Editions TV Presents Three Simple Steps to Building Excellent Credit

If you are considering getting a mortgage any time soon, you probably know that having good credit just isn’t good enough anymore.  You need to have excellent credit.  In fact, many lenders aren’t even lending to borrowers who have traditionally had excellent credit because they are so scared about losing any more money like they did on loans during the financial crisis.

 

However, if you have good credit, there are some simple steps that you can take to boost that to excellent credit.  Editions TV with Terry Bradshaw highlights some of the easy ways that you can get your credit to that top tier. 

 

Editions TV Highlights The Difference Between Good and Excellent

 

Having good credit is having a credit score between 650 and 750, while having excellent credit is usually having a credit score over 750.  The Editions television series shows that the difference between good and excellent can result in thousands of dollars in savings on a loan.  However, the difference on your credit report to get from good to excellent is very small.  It takes a few small tweaks and tricks to get you to the next level. 

 

Look at Your Loans

 

The first thing you should do is look at your loans.  The credit bureaus like to see a mix of credit types on your credit report.  You should have revolving lines of credit like credit cards, as well as fixed lines of credit cards like loans (mortgage, car loan, student loan).

 

If you don’t think you have a good mix of loans, you should take out a loan even if you don’t need it.  For example, if you were planning to purchase a car with cash, you may take out a loan, and then pay it in full.  On your credit report, this will look really good because it looks like you had a loan and paid it off (even though you never really needed it).

 

Since interest rates are relatively low, you could get a loan and pay it off in a few months without paying too much in interest.  This will let you have multiple types of loans on your credit report. 

 

Payment Tricks

 

There are also a variety of payment tricks that can help you boost your credit score.  Editions TV reminds viewers that the credit card companies only report the balance due on your credit card statement on the Due Date.  So, if you pay off your credit card in full before the due date, the credit card companies will report $0 owed, which looks great on your report and can boost your score dramatically. 

 

The problem is, that even if you don’t ever pay interest on your cards, you are usually paying during the “grace period”, not when the balance is due.  That is why credit card companies report your balance. 

 

This is really crucial right before you’re applying for a big loan, like a mortgage.  Say you put all your bills on one card – you monthly balance could easily be $5,000.  When applying for a loan, it looks like you have $5,000 in credit card debt, which looks bad even though you pay it off in full each month.  That is why it is so important to pay off your balance before the credit card is due, or even better use debit cards instead while applying for a loan so that you balance doesn’t look bad. 

 

Other Factors You Control

 

Finally, there are a lot of little factors that you can control as well.  Your credit report is also based on length of credit history, so the longer you’ve had credit, the better.  This is why you should never close a credit card, even if you no longer use the credit card.  It still will show up on your report and boost your score.

Second, you are also graded on your debt to credit limit ratio.  The goal is to have this as low as possible.  One way to rig this score is to call your credit card company and ask them to increase your credit limit.  This will boost your score overnight. 

17 Responses to “Editions TV Presents Three Simple Steps to Building Excellent Credit”

  1. Morse Thompson December 3, 2012 at 2:56 pm #

    Credit is very important especially things like getting a loan and buying a house. It’s amazing how much money you can save. I never heard of the paying your debt off before the due date. Hopefully that works. If you have cards that have good standings keep them open.

  2. Rebecca December 3, 2012 at 2:58 pm #

    Good article. But how long does it take a credit card company to report back the crediting agencies when the balance is due? Thanks.

  3. Thomas S. Moore December 3, 2012 at 3:05 pm #

    I made the mistake of not having a good enough balance on my credit file. All I had when I was in college was department store cards. Having installment loans like car payments and mortgage really helps a lot when looking to improve your score. Things have gotten a lot tougher with lending so just having a high credit score isn’t going to cut it. Nice post.

  4. Lilly M December 3, 2012 at 5:36 pm #

    I did not realize the importance of credit when I was younger. Now that I am 33, I see the importance of your 3 credit scores. It doesn’t matter if one of the agencies has you as a high credit score and the others do not. You have to make sure the information on all three are verified and correct before you go to make any purchases. I plan to teach my children at a young age the importance of your credit score and monitoring your credit on a regular basis.
    Great Post!

  5. Janice December 3, 2012 at 6:13 pm #

    The importance of credit should be taught in school during high school and college so that young adults can understand how important all three of your credit scores are. I unfortunately found out after I already screwed mine up.

  6. Tiffany December 3, 2012 at 9:11 pm #

    Key to remember is no matter what kind of credit you have to make sure you make your payments on time and keep your balances low. I never paid too much attention to what mix I had when I first paid attention to my credit score. As Janice stated education about credit does make a big difference.

  7. Anas December 4, 2012 at 9:52 am #

    Thank you for this article, it has open my mind about credit, exactly how to maintain our financial. Many thanks

  8. Susan Johnson December 5, 2012 at 12:12 pm #

    I thought that anything over 700 was considered excellent credit. Does this change from year to year? If you are already at 725 what can you do to improve your score?

  9. Andrew Micheal December 6, 2012 at 11:25 am #

    Basically it wasn’t until I wanted to purchase a car that I found out that my score was very low causing me to have a very high interest rate. After paying off the car loan my score improved a lot. Of course I never missed a payment and my other balances were kept in check.

  10. William Smith December 8, 2012 at 12:16 am #

    People really need to watch the debt to credit limit ratio. That can kill your score as no one really wants to lend to you when are your cards are maxed.

  11. Brandy D. December 10, 2012 at 11:58 am #

    These are simple but easy tips to mess up. A lot of people make payments on time but also just the minimum payments. The length of credit effects your score as well.

  12. Veronica December 11, 2012 at 4:03 am #

    Is it true that it is better to have a little bad credit verses no credit? I hear that a lot but just starting out I have no credit cards and no loans. How can I start building credit?

  13. Nancy Davis December 11, 2012 at 1:08 pm #

    Susan – I thought the same thing. A few years ago 700-750 could get you some of the best rates for anything. Now lenders are more cautious and want higher scores and less balances on credit card. Nice post!

  14. Maria December 11, 2012 at 11:26 pm #

    Never knew about the reporting period for you credit balances. Does it work the same for installment loans? I hear its harder to get from a 750 to 850 as you probably already are doing the right things which is the reason you have a high score.

  15. T. Scott December 12, 2012 at 2:12 pm #

    I would be happy with a 650 right about now. My wife and I are looking to purchase our first home and we need 640-675 just to get a loan and that probably wont even get us good rates. Wish I saw this post a few years ago.

  16. Carla L. December 12, 2012 at 11:35 pm #

    Very interesting topic! Credit is important but I think excellent credit is just a status quo. With a 675-750 you pretty much get what you want with good rates in my opinion.

  17. Lois P. Hicks December 13, 2012 at 11:55 pm #

    I would love to be setting at a 800 right now. Trying to refinance our home and saving 1-2% on a mortgage is killer when you look at the long term. These are really simple and effective tips to use to boost credit.