Avoiding Credit Mistakes

Believe it or not, there are several little things that many people are still failing to do when it comes to keeping their credit scores in tip-top shape. This is a shame, because these small steps can save you hundreds of dollars in finance charges by making it possible for you to receive lower interest rates on credit cards and loans. Make sure to follow these simple steps and your credit scores will start to shape up rather quickly.

First of all, be sure to check your credit reports every year. You are entitled to a free copy once each year, so take advantage of this offer. Make sure everything on the report is accurate and take steps right away to fix anything that is wrong.

Second, always, always, always pay your bills on time. Even if you can only send the minimum payment, be sure to do it. Ideally, you should send more than the minimum payment. This helps to illustrate that you are responsible with your cash and are not living from paycheck to paycheck. Sit down and plan a monthly household budget that will guarantee you have the funds available when they are needed to get those bills paid.

Along the same line, avoid maxing out your credit cards. If you max out your credit limit, it sends a message that you are desperate for cash and other lending institutions will be weary about lending you more money. Try to keep the balance you carry at no more than 30% of your credit limit.

If you have had a credit card for awhile, don’t jump ship because you have found another card. Opening up an account with a card that will provide you with better terms is a good idea, but keep the other account open. Use it once every few months or so in order to keep the account active. A long history with one card reflects favorably on your credit score.

If you have a business, resist the temptation to use your business card for all of your personal expenses or vice versa. You need to build a credit history for both your business and for your personal use. So, be sure to maintain activity on both ends and to get those bills paid on time every time.

This entry was posted on Thursday, June 7th, 2007 at 9:51 pm and is filed under Tips & Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.