4 Steps to Creating Good Credit
by James H. Dimmitt
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 things 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.
James H. Dimmitt. Get your FREE credit report online now and subscribe to our
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