The best ways to build excellent credit are much different in your 20s than in your 50s.
1. Maintain a variety of accounts
If your 20s were all about building credit, then your 30s and 40s will be all about leveraging it. “Now is the time to diversify accounts,” Lin says, suggesting that those who managed to build a decent credit score in their 20s should consider adding revolving credits lines, like a mortgage or auto loan.
Credit lines fall into two major categories. Installment accounts require consumers to pay a fixed amount each month until the entire balance has been depleted, while revolving accounts can be reused as long as minimum payments are made and the limit isn’t reached. Having both on the books nets more points with FICO than having only one kind.
2. Take advantage of low rates
If you’ve achieved a strong score, you will probably qualify for the lowest interest rates on large loans. Consider whether it’s time to buy property, cars or upgrades for your home.
“People don’t realize the value of a good score,” Lin says, pointing out that once you’re in the 750 range, there’s no need to shoot much higher. “It’s meant to be spent.”
3. Don’t sweat short-term score swings
Quinn says it’s alright if your score dips into the lower 700s after you purchase a home, take out an auto loan or incur debts that are typical among those starting families. As long as you’re responsible with paying back debt, your score will likely rebound from the hit you take from credit inquiries.
“Credit reports belonging to people in their 30s and 40s are well-aged and generally large enough that taking on new debts and making small payment mistakes from time to time don’t spell credit score disaster,” Ulzheimer says.