5 Little Known Secrets to Building Good Credit

Real Estate Agent with Coldwell Banker Realty RES.0808054

Having a good credit score is essential for financial success. But building and maintaining a good credit score can be difficult to understand for many people. Fortunately, there are some secrets to making the process easier. In this article, we will outline 5 little known secrets to building good credit, so you can start using these strategies right away. From budgeting your finances wisely to understanding how lenders assess your creditworthiness, these strategies will set you on the path of having an excellent credit rating in no time.

Tip 1: Pay Bills on Time

Paying bills on time is one of the most important steps to building good credit. It is also the most basic and easiest to do. Making payments on or before their due date will help you build a solid credit history, which is essential for obtaining favorable rates when taking out loans and other forms of financing. Paying bills late can have serious consequences such as late fees, penalties, and even increased interest rates. It can also reflect negatively on your credit report, which can make it difficult to qualify for loans in the future.

The best way to ensure that all of your bills are paid on time is by setting up reminders using your phone or setting up automatic payments with your bank or lender so that you never miss another payment again. You should also keep track of all your accounts in one place, so you know exactly when each payment is due and how much needs to be paid each month. Set up one day a month that you review your list of accounts and make sure each has been paid.

Tip 2: Monitor Credit Reports

It is essential to keep track of your credit report in order to ensure financial success. Checking your credit report for errors or any suspicious activity can help build and maintain strong credit. You can obtain a free copy of your credit report from the three major reporting bureaus, Experian, Equifax, and TransUnion. By regularly monitoring these reports, you will be able to spot any discrepancies that could potentially damage your credit score. Additionally, many companies offer services that provide easy access to all of your reports conveniently located in one place. One option to check out is Credit Karma. Free app on your phone allowing you to quickly and easily check your credit. One downside is that it doesn't provide access to all three bureaus, so you still need to get your free annual credit report once a year.

Being proactive about tracking and monitoring your credit is an effective way to protect yourself from identity theft or fraud. Regularly reading through each report helps you find unfamiliar accounts or changes in addresses associated with them, as well as any costly late payments that could have been overlooked when paying bills on time. Furthermore, it's important to stay on top of erroneous information like incorrect account balances, which are reported by creditors and can drastically hurt a person’s score if left unchecked. While it may seem tedious at times, keeping up with regular checks is an invaluable part of maintaining financial success and good standing with the three major bureaus.

Tip 3: Keep Balances Low

Keeping balances low is one of the best ways to build good credit. This means paying down your credit card balance each month and keeping it as close to zero as possible. Paying more than the minimum on your credit card can help you save money in interest payments, too. It’s also essential to keep track of how much you owe compared to your total available credit; a ratio less than 30 percent is ideal, and 10percent is even better. Try setting up an automatic payment plan for at least the minimum payment each month, if not more. You can also set up alerts from your bank or credit card company. Use those so you know when you have exceeded a certain percentage of spending or when payments are due, helping ensure that you don’t go over budget or miss any payments. Bonus tip: Credit reports don't have a memory. So you could owe $999 on a $1000 card today, pay it down to $100, and your score will improve as soon as that balance is reported to the credit bureaus (once a month). Now, don't charge it back up!

Tip 4: Don’t Open Too Many Accounts

Don't be tempted to open too many accounts in a short period of time. This will negatively affect your credit score and cause creditors to view you as high risk because it appears that you need more credit than you can handle. Keep your account openings to a minimum, no more than three in any one year. When applying for new credit, make sure the creditor is a reputable company with good customer service. Avoid store cards or other offers with limited features and higher interest rates unless absolutely necessary. Also pay close attention to the details of any offer before opening an account; look out for hidden fees and penalties which may come into effect if payments are not made on time or other terms are breached. Finally, always stick within your budget when shopping around for new credit so that you don't overspend on something you cannot afford. Use your inquiries for the best use possible. Don't apply for the store card to save 10% on a sweater at the department store when you want to buy a house, or a car.

Tip 5: Don't close unused credit accounts

When it comes to building good credit, one factor in your credit score is having longer-term accounts. Closing an account may seem like a good idea to avoid temptation or fees, but in reality it can actually hurt your credit score in the long run. When calculating your credit score, one factor used is the average length of time you have had an open line of credit with lenders. The longer the time period, the better, so closing accounts that are no longer used can have a detrimental effect on your financial success.

By following this tip and not closing unused accounts when building good credit, you are more likely to increase your overall success with creditors. They will see that you have consistently been managing debt over an extended period of time, something that they always appreciate!

Conclusion: Reap the Benefits of Good Credit

Good credit is an important asset in life and can provide numerous benefits, such as access to lower interest rates on loans. Building good credit takes time and effort, but the rewards are well worth it. Following these steps will help put you on the path to financial freedom by improving your overall financial health.

Once you have established good credit through consistent responsible behavior, you can reap some great rewards. You may be able to qualify for lower interest rate loans or even receive special discounts from lenders due to having a solid financial profile. Additionally, being able to demonstrate that you have managed your finances responsibly creates peace of mind in other areas of life, such as renting an apartment or obtaining insurance coverage at better rates than those with bad or no credit history at all. Finally, a good credit rating also gives you more leverage when negotiating with creditors if something goes wrong with one of your accounts; they'll be more likely to work out a payment plan rather than turning the account over for collections.


Posted by

Hey, there! Thanks for stopping by our Greater Hartford Real Estate blog. Your go-to place for all the ins and outs of buying and selling homes in the Greater Hartford area. Our aim is to give you easy tips, smart ideas from experts, and the newest information about the housing market. This way, you can make good choices and feel sure about your journey in buying or selling a house.

You know what they say, "Sigler Sold Another" – and that's not just a catchy phrase! It's our promise to stand by you and help you achieve your real estate dreams.

As featured in the New York Times article, "A Little-Known Loan Program." We know that dealing with money when buying or selling a house can be confusing, but don't worry, we're here to help you. With close to 20 years of experience in the real estate and mortgage world, we have the know-how to guide you. We'll help you find the best loan and explain any hard parts in a way that's easy to understand. If you're selling your house, we'll keep an eye out for any issues so that the people buying it are able and ready to close on time.

No matter if you're buying your first home, buying a home to rent out, or selling your home to start a new journey, we're here to help you every step of the way.

Don't be a stranger! Reach out to us anytime for some personalized advice or a helping hand with your real estate needs.


"Sigler Sold Another" – Your Greater Hartford Real Estate Experts

0 Down Plate


Comments (9)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Jon Sigler very good helpful report about little known secrets to building good credit.

Mar 05, 2023 08:54 PM
Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

Simple and valid advice Jon. Use autopay to insure you never miss a payment. Jeff

Mar 05, 2023 10:52 PM
Jon Sigler

Just making a list of your bills and checking it once a month can be a huge improvement in being on time and in turn your credit score!  Everyone has a phone in their hand, use the notes app they all come with to start!

Mar 06, 2023 05:11 AM
Charles Ross - (785)-819-6944
eXp Realty LLC Salina Group - Salina, KS
Love To Help People

Excellent  Information. Thank you for sharing. Have a wonderful day and a blessed week.

Mar 06, 2023 01:41 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Mar 06, 2023 03:18 AM
Sham Reddy CRS
Howard Hanna RE Services, Dayton, OH - Dayton, OH

Great tips, great blog Jon!!! Thanks for sharing!!!

It is essential to keep track of your credit report in order to ensure financial success. Checking your credit report for errors or any suspicious activity can help build and maintain strong credit. You can obtain a free copy of your credit report from the three major reporting bureaus, Experian, Equifax, and TransUnion. 

Mar 06, 2023 03:38 AM
Jon Sigler

100% agree.  Reviewing your credit is free and easy.  AnnualCreditReport.com and apps like CreditKarma make doing so simple.

Mar 06, 2023 05:18 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Very good points made. Great information.  Thanks for sharing and enjoy your week!

Mar 06, 2023 05:23 AM
Don Baker
Lane Realty - Eatonton, GA
Lake Sinclair Specialist

Another tid bit is to use "unused accounts" about once every 6 months so the creditor doesn't close it for non use.

Mar 06, 2023 07:13 AM
Jon Sigler

Very good advice!

Mar 06, 2023 03:25 PM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
CEO of Vision Drive Realty - Coastal San Diego

Great advice, especially the "not closing unused accounts" tip. It seems like we should, but you point out why we should not.

Mar 07, 2023 06:49 AM
Jon Sigler

Age of accounts is a factor in a credit score.  Not nearly as important as how you pay or percentage of available credit used.  But still a factor.

Mar 07, 2023 11:00 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Great advice!  Thank you for this information.  Every buyer should read this BEFORE buying a house!

Mar 10, 2023 10:57 AM