10 tips to maintain good credit
Remember being in school and you were always told that your attendance and behavior record are gonna follow you? That's exactly what having good or bad credit feels like.
These 10 steps will help you to get on track whether your building credit or trying to re-establish credit.
1. Get a copy of your credit report
Did you know you get one free copy of your credit report annually? https://www.annualcreditreport.com/index.action Its important to keep track of your credit report for mistakes and to view your overall accounts and debt. It's recommended to keep a credit monitoring service so you can keep track of your report all year. https://www.identityiq.com/sc-securepreferred.aspx?offercode=43125602
2. Know Your Credit Score
Credit bureaus translate the information in your credit report into a number called your credit score. This number is used to determine whether or not you will be a risk to do business with. There are different types of scores the higher the better and the less of a risk you will look like to lenders. Always order your score when pulling your credit report.
3. Make sure when pulling your credit always report accurate and true information
Reporting all accurate and true information will help keeping your credit report from looking incomplete. This also will ensure that all you credit information is set up correctly from the start and show no misleading information.
4. Set and follow a realistic budget
Creating a realistic budget is important to help you maintain good credit habits so you don't live beyond what you can actually afford. This helps keeping you from hurting your credit by not missing payments and creating late payments on accounts or getting them closed into collections.
5. Some Credit is good but dont have too much
Your credit history is important to show lenders how you manage your credit accounts also know as your debts. Someone with no credit history is more difficult to be approved for credit accounts as they have no insight on how you manage your accounts and this makes approval much harder. Only few accounts are needed to help establish credit don't over due yourself.
6. Always pay your bills on time
If you fall behind on payments call your lenders and speak to them on behalf of your situation in which lead you to falling behind. Not paying your bills on time can create late payment marks on your credit report and delinquencies. This raises a red flag to lenders as seeing you not being able to afford or manage or credit accounts making it hard for you to be approved in the future.
7. Mix It Up
Lenders like to see that you can manage accounts but that your capable of managing different accounts. Credit cards are great for this because you control the amount you spend on the account and how much payment you can afford. Its also good to have an installment loan such as a car or student loan can show a good payment history and help with your scores and chances of approval.
8. Spend what you can afford
Just because a lender such as a credit card gives you a high credit limit doesn't mean run that balance up. Having high balances can hurt your scores because of a high credit utilization , ( balance to limit ratio ) which makes you look like a high risk credit risk. Keeping balances low helps show lenders that you can manage high credit limits and won't spend more than you can afford.
9. Careful closing your accounts
Closing accounts may seem like a good idea so your not tempted to spend any limits on your account but closing an account can hurt you in multiple factors. Utilization, credit history will be affected. Although if you have a high credit limit among your accounts you score will be affected very minor.
10. Only apply for new credit if needed
Only apply for credit if really needed and when balances are low on current opened accounts. Applying for too much credit will hurt you. Lenders will see you applying for too much credit and see a risk that your living off your credit accounts. This a risk most lenders don't take and that credit inquiry remains on your account for two years.