How do I get Excellent Credit?

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It is important to have several open accounts that report to the 3 bureaus monthly. Many people think that the fewer accounts you have the higher your score will be. The key is to have several open accounts with high limits and to keep the balance less than 40%of the credit limit.

The higher the limit and the lower the balance the better. If your limit is $10,000.00 on a credit card and you owe $2,000.00, this will be scored as a positive. If you owe $9,000.00 on a $10,000.00 credit limit it would score as a negative. This is why a person who has never been late on a payment could have a lower score than they would expect.

When you make a monthly payment on time it shows as a slight positive to your score. If you have several open accounts and make all of your payments on time, your credit score will steadily increase.

If you are late on a payment and it is reported to the credit bureaus, your score will go down. A late payment may drop your score twenty points, while making a payment on time may increase your score as little as a point or less. It is much easier for your scores to go down than it is for them to go up.

Each type of credit effects your score differently. A late payment on a mortgage may drop your score 40 points, where a late on a credit card may drop your score only 10.

The more open accounts that you have the less a late payment will effect you. If you have 30 open credit lines and you are late on a payment, it may drop your score 5 points, but if you have 3 open credit lines and have a late payment it may drop your score 40 points or even more depending upon the type of credit that it is. " 1 of 3 accounts late = 33% delinquency, but 1 of 30 = 3% delinquency

When an account is paid in full your score will go up. If you were to pay off an automobile or a mortgage your score would move in a positive manner. When a consumer has very little credit, a new automobile or mortgage may increase the score dramatically once the first few payments are made on time.

It is important to have a high score to qualify for large loan amounts, but it is not the only determining factor. For large loan amounts, the credit history is taken into account. A consumer with a history of paying off large balance credit accounts will be able to qualify for larger loans much easier than a consumer who has not shown a history of payment on large balance accounts. A consumer generally has to build up with smaller loan amounts first.Proof of substantial Income or substantial assets can of course be an exception to this rule.

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