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.
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 Use 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.
