How to Keep Your Credit History Well
08/17/2007 | Credit History
Our financial affairs need a proper consideration and calculation - more than you may realize.
We are not all financial advisors and therefore don't know all the tricks, but there are some ways to act like a money-savvy person. One's wrong steps down the credit road work for a credit history as bad as poor marks for a child's report card. When your money affairs go wrong you need a good advice on finance, but not many of us have ever received any valuable one. Mortgages, loans and credit cards remain one of the biggest mysteries of our lifetime and no one seems to have a good idea of what's going on. Many people don't even realize that doing well with credit can really be summed up in two words: common sense. Keep in mind that your credit report is never closed for making proactive changes.
7 tips to common sense credit
1. Pay your bills on time. Every time one of your bills goes past its due date, it works negatively for your credit report. And potential lenders see that you don't pay the money that you owe on time. However, this is not a difficult matter - just pay each of your monthly bills on time and don't leave an outstanding balance on any of them.
2. Build your payment history. It's the first thing a potential lender is worried about. It's clear for them if you were always late on your payments to previous loan. This also shows your credit cards use that you have had in the past. Repaying the amount of your loan in full every month will serve to boost your lending power.
3. Don't stock up on credit cards. A gold money-savvy rule is: never have more than four credit cards. It allows you to be flexible in your spending while maximizing the amount of perk as well. A number of credit cards offer bonuses, like air miles, cash bonuses and others. Pick the one to suit you best.
4. Think of your monthly credit budget: one of the most important factors for a lender is your ability to pay your loan, based on what you make. Therefore, the more loans you have, the more likely they stand for you as a potential debtor.
5. Do not max out your credit every month: many people, especially beginners at the credit industry will max out their credit on a monthly basis. When a potential lender is analyzing your file, they will take into account the amount of credit that you are allocated versus the amount that you use. If you have a credit card with a max of $5,000/month but only use $2,000 of it, it will look good to a potential lender.
6. Try to limit the number of times that your credit will be considered. There are a variety of reasons why someone could request your credit report. These can be anyone from potential employers, someone whom you are requesting credit from, utility companies or even insurance providers. However, every time that someone requests a copy of your credit report, it makes a blemish on your personal credit history.
7. Review your credit report: everyone is entitled to a copy of their credit report. This is the file that will either pave your financial future or cause a few bumps in the road. Even if you have a good credit rating, you should review this file for errors. They can include anything from a misspelled name to an omission of re-payment on a loan. Since no one else cares, it is up to you to make sure that there aren't any mistakes in your credit report. Errors in your credit report can cause you to be denied credit or forced to pay a higher interest rate than you should.
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