Mastering Credit: 9 Habits People with Good Credit Scores Practice

A good credit score is equivalent to financial freedom in today's economy. It unlocks the door to securing your dream home with a mortgage or snagging a sweet car loan with lower interest rates. It also lets you use credit for shopping or traveling expenses. In short, a good credit score can improve your financial prospects. However, not everyone can say their credit score is up to par.

So, how do people with excellent credit scores achieve it? How can you build and maintain a good credit score?

In this blog, you'll discover the essential habits of people with stellar credit scores. You'll also gain insights into cultivating these practices and utilizing credit cards responsibly to keep your finances healthy.

9 Effective Habits People with Good Credit Scores Practice

Atomic Habits author James Clear states, "Goals are good for setting a direction, but systems are best for making progress." When it comes to credit card spending habits, people with good credit scores have established behaviors that enable them to properly manage their expenses, debt, and other financial responsibilities.

1. Set financial goals
   
   People with high credit scores don't use their cards just because they want to. They have a clear vision for their financial future, whether it's saving for a house down payment or planning a dream vacation. This focus helps them make informed decisions about credit use, prioritizing purchases that align with their goals.
   
   For example, someone saving for a house might use their credit card for building supplies while keeping other expenses in check. A clear goal and a definitive path to get there can make all the difference when you're trying to achieve and maintain a good credit score.
2. Have several credit types and make the right selection when shopping with credit cards
   
   Some people have the essential understanding that credit products have different purposes. They may have a home loan from a local bank, while others secure a personal loan from the bank for their child's education.
   
   Meanwhile, a credit card is best for everyday expenses or travel miles. People with good credit practices are also selective about which cards they use. They might have a rewards card for specific purchases but avoid store cards with high interest rates.
   
   You could adopt the same strategy. Having a mix of credit types lets you build a solid credit history, prove your ability to manage financial obligations, and maximize the benefits each credit product offers.
3. Keep old accounts open
   
   Credit bureaus typically calculate credit scores based on five factors, including length of credit history. For this reason, people with good credit scores keep old accounts open, even if they rarely use them.
   
   Likewise, if you decide to maintain old accounts, you can provide proof of prolonged responsible credit usage to boost and keep your credit score effective.
4. Automate bill payments
   
   People with excellent credit understand that missing payments can negatively affect their credit score. That's why they automate bill payments to ensure on-time payments every cycle.
   
   Most banks offer an auto-debit feature that lets you and other credit card users automatically pay debt from a savings account. It eliminates the risk of missed payments due to forgetfulness and helps maintain a regular payment history.
5. Ensure low credit utilization
   
   Your credit utilization ratio is the percentage of your credit limit that you currently use. People with excellent credit scores keep this ratio low, ideally below 30%, to demonstrate they manage their finances well. For instance, with a credit limit of ₱500,000, aim to keep your balance below ₱150,000.Maintaining low balances, paying your dues on time, and keeping your debt levels manageable show lenders that you are financially responsible, which can significantly boost your credit score.
6. Manage debt
   
   Debt isn't inherently bad, but responsible management is vital in avoiding late payments, high interest rates, and possible penalties.
   
   Those with excellent credit scores avoid excessive debt and prioritize paying it down strategically. They might focus on high-interest debt first to minimize interest charges and free up credit for future needs.
7. Practice caution when applying for credit
   
   High credit score owners understand the impact of credit inquiries on their scores. They avoid applying for too much credit at once, as each application typically triggers a hard inquiry. When that happens, it can cause a temporary dip in their score. So, they space out credit applications and only apply when necessary.
8. Learn from past mistakes
   
   Good credit card habits don't just form overnight—they're the product of many, sometimes costly, mistakes. Credit-conscious people have made financial missteps but use them as learning opportunities. They analyze where they went wrong, like missed payments or overspending, and find ways to avoid repeating those mistakes.
   
   If the mistake was due to missed bill payments caused by poor organization, they might now set up reminders or automate payments to ensure timely bill payment. This reflective approach helps them continuously improve their financial habits and maintain a high credit score.
9. Save regularly
   
   Disciplined high credit scorers prioritize saving money consistently, regardless of income level. They put some of their earnings into savings accounts, emergency funds, or investment portfolios to build financial security.
   
   Automatic transfers can be an excellent saving strategy. When you put it into practice, you can move a specific percentage of your monthly paycheck into a high-yield savings. This systematic saving habit provides a safety net for unexpected expenses and reduces the need to rely on credit, helping you maintain a strong credit score.

Swipe Your Way to Success

Good financial habits are essential to securing financial opportunities. You only need to invest time and commitment in building them, but starting early makes it easier to manage credit and achieve a good score. Then, you can enjoy significantly better benefits, like favorable loan rates and credit terms.

In the credit card industry, RCBC Credit Cards are ideal for offering features to help you stay on top of your finances. With the RCBC Pulz app, you can easily manage your credit smarter and easier. Plus, you can stay on top of your spending by sending real-time payments, convert purchases to 0% installment for three (3) to 36 months, charge and pay utility bills using your RCBC credit card, and much more!

Apply for an RCBC Credit Card today and use its features to achieve a good credit score.