Zero debt does not always mean a higher credit score

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What do the consumers with the highest credit scores have in common? If you spoke to each one of these consumers you would see various trends. These trends include; the total repayment of debt each month combined with the smart use of credit, history that has been established which can help to increase the credit rating, multiple types of debt being accumulated and repaid to ensure responsible repayment and lending practices have been involved as well as investing, savings and other accounts which earn money for the user – rather than accounts which cost money such as high interest credit cards.

Do you have the potential to have a higher credit score? Really, it is impossible to develop a credit rating without taking advantage of credit. There are many aspects which come into play in the credit score, such as; how long the credit history has been established, the types of credit that have been used, the repayment schedules and habits as well as the debt that has been accumulated and reported to the credit file. Debt is required to develop the credit score – but it is all about how you choose to repay the debt after it has been accumulated. Therefore – you can accumulate a high credit rating by using credit the right way!

You need to accumulate debt in order to have a high credit rating – but you need to repay this debt. Here are some things that you should keep in mind when it comes to debt repayment.

  • To keep your credit score you need to repay the debt at the end of the billing period. Late payments can reflect negatively on the credit score.
  • Payments made on the full balance of the account reflect positively on the card holder and ensure that your credit score is going to increase once this process has been completed and reported to the credit agency.
  • Maintaining open accounts are necessary. Keep using the credit card month after month; even for small purchases and repay the debt in full to ensure that you gain the most from the credit card use.

If you have zero debt — it is important to think about your past consumer behavior. Have you used credit enough to establish a high credit rating? When was the last time that you requested to see a copy of your credit report?

It is possible to create a high credit score without carrying debt from month to month and year to year. However, credit must be used. In order to be successful it is important to understand the difference between monthly credit use, and letting this credit use translate into high amounts of debt.

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