Easy Ways to Keep Your Good Credit Score
Credit History
More than you may realize, common sense counts when dealing with your own credit. We are not all financial advisors and therefore don't know all the tricks, but thinking your investments through really pays off in the end.
If you make poor choices as an adult, you can expect the very same type of discipline that you may have witnessed as a child with a poor report card. No matter what age we are, we all have some sort of file that is kept on us. However, most citizens share the credit report in common. If you are a legal citizen of the country and over the age of 18, then you can be certain that a credit file has already been created on you.
Throughout our lives, we have all been on the receiving end of much financial advice. Whether it is from aunts and uncles or husbands and wives, sometimes it just doesn't sink in until it's too late. Thankfully, the door on your credit history is never closed and is always available for you to make proactive changes.
Although most of us have gotten passed down credit advice in our times, not many of us have ever received any valuable advice. 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. There are however, an abundance of people who realize the importance of having good credit. This pool significantly dips in population once the question of ‘how do you get good credit' emerges. Many people don't realize that good credit can really be summed up in two words: common sense.
Seven Tips to Good Credit Score
1 - Ensure that your bills are paid on time: Every time one of your bills goes past its due date, it reflects negatively on your credit score. This also shows to potential lenders that you don't pay the money that you owe on time. However, this is not a difficult matter. Simply pay each of your monthly bills on time every month and don't leave an outstanding balance on any of them. These can be hydro, phone or even cable bills. Every time you submit a payment on time, it looks good on your credit report. Every time you submit one late, it looks bad.
2 - Build your payment history: One of the first things that a potential lender will look into is your history of paying back previous loans. If you have received a loan before and they can tell that you were always late on your payments; it will not look good for you. This also applies for credit cards that you have had in the past. Repaying the amount of your loan in full every month will only serve to boost your lending power. This is something that you can take control of today.
3 - Don't stock up on credit cards: A good general rule of thumb is to never have more than four credit cards. This allows you to be flexible in your spending while also maximizing the amount of perks. Many cards these days offer air miles and bonus dollar. However, keep in mind that having a large sum of credit cards could very well hurt your credit rating. Be responsible with your choice.
4 - Decide a number to serve as your credit for the month: one of the most important factors that a lender will take under consideration is your ability to pay your loan, based on what you make. Therefore, the more loans that you have, the less likely they are to view you as a potential debtor. If at all possible, pay down any existing loans as quickly as possible and make sure to never exceed your monthly credit card budget.
5 - Do not max out your credit every month: many people, especially those new to the credit industry will max out their credit on a monthly basis. This is mostly achieved by charging the maximum amount to your credit card every month. 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 amount of time that your credit will be considered. There are a variety of reasons why someone could request your credit report. These can include 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 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 because it may contain errors. Credit reports are famous for having glaring errors that can adversely affect your credit rating. These can include anything from a misspelled name to an omission of re-payment on a loan. Since no one else will, it is up to you to make sure that there aren't any mistakes on your credit report. Upon finding one, simply report it in writing to the credit bureau and they will issue you a new credit report. Errors on your credit report can cause you to be denied credit or forced to pay a higher interest rate than you should. It is crucial to review it every year and make sure that the information contained is up to date and factual.
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Comments
Mark, 12:10 AM, September 10, 2007
Thanks for essential pieces of advice.
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