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How to maintain a good credit score

By Sally Maison
Published: Saturday, November 20th, 2010

A credit report is the basis of your credit scores; it is an ongoing monitoring of how you handle your finances. These reports are coming from the credit bureaus, court system and other public records. It’s important to care of these reports because once it was already submitted and reflected, it’s not easy disputing it, it may stay there for several years and this could affect you loan applications and other credit based business you are planning to have. Bankruptcies would even reflect on your reports for ten years.

A special computer program generates this information, it’s too complex to do this manually using those credit reports, so this computer program makes it easier but efficiently in giving this credit reports. Some individuals have more than two credit cards and some have even more than a dozen so it’s really important having this highly secured and guarded computer program being used. The credit score is made up of payment history (35%), your credit utilization (30%), the length of credit history (15%), and the types of credit used (10%), and your recent credit search (10%).

When applying for mortgage most lenders will check your credit score and credit history and that could be their basis of your creditworthiness .In buying cars, it’s important to get the best rates and this would let the cost of this lower and you need to prove that you have a more favourable position in financial aspect.

Applying for a credit card is really tempting especially when you just heard an advertisement about big discounts and offers. But before applying be sure your credit score is in good standing or you are likely declined. If you have a poor history of repaying loans, even mobile phone bills and most especially, poor history in paying credit cards, these would highly affect your probability of adding another one.

Having a good credit score is a nice thing, maintaining that score is another story. One way to maintain a credit score especially when you cannot remember to pay all your bills is to set up a direct debit or automatic debit to ensure all your payments and bills would be paid on time. Late payments and penalties is not a good thing to be reported on your credit.

Avoid buying things that you do not really need. Having a low balance on your credit card is a good thing and lower balance is assurance that you can likely make a payment on time. If you have cash, it’s best to use that and just use credit card in emergency cases especially when you don’t have cash. Maxing out your credit limit on your card could lower your average score by as much as 50- 70 points.

Never apply or even add another credit card if you don’t really need them. Again, lower monthly balance will keep you on track on making those payments, adding more credit cards are adding more balance. New accounts will even make you credit score lower by 10 points. Closing an account will not let it go away, in fact, closing an account would also be reflected on y our credit report and could also be a basis on your application.

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