The other reason to use your credit for everything is that every month you’re making significant payments on your credit card. “As much as I love the idea of having a zero credit score and walking away from banks, that’s just not the world we live in,” Lull said. He further notes that “if you use credit responsibly, just charge everything and pay it off every month.” That’s one of the best ways to get and to maintain an excellent credit score.
Awareness of Your Financial Decisions
Sullivan says people need to be aware of financial decisions that aren’t immediately recognizable as being credit-related. “Being asked to cosign for a loan is a financial decision, but it’s also a credit decision,” he said. When youcosign for a loan, you’ve just taken a potential hit to your credit if the person doesn’t pay back the loan. “When you agree to support someone else and give them money, that’s going to impact your credit, because that’s money you can’t use to pay off your debts,” he said. Think about every financial decision that you make in terms of how it’s going to impact your credit. Because it can and it will.
Setting Your Credit Awareness on Autopilot
Sullivan suggests that people pull their credit report three times a year, because it’s free. However, Lull notes that there are now free credit monitoring services that allow you to peek in on your credit whenever you want. The trick is to strike the kind of balance Sullivan talked about above. Spending ten minutes every week looking at what’s going on your credit is a good use of your time and probably all the attention that is required. Look around and find a free credit monitoring service that’s right for you, but also go ahead and pull your credit report three times a year. Leave yourself a calendar alert and attend to it.
Excellent Credit for Married Couples
Sullivan finally points out that if you live in a community property state, it’s not just your own credit you have to look at — it’s your spouse’s as well. “In a community property state, you might have just taken on a lot of debt by getting married,” Sullivan says. “If you both apply for a loan together, you can get less favorable terms.” This cuts to the heart of an earlier point. “Basically everything in life impacts your credit, and you have to be aware of it,” he said.