Too often, people will incorrectly assume that they can have great credit scores simply by paying their bills on time and “not owing money” to anyone.
Your payment history and your outstanding debt are definitely important, but they only make up about 65% of your credit score.
It’s also important to have a long, solid history of using credit. This means, if you don’t have enough credit, your scores will suffer. It’s important to actually use credit regularly, have a good mix of credit (home loan, car loan, credit cards, etc…) and so responsible use of that credit.
This means that you shouldn’t be afraid to borrow money or use credit cards. In fact, it’s good if you do – as long as you make the payments on time and don’t make a habit of “maxing” out a credit card while making “minimum” payments.
A rule of thumb… use credit, use it wisely, make payments on time, have a variety of accounts, and don’t close well established accounts that have a long history of on-time payments.
Call our office for assistance if you have any questions!