4 Steps to Establishing Good Credit
As a consumer you’ve learned the importance of establishing a good credit rating with
your lenders. Whether you are shopping for a new home or auto, or searching for the
best deals on insurance, your credit worthiness will be judged by your credit rating
or credit score.
A bad credit history or bad credit habits will place “black marks” on your credit
profile. These include thngs such as late payments, having an account assigned to
a collection agency, and of course bankruptcy.
Establishing good credit habits and therefore a good credit rating will improve your
credit worthiness. This will be reflected in potential lenders offering you substantially
lower interest rates and better deals on credit offers.
Here are 4 tips to help you create a shining credit profile:
1) Pay Your Bills On Time
Lenders only have your past payment history on which to decide the type of credit
risk you present to them. How you pay off your debts now indicates to them how you
will pay off future debts.
2) Don’t Carry Too Many or Too Few Credit Cards
How much is too much? How little is too little? Many credit experts and financial
planners suggest two to four credit cards is just the right mix.
3) Pay At Least the Minimum Due
Always pay at least the minimum due payment, but never less. And remember, just paying
the minimum payment means it will take you years and years to pay off that credit
card.
Example: Paying off a $2,000 credit payment at 18% APR with a minimum monthly payment
of 2% ($40 dollars or less) will take you 30 years to pay off the amount plus interest.
4) Review Your Credit Report Regularly
Monitor your credit report from all three major credit bureaus - Experian, TransUnion,
and Equifax - on a regular basis. Check your credit profile at least annually. Review
it carefully and make sure that any past mistakes or disputes have been corrected.
Also, if you notice an account listed that you know that you have not personally opened,
contact that creditor and the credit bureaus immediately. This could be a sign that
you’ve had your identity stolen. Request to have a fraud alert placed on your profile
and account to protect yourself and your credit. Identity theft is the fastest growing
consumer crime in America, with an estimated 1 million people victimized each year.
Establish good credit habits early in life and reap the benefits that your good credit
rating will provide you for the rest of your financial future.
This weblog is sponsored by Ovation Law.