What Can You Do To Protect Your Credit Score?
Your CREDIT is a big part of your financial health. It is identified by your CREDIT SCORE. Your credit score indicates how you use money over time. How much of a risk it is to loan you money? Are you responsible or irresponsible with money? If your credit is good it can help you to borrow money at a lower interest rate for long and short term loans. If not it can hurt your future ability to borrow money. So you have to maintain a good credit score before you want to make a big purchase like a home or a car.
A low credit score can also negatively affect you in other areas of life. When renting a home or an apartment; landlords or property management companies routinely check the credit score to see if the prospect is a responsible tenant and is willing and able to pay the rent on time.
What can you do to protect your credit score?
1) Your Payment History
How good are you about making payments on all your current bills and balances? Always consistently pay your bills on time as accounts in collection are a big negative for credit score. If you cannot pay your credit card balance in full, be sure to make the minimum payment on time. Late and missed payments cost more in the long run, as you can be charged a higher interest rate for credit, later on. Setting up automatic payments for fixed expenses is an easy way to avoid missed or late payments.
2) Balance You Owe
How much credit do you have available? One of the factors that determines your credit score is the amount of credit you have available. The debt to credit ratio should be as low as possible so it is a good idea to keep the overall debt lower than the total credit available. Try to reduce your balances by paying a little more each time than just the minimum payment. Be careful about closing unused credit card accounts. This can also be viewed negatively in determining your credit score as the less credit you have available the lower the credit score.
3) Your Credit History
How long have you been borrowing and managing money? The account age is also important. It is not a good idea to close old credit card accounts which show you have been making payments on time as those accounts are a part of your credit history.
4) Newly Opened Accounts
What have you been up to lately? Be careful about opening up a bunch of credit cards in a short period of time. The credit reporting agencies view you as a high risk when you apply for too much credit in a short period of time. Think about that every time a department clerk asks if you want to apply for a department store credit card.
Have you checked your credit report recently? Check your credit report at Annualcreditreport.com. At this site, once every year you can get a free credit report from each of the three credit bureaus, Experian, Transunion and Equifax. Check the report for accuracy and also make sure you are aware of all existing open accounts.
Don’t risk your financial health. Having a good credit score should be an ongoing priority. Now doesn’t that just make good sense?