Credit Scores; Excellent, good, bad and ugly
We all know that our credit score is the golden number that tells us what we can and cannot afford according to financial lending standards. Achieving a good credit score is hard but easily achievable. Most credit scores are rated on a scale from 300-900. The higher your score the less of a risk you present to potential lenders. You can maintain a good credit score by requesting credit and paying everything off on time.
Each lender is different. Lenders may have their own scale that they use to determine if they want to lend to you and at what interest rate they feel comfortable giving you the money. They all have their own standards when it comes to lending but typically the higher your credit score the better.
Avoid applying for multiple credits. When considering applying for credit think strategically. If you are not sure if you will be approved by a lender then consider your other options before applying. Every time you apply for credit it hits your credit score in a negative way. The more credit you apply for it lowers your credit score. It is recommended that when considering making a large purchase that you stop applying for credit if at all possible. This will look good when you go to get the loan for that large purchase.
We all think that paying off our credit cards and loans every month and as fast as possible is a good thing; which it is but carrying a balance can be beneficial. Carrying a balance every month is not considered a bad thing as this will only help to grow your credit. Most lenders only make money off of you if you carry a balance monthly and they view this as a positive. This may help your borrowing power in the future with the same lender. You do not want to carry over a large portion of your monthly balance but carrying over 30% of your available credit on your card might actually boost your score more then having a balance of zero.
Do what you feel comfortable with. If you do not feel comfortable carrying a balance over every month then do not do it! Paying your bills off on time is great as well. It may make your credit score a bit lower but it is not the end of the world.