Excellent Credit History

Benefits

The benefits of an excellent credit history are numerous. For starters, applying for a loan or credit card with superb credit usually results in quick loan approval. Lenders offer low interest rates to borrowers with excellent history, and depending on the type of loan, borrowers may qualify for 0 percent interest. An excellent credit history also comes in handy when applying for an insurance policy because insurance companies often reduce premiums if applicants have a good credit history; and when setting up utilities for your new house, utilities companies may waive deposits because of your excellent credit history.

Consequences of Poor Credit History

Ignoring credit and acquiring a poor credit history has its disadvantages. Lenders use credit to determine creditworthiness, and a low score can prevent buying a car or purchasing a house. Working in certain industries requires a good credit rating, and those who've made poor credit choices in the past may not secure employment with the government or with a bank.

Credit Score Factoring

Different factors play a role in acquiring an excellent credit history. Building a good score involves more than paying bills on time. Yes, timely payments make up 35 percent of scores. But to acquire the best credit rating possible, it's imperative to consider other factors that make up credit scores. Keeping debts low helps ratings because the amount owed makes up 30 percent of scoring. Length of credit history makes up 15 percent of scoring, thus it's vital to keep older accounts opened. The type of credit accounts and the number of inquiries both make up 10 percent of scoring. Diversify and carry different types of accounts and only apply for credit when necessary to boost a low score.

Tips to Achieve Excellent History

Achieving excellent credit history take effort and work. A good credit score can quickly drop with a collection account or 30-day late payments. Always pay on time to help improve your score, and if you have difficulty mailing payments by the due date, use automated payment systems to stop lateness. Paying more than your minimum on credit cards and stopping credit card use helps reduce balances, which can also have a positive effect on your credit score.