Yes. You do.
In this article we will explain why paying cash doesn’t mean you should not worry about your scores. We also have some good tips to help you increases your credit score and maintain good credit in the future.
Does you credit score still matter when you don’t need a mortgage or need to borrow money?
Having good credit is something everyone should strive for, even people who pay cash for everything.
What are some reasons you would still need a good credit score?
Credit cards often have cash back, points, or miles rewards. Using a credit card can often times be less expensive that paying cash, assuming you pay off the balance in full each month.
Even if you don’t anticipate needing a loan, you never know. Having good credit gives you peace of mind that in an emergency you can get a loan if you really need to.
How does some people’s credit get hurt later in life (i.e., they
no longer use credit cards so scores go down)?
Late payments and high credit card balances are some of the more common reasons why consumers credit scores drops. Payment history is 35% of your score, while your credit utilization ratios make up 30% of your overall credit score.
If you have multiple credit cards try to use them once a month for small purchases and paying it off each month. Paying the bill on time is something all of us sometimes forget. You should set up automated monthly payments with each card this way you don’t have to remember.
If you notice your credit score has dropped, what
can you do to boost it?
It depends on why your credit score is being damaged. If you have open credit accounts that are not being used you’re missing out on adding timely payment to your report. Just making a $20 purchase on each card once a month and paying it off will give you credit for payment. If you don’t use them, they are not helping your score.
If you do not have any credit cards because they were closed due to inactivity. You should open up a couple of new cards and use them monthly, your score will begin to increase again after a few months.
Pay your credit card balances off
Credit utilization is the amount of available credit you’re using. Your credit utilization ratio makes up 30% of your credit score.. Make sure you keep the balances on your cards as low as possible. It’s best to pay them off in full each month. If you can’t do that, you should try to keep the balance under 20%.
When to get a secured credit card?
If your scores are too low to get approved for a credit card, you can get a secured credit card. A secured card works much like a traditional unsecured card does. However, you will need to pay a deposit equal to the credit limit. You can get the deposit back after you close the account. You may even be able to convert it into an unsecured card after 6 months and get your deposit back.
Have someone add you as an authorized user
Being an authorized user on a credit card account will help increase your credit score. If you have a friend, family member, or significant other with a credit card in good standing. They can add you as an authorized user so you can build credit as well. Once this is reported to the credit bureaus (usually in 45 days) the entire account information will appear on your credit report and you will see a jump in your credit score.
What else should consumers be doing to monitor and maintain their credit?
One of the most effective and convenient way to monitor your credit is with Credit Karma and Credit Sesame. You can monitor all 3 credit reports and get updated credit scores monthly, and they’re completely free. You can go to their website, or download their apps. They alert you each time anything changes on your credit report. For more information read our article giving tips to increase your credit score in a hurry.
The Lenders Network has the largest network of mortgage lenders that specialize in home loans for borrowers with all types of credit scores. We will match you will the best lender based on your specific situation.