You may be a whiz at vegetable gardening or flower gardening, but how are you at credit gardening? That may sound like you are buying plants on credit, but in this case, good credit is the product of your gardening. Instead of harvesting fresh vegetables or springtime flowers, your harvest will be an improved credit score.
Your objective is to remove items that drag down your credit score — the "weeds" in your credit report — while taking care not to introduce any new items that can drop your score. For example, opening new lines of credit will typically pull down your score through hard inquiries for credit that require significant review of your income and debts.
Just as with other types of gardening, credit gardening requires planning. Your credit score is most important right before making a large purchase such as an auto or a home, and by keeping your credit score at its peak, you can save hundreds or even thousands of dollars via a lower interest rate offer.
Before beginning your credit gardening, make sure that your garden has no hidden errors that are unnecessarily damaging your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. The service will allow you to check reports from all three major credit bureaus (Equifax, Experian, and TransUnion); that's important because any error could be unique to one agency.Be sure to dispute any errors in the report to clear your credit garden for planting. If you believe there is a mistake on your credit report, you can resolve it with a single click using our credit correction service.
If you already have a variety of credit accounts such as credit cards and installment loans like a mortgage, your credit "seeds" have already been planted and your goal is to manage those accounts wisely until the next large purchase. However, if you are starting out with little credit or attempting to rebuild poor credit, you will need to plant some credit seeds by opening a few, controllable accounts.
Secured cardsbacked by a cash deposit are an excellent form of seed credit, assuming that the card issuer reports activity to the credit bureaus. Gas station cards are also useful because they are frequently used but do not generally build up large balances.
During the tending phase of your credit garden, you must be careful to manage your accounts wisely. Use all of your cards for small purchases each month to keep the accounts active and your overall credit utilization low. Make sure that you pay off all purchases on time and in full each month. This provides food for your credit garden by showing responsible use of credit. Meanwhile, the passage of time will eventually remove the negative events pulling your credit score down — weeding the credit garden automatically.
Even though you may be tempted by promotional credit card offers or major deals on purchases during the tending phase, keep your goal of a higher credit score in mind. If you are not credit gardening toward a specific large purchase, it may help to set a time-related goal such as opening no new accounts for one year. This clears the path for future large purchases.
After careful tending, it is time to harvest your new higher credit score in whatever way you see fit. Whether your goal is a great deal on a mortgage or auto loan, or simply to bask in the glow of a great credit score, it is time to enjoy the fruit of your efforts.