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.
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© 2003, Your Free Credit Report Now
Author: James H. Dimmitt.
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