5 Credit Habits of the Wealthy

1. Always use a credit card with great rewards

When it comes to using a credit card, the wealthy have learned how to use them to work in their favor. What's the secret? Credit card rewards. By using rewards credit cards strategically, they can get the most bang for their buck by earning cash or even vacations.

2. Never pay credit card interest

The wealthy have developed two ways to use and pay their cards so they don't ever pay interest. The first is rather simple: they only use their card for things they're certain that they could pay for with cash. By doing this, they're able to pay off the balance each month, which allows them to still earn rewards.

The second way is by using a card with a 0% intro APR for any large purchase they're planning to make. This method not only will allow them to pay no interest for an extended period of time, but earn cash back or points on their purchase if they open a card that also offers rewards, such as the Citi Double Cash Card.

3. Know their credit score and keep it high to get the lowest rates

This is another one of the wealthy's credit habits that most people haven't developed yet. Most people know that you can get a free copy of your credit report from AnnualCreditReport.com once per year, but not everyone knows that the legally-mandated credit report does not include your credit score. So how do you check it? There are a variety of ways to get access to your credit score, such as signing up for a free trial of a credit report monitoring service. Many people don't realize, however, that you can get a credit card that includes updated FICO scores with your statement. Only a handful of credit cards offer this feature. One of the best options in terms of cards and monthly FICO score updates is one of the Discover it cards. And with more than four cash back cards to choose from, you'll be able to find the best card for your needs and stay up-to-date on your score.

What's the benefit of knowing my credit score?

There are many benefits to knowing your credit score, but the main is being able to maintain your high score so you can qualify for more credit as well as pay less interest, which is directly correlated to your score, on any credit you may open or already have. Another reason is to help you detect potential fraud on your credit reports. Because you'll be getting updates on your credit score monthly, you'll be able to recognize when it has dramatically changed. If this wasn't a direct result of how you used your credit, then you'll know that it was fraud and you can take the appropriate action to report it.

4. Don't max out their credit cards

This is one of the major credit card mistakes that most consumers fall into, but the wealthy know to avoid it. Maxing out your credit cards can not only make you more vulnerable to potentially going over your limit, but it also is not so great for your credit. Why you ask? Well, it turns out that about 30% of your credit score is influenced by your credit utilization ratio, which compares your total used credit to your total available to provide a percentage on how risky you may be to loan money to.

The wealthy know that the more credit they use, the less likely their chances are to get a new loan or credit card so they make sure to only use the recommended 30% or less of their total balance. And in the event that they go over 30% of their credit balance, they pay it down as quickly as they can. That way their high balances won't have a negative impact on their credit score.

5. Have multiple credit cards

One of the easiest ways to build your credit is to have multiple credit cards, which is no secret to the wealthy. By having multiple credit cards, you're able to raise your credit utilization ration because you'll have more available credit. In addition, by paying all of the bills on time, you'll be able to prove to lenders that you're a trustworthy borrower.

But having multiple cards isn't enough. You also need to use each of the cards regularly to keep them open and active. That's where habit No. 1 steps in. By using multiple cards based on the rewards they will earn, the wealthy are able to not only get excellent rewards, but also build and maintain a strong credit history. Of course, not paying some of those bills on time will have a negative effect on your credit, so making sure to stay on top of all your credit accounts is critical.