3 Habits of People With High Credit Scores

Without even knowing it you might be doing things that are damaging your credit score, which affects not only your ability to borrow but also the interest rate you pay when you do borrow. So how do you identify and put an end to your bad credit habits? Simple: Start doing the same things as people who have excellent credit scores.

9 Secrets to Better Credit

Here are three credit-boosting behaviors that will help bump up your score:

Payment history is the top factor in most credit-scoring models. Payments that are 30 days or more late can quickly drag down your credit score – and it only takes one missed payment. Take this into consideration: 96% of people with the highest credit scores pay bills for loans and credit cards on time. Even if you can only afford to pay the minimum, always pay on time because that will have a bigger impact on your score than the amount you pay. Set up automatic bill payments so you never miss a payment deadline.

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The second most important factor in your credit score is how much debt you have; your credit utilization ratio is a big part of that. According to Fair Isaac, the company that invented the widely used FICO credit score, people with excellent credit scores use only 7% of their available credit, on average, while most consumers with lower scores have maxed out their available credit. You can see a significant increase in your credit score by paying down maxed-out credit accounts.

Lastly, don’t open and close credit accounts indiscriminately. People with excellent credit scores have an average account history of 11 years versus an average account history of seven years for those with lower scores. So opening several new accounts at once can shorten the average age of your credit history. And closing old, inactive accounts can hurt your credit, as well as take away your access to that available credit.

There are additional steps you can take to improve your creditworthiness. Here are four more habits of people with excellent credit scores that you should adopt.

Browne Taylor joined Kiplinger in 2011 and was a channel editor for Kiplinger.com covering living and family finance topics. She previously worked at the Washington Post as a Web producer in the Style section and prior to that covered the Jobs, Cars and Real Estate sections. She earned a BA in journalism from Howard University in Washington, D.C. She is Director of Member Services, at the National Association of Home Builders.