Here’s How to Manage Your Credit Like a Millionaire (Even If You Live on Ramen)

Man making it rain cash
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You dream big. In fact, you imagine dining on caviar while relaxing on a yacht.

Nevermind that you are actually chowing down on some ramen on your futon. It’s all a state of mind, right?

Yes and no. Take that state of mind just a bit further and start practicing what you dream. You know that if you want to make it big, you need to  manage your credit score, so why not start do it like a millionaire?

Thinking like a millionaire when it comes to your credit score could help you get closer to living your caviar dreams. Here are a few tips:

1. Pay Your Credit Cards On Time and Get Paid Back

Paying your credit card bills in full each month is an absolute must if you want to boost your credit score. In a perfect world, you’ll pay off your balance every one or two weeks to keep your utilization low (more on that below).

So why even use them?

If you get the right credit card, it will pay you back. Look for credit cards that have no annual fee but offer rewards like cash back, travel points or some other perk.

If you’re not sure which credit card is right for you, Credit Sesame can help. Credit Sesame, a personal credit-score management service, can pair you up with the best credit cards to keep your credit score healthy.

Using credit cards helps you build a credit history. Paying them off boosts your payment history. By choosing the right card, you could also be flying first class or treating yourself to a bottle of bubbly with your rewards.

Now that’s living rich.

2. Have More Credit Than You Use

Can you imagine the credit limit on a millionaire’s card?

Now, do you think they use all of that? To keep your credit score in great shape, keep your credit utilization below 30%. That means, however much credit you have available through credit cards or lines of credit, only use 30% or less.

To find out what your credit utilization is, log into Credit Sesame. It breaks your credit score down into separate categories and grades them so you can see exactly what needs attention. If your credit utilization gets an “A,” great! If not, Credit Sesame will offer suggestions to better manage your credit.

Even if you’ve let your credit card debt accumulate, take a deep breath. Using Credit Sesame helped this mom pay off nine credit cards and climb out of debt.

If you’ve been good and have been paying your credit cards on time, consider asking the credit card company to increase your spending limit. Here’s the millionaire trick: When you get more credit, don’t use it.

True, you won’t be able to buy a new boat with your card and keep your credit utilization under the desired threshold, but you could probably buy a pretty nifty boat hat. You know, dress for success.

3. Let Your Credit Age Like a Fine Wine

Did you know credit age is a factor in your credit score? Credit Sesame says creditors and lenders like to see an average account age of more than five years.

So, if you are closing out those store cards you haven’t used in a while, you’re not doing yourself any favors. Let them be. In fact, it can be a good idea to charge something on them at least once or twice a year, just to keep the account active and in good standing.

So what happens if you need to get a new loan or credit card? It could bring your score down temporarily because it’s brand new, but don’t fret. Just keep a few older accounts open to keep that average age where you want it. Just one credit card that’s 15 years old can help offset the effect of new credit.

Credit age, while important, only accounts for 15% of your score, so be mindful of it, but don’t lose sleep over it.

4. Diversify Your Credit Like It’s a Millionaire’s Portfolio

You always hear how important it is for an investor to diversify their portfolio. Why? Because if you have millions of dollars in investments, you don’t want all of your eggs in one basket.

Another sneaky part of your credit score is your credit mix. This is based on the types of credit and debt you carry, like car loans, mortgage, credit cards and student loans. Having a diverse credit history shows lenders you have the ability to handle different types of accounts, and that helps boost your score.

Should you go buy a house on a whim like a movie star just to get a mortgage into the mix? Of course not.

But if you’re looking at a home remodel of some type or other expense, consider getting a loan rather than putting it on a credit card. For example, Jerry Morgan told us Credit Sesame helped him realize a car loan could improve his score.

Boom. You’re diversified and rocking your credit score like a big-wig.

5. Be Smart When Shopping Around

Do you think millionaires just buy whatever they want without looking at the cost? A few, maybe, but most of them didn’t get to be millionaires by being frivolous with their money.

And neither should you. If you’re thinking about buying a car or a home, shop around to see who will give you the best interest rate. A few percentage points can mean a lot of money over the course of a loan. Most online marketplaces can give you quotes without impacting your credit score.

To avoid applications and inquiries that could hurt your score, use Credit Sesame to check out your personalized buying power. This shows you what credit cards, loans or mortgage amounts you will likely qualify for before you apply.

Give Your Credit Score the Millionaire Treatment

You don’t have to rake in millions of dollars to have a credit score that shines like the hood ornament on a Mercedes. Just give it a little love and attention and it could actually help you get a little bit closer to that millionaire life.

By managing your credit and boosting your score from good to excellent, you can open opportunities you wouldn’t otherwise have. You can get that great mortgage rate. You can get an auto loan rather than buying a beater off Craigslist.

To see where you credit score is right now and to learn how to manage it, sign up for Credit Sesame. It’s free, it’s easy, and it’s the coach you need to manage your credit like than a millionaire.

Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.