly. If you have just applied for 10 credit cards, banks tend to assume the possibility that maybe you’ve lost your job and are in need of a back up plan. Try to start with one small line of credit and build from there. Make sure that you can handle the payments consistently, are never late, and keep your balances as low as possible, or completely paid off.

5. Type of Credit used accounts for 10% of your credit score.

The credit scoring model likes to see that you have a variety of types of credit in your file. The very best placement of credit is to have a loan on a home, a car payment and a few credit cards. This credit is spread across different types of lenders and type of credit extended to you. There are a few types of credit to stay away from. Payday loans are very bad places to have credit with and your scores take a hit for having these types of high risk loans. Other very bad types of credit are the offers that allow you to have no payments for a year. These are dangerous, because the terms of the agreement may include that if you do not pay the loan off in a year, on day 366 you will owe the entire years worth of payments at typically 20% interest. This is a disaster waiting to happen. People who repeatedly go for these offers, are people who get into credit trouble. You should not have that kind of credit on your credit report.

Credit is serious business, one that can affect the future of anyone who and not to be entered into lightly. To that end, the Feds put limitations on anyone under the age 21 who is looking to get a credit card by requiring a cosigner or proof of income to cover repayment of the balance. Card issuers are also banned from offering freebies and gifts to entice students on college campuses to sign up for a card.

But is a charge card such a bad thing? And does avoidance equal more responsible behavior when the magic age of 21 is reached? Far from it! Credit literacy and good credit management doesn’t come with age but with experience. It doesn’t matter whether you’re 20 or 60 years old, money management skills are learned.

Issuers have designed cards for students and first time credit users that encourage responsible money management. For example, the Journey Student Rewards card from Capital One not only offers 1% cash back on every dollar spent but pays a 25% bonus each month a student pays the bill on time. “This card was designed to help students build their credit confidently, and at the same time we’d love to reward the students for good card use,” said a Capital One spokeswoman.

About Cosigning
A cosigner is a parent or guardian with good credit who agrees to back your credit account, making them liable for your debt if you fail to make good on paying it back. The actions of both you and your cosigner will impact the other. So for instance, if your cosigner defaults one of their personal loans, your credit rating will suffer. There is no going back on the agreement once a cosigner has given their approval.

Cost of Using a Credit Card
Just like any contract that you are considering, the terms and conditions need to be compared before signing a card agreement. The interest rate that you will pay on outstanding balances is the most costly term to consider – the lower the better. Student cards are typically higher than the general public until it’s been proved that the credit will be managed responsibly.

Learn all about credit cards and understand the cost and gain a clearer understanding of your rights as pertains to cards with this online tutorial, The ABCs of Credit Card Finances. A parent who was concerned about the lack of education for students entering the credit arena designed the curriculum. Offered by the Center or Student Credit Card Education, Inc., register for free and access interactive lessons and quizzes and beginning learning how to choose and use a card responsibly.

Many consumers use credit cards for their convenience, but those who use high limit cards tend to be more sophisticated and affluent consumers. Cards with high credit limits, generally limits above $10,000 to $15,000, are often designed to entice those high income customers. These enticements may take the form of travel rewards like free airline tickets and upgrades, cash back awards that allow those affluent consumers to recapture some of their spending, or experience rewards like special access to hard to find tickets and special seating at concerts, Broadway plays and other events.

Analyze Your Needs and Your Spending Patterns

Analyze the spending you do on your cards. If your current credit card provides a year end summary broken down by categories, analyze that statement to see which spending categories have the most activity. If you do not have access to a detailed summary, you can create your own using your credit card statements. Create a spreadsheet listing each purchase and its assigned category, or simply write the information on a piece of tablet paper.

Once you know which categories represent the bulk of your spending, you will be better equipped to find the best card. If you find that you spend only 3 percent of your money on travel, a high-dollar travel rewards credit card might not be very useful. If your analysis finds that you spend 20 percent of your dollars eating out, a dining rewards card with a high credit limit could be very rewarding.

Look for High Limit Cards to Match Your Lifestyle

Seek out prestigious high-limit credit cards. These type of credit cards tout their high levels of customer service and customization as well as their high spending limits. If you hold a regular credit card call your issuer and enquirer whether a change of card product may benefit you.

Understand the Terms and Conditions Before You Sign Up

Review the terms and conditions of each card carefully. Some high spending limit cards come with high annual fees, and you will have to decide if the perks and rewards offered are worth the extra cost. Also be aware of the tiered spending levels many of these cards use. In order to earn the highest cash back percentages and most prestigious perks, you might be required to spend $5,000 or even $10,000 annually on the card. If your spending levels are already that high, that should not be a problem, but it is something to be aware of.

Choose Your Card Wisely to Maximize Your Savings

Maximize your rewards by booking travel with the high limit card that provides the most bonus miles. Make your petrol purchases using the card that provides the best petrol rewards or cash back for fuel and car related expenses.

This article is for educational purposes only and is not financial advice. Consult your financial adviser or other professional before making a decision about any financial transaction.

When having a credit card, there are important things to take into consideration, if you want to have control over your finances and avoid getting buried in debt. Usually, the credit card won’t make you richer, but it can surely make you waste your money on interest fees and taxes you did not foresee. To avoid these situations and to secure your financial future, you should give some thought to certain aspects.

First of all, every cardholder knows that at the end of each billing cycle a credit card minimum payment has to be made, in order to avoid lateness fees and other penalties. The credit card company can also raise your annual interest rate if you are late with your payments for more than two months. This is what the banks expect you to do, just to keep on making the credit card minimum payment so that you will get to pay off your debt in a much greater amount of time. The credit card minimum payment is either a percentage of your balance due or is the result of dividing the existing balance to a certain number of months. Either way, the minimum payment is calculated in accordance with the remaining debt, therefore the bigger your monthly payments are, the sooner you’ll be able to get rid of your debt and close that account, if you cannot manage it anymore.

Think about a pay plan, consisting of constant monthly payments, which are at least twice the minimum payment. Try to stick to this plan and use all the extra money you can get in a month to pay off your debt. Just think about how much money you’ll be able to save in the long run, after you’ve paid the most part of the balance. You can also consider opening up a new credit card account, even if this doesn’t sound very wise, but it can actually prove to be very useful if you are already experiencing debt problems. When you open up a new account you’re likely to get an introductory rate of 0% APR on balance transfers or on purchases, and you can enjoy the offer for as much as 18 months. What you can do to get rid of your old debt is to take advantage of the 0 interest rate and to transfer the balance from the old card onto this one. Make a little more than your monthly payments, because without a balance at the end of the month you’ll have much less interest to pay. Think about closing down that account if the rates are too high.

Making the credit card minimum payment is not a good thing, it only seems this way for people always spending more than they can actually afford and who feel comfortable at the thought of returning the borrowed sum in a long time, little by little. But if you actually care about your financial future, remember to always pay more than the credit card minimum payment.
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