In today’s world having good credit is an absolute must. Credit is no
longer for simply buying items today and paying for them later. Now,
credit is used to validate who you are as a person and your worth.
Credit scores are utilized daily in life. By following some simple
rules, you can keep your credit score at its highest points.
Understand that your credit score is a living and breathing animal. It
is ever changing and has its up days and down days. Perhaps your credit
score is 600 right now. Tomorrow it could be 595 and next week 615. The
smallest detail can change your score for better or worse.
Utilization
This is the big killer for most people. Utilization basically means the
amount of your total credit ability you are actually using. Here is an
example breakdown:
You have (5) credit cards with a total combined credit line of $10,000.
You currently owe $3,000.
You are using $3,000 of your $10,000 maximum thus your utilization is 30%.
The goal is to keep your utilization under 30%. A high utilization can
destroy your credit score. In fact, I have personally seen a high
utilization cost a person about 100 points. One hundred points is huge.
To keep your utilization low, you want to do two things.
1. The first is pretty obvious—Don’t use too much of your credit.
2. Next, work to increase your credit lines. Bug your creditors
constantly for credit line increases. Some allow you to request credit
increases every so often and some are automatic. Always work to
increase your credit lines.
Inquiries
There are two types of credit inquiries—Soft and Hard. Soft inquiries
don’t affect your credit rating at all. Soft inquiries are generally
created when you view your own credit report and other minor requests.
A hard inquiry can hurt your credit score. When you apply for credit, a
hard inquiry is usually created.
Typically one or two inquiries in the past six months won’t harm your
score, but more than this will start taking your score down. Also some
potential creditors will look at how many inquiries you have in the
last six to twelve months. If you have more than one or two, you might
be denied credit.
The moral here is to only apply for credit when you are pretty sure of
being approved and when you need it for personal or credit building
reasons.
Accuracy
The last thing to do is make sure all your credit data is correct. Most
credit reports have errors on them and you can indeed have information
changed and even removed. To find out how, visit CreditLiberty.com,
which is a credit repair information website.
If you have false late payments, incorrect credit lines, incorrect
credit balances, incorrect account types or payment history mistakes,
your credit score will be reduced. You owe it to yourself to check your
credit report with Experian, Equifax and Trans Union very often. At the
very least, check your credit report twice per year and always check it
before you apply for credit. In fact, you should check it well in
advance because correcting information on your credit report normally
takes about 30 days.
