Great credit opens doors, and not just lower interest rates on loans and credit cards. It also helps consumers qualify for higher credit limits and better insurance rates, may allow them to negotiate lower rates on vacation rentals and avoid having to pay security deposits when they sign up for new cell phone service or utilities. If you want to learn the benefits of having great credit, read this article. Great credit is within reach if you follow these timeless tips.

1. Always pay your bills on time. 

This simple act each month will build great financial habits that will pay off over the long run. If you have the habit of forgetting to pay your bills, set a recurring reminder on your phone or calendar to pay them a day or two before they are due. You can also set up bill pay with your bank or auto-pay with each creditor or utility service.

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2. Keep your balances low.

Credit issuers often report your balance to the credit agencies on a certain date, typically the last day of your billing cycle. Consider paying all or part of your bill before the closing date (call your credit issuers to find out the specific date) so the issuer will report a lower or zero balance. Also, ask your issuer if they accept multiple payments during the month to help you maintain a lower balance and still earn rewards. 

3. Maintain a credit utilization ratio of less than 30 percent. 

Simply put, your balances make up 30 percent of the total amount of credit available to you. If you’d like to increase your credit score faster, lower your credit utilization ratio to less than 10 percent. 

4. Tackle your debt. 

Start with the highest interest rate card or loan. Once that debt is gone, pay down the balance with the next highest interest rate. Continue the process until you’ve paid off all your existing credit card and loan debt.

5. Avoid using your credit cards to pay for large purchases.

While credit cards make it easy and convenient to buy what you want, the compound interest can add up quickly and work against you if you don’t pay the balance off in a timely manner.

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