Monday, March 17, 2014

Watch Your Score


In my previous article, I mentioned how maintaining good credit standing benefited us. It takes discipline and determination before anyone would be able to establish good credit history. I cannot speak for other people but I can share how we did it. 

First, we only maintain three credit cards from major financial institutions. We have one Visa, one Mastercard, and one American Express. We turned down hundreds of credit card offers. Applying to every credit card offer would lower your credit score.

Second, we do not use our credit cards at the same time. We also make sure that when we do use them, the whole amount will be paid off when the bill comes. In that way, we will not worry about late payment. It is another factor that affects credit standing.

Third, we designated one card to use for our regular shopping. It makes it easy for us to monitor our spending. This is the card that gives us cash back for every purchase we make. It is tied up with Costco so we do not have to pay the credit card's annual fee. 

Every year, we receive two cash back checks; one from the credit card company and one from Costco. The amount in those checks covers our Costco membership fee. 

Fourth, we use the other two credit cards just enough to keep them active and in good standing. Two to three times a year would be enough.

Fifth, we only use 10 to 20 percent of our credit limit. It sends a bad signal to the creditor when your balance is more than 50 percent of your credit limit.

The last point is a bonus point. My husband and I competes on who gets the highest credit score. Our finances are consolidated so it is always a tie. 

Yes, it is important that you and your spouse are in the same page. A family that creates good credit together saves together.


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