I have good credit, and a friend of mine suggested that I make a blog post about how to get good credit scores.
I won't re-hash what you find on most other web sites. I'll only add what they don't cover.
Credit scores are simply the output of a computer algorithm. So by changing various inputs (credit behaviour) and observing the output (credit scores), you can optimise your credit score.
1. Spread automatic bills across different cards. That ensures all cards get used - that's key. Netflix on one, Amazon on another, cell phone top-ups on a different one, etc. Don't crowd all spending on one card.
The point of using automatic bills is so that you don't have to remember to use all your cards. You might use just one card for ad-hoc spending like groceries or gasoline for your vehicle, and that's fine. By placing other, automatic bills on different cards (where there is no extra cost for paying by card) you don't have to manually spread your bills across cards to optimise your score.
2. Use your planned spending intelligently. Pay on time, don't pay any interest or fees, don't spend what you don't have and don't spend simply to better your score. Don't use credit to artificially boost your lifestyle.
3. Try not to go above 10% utilisation per card. Spending $1,000 on a card which has a limit of $10,000 is a lot better than spending the same on a card with a $2,000 limit. Usage percentage is optimally greater than 0 but less than 10. Many people avoid high limits, thinking they will go wild with shopping trips when given high limits. But they hurt their scores in the process. Embrace high credit limits, but don't use them.
We live in a fiat currency economic system, and fundamentally, debt is the basis of that system. Credit scores are a measure of how well you handle debt, and unless you're rich, you might as well optimise your credit scores.
