Your credit report will have a rating, or score, on it similar to letter grades on a report card. An “A” is the best score possible. Car companies also use a credit report score such as a “beacon rating.” Any credit company wants to minimize the risk they have of losing money. If you don’t pay your bills, the money is coming out of their pockets! Each year, credit companies lose millions of dollars to charge offs. So they attempt to minimize their risk by charging more in interest and annual fees to high-risk customers. It’s up to you to prove to them over time that you are not in the high-risk category. No matter how far or fast you speed ahead, you can never outrun your credit history, so be sure to keep it out of the red. 

Here are some tips for you to have a A+ credit rating and a sky-high score.

Not everyone has the exact same terms of use on credit cards. If you are a first time credit user, you may have an annual fee to pay or extremely high interest rates. Shop around for the best deal for you, and know that eventually when you have some credit experience under your belt, you will be given more opportunities to have higher limits and lower interest. Often, having a parent co-sign on your account is a good way to get a lower interest rate. After you’ve made regular payments on your account for 6-12 months, it never hurts to ask for a lower interest rate.

More opportunities for credit aren’t always good though. Have you ever walked into a store and they told you that you could save 10% on your purchase that day if you applied for a credit card for that particular store? Sounds great, doesn’t it? Jan saw this as an incredible opportunity when her local electronics store had this and she was there to buy a new stereo. Since she had had a good credit history, she was approved and saved 10%! She didn’t stop there though. Within a month, Jan applied and received five different cards from retail stores all because of the savings offered when opening an account. She was enjoying all of her new stuff for a few weeks, until BAM! All of the bills started coming in. None of them had a very high balance, but she had to make minimum payments on each one so that she wouldn’t be charged a late payment fee. The interest on all five cards kept adding up even though she didn’t make any other purchases except for the original ones the days she got the cards. Suddenly all of those 10% discounts were insignificant compared to the interest she was paying. With so many bills to pay, it took her an entire year to pay off all five cards. She was smart enough to close each account when she realized that a lot of credit cards were not the best thing to have.