If you have ever thought about buying a house or car, you need to keep in mind that good credit is part of the process. Lending agencies will acquire your credit score from various credit tracking companies. This score, based on a scale of 0 to 1,000, will determine whether or not the new house or car you want may indeed be purchased. If you don’t have a good credit score, you may have to find a co-signer, and that is sometimes hard to do, especially if your credit score isn’t that great.
So, what can you do to make sure you don’t get bad credit? Here are some things you probably want to keep in mind when thinking about your credit score and maintaining the good credit you already have.
Credit Cards – Be Careful!
Having a credit card is no evil thing, but using the credit card obsessively and irresponsibly is. Some people get a credit card and think they have instant money to spend. They forget that the spent money needs to be repaid to the creditor —with interest. They may purchase an item for $1,000, but end up paying $1,600 when interest is factored in. If you want your credit score to be good, don’t be obsessive with your credit card.
If you want to use a credit card, use it wisely. Don’t maintain a balance for more than half as much as you have in your savings account. If that confused you, here is an example and explanation. If you have $5,000 in your savings account, never maintain a balance of more than $2,500 on your credit card. What this does is allow you to build your credit score, without finding yourself in a bind if things get financially scary. If you needed to pay off your debt immediately, you would have the resources to do so, and you would still have a little in your account for a “rainy day.” This will help your credit score instead of hurting it.
Payment History
If you have a credit card, being late or deficient on payments can be detrimental to your credit score. It is probably okay if it happens once or twice, but when it happens over and over again, you have a problem. Your credit score will go down each time you make a late payment. This also includes being late with house or car payments as well.
Anything for which you have borrowed money can affect your credit score. If you want to maintain a good credit score, make sure you have an on-time payment history. This will look good on the credit score from your credit report and even help build the credit score to a higher level.
Be Consistent
When applying for new credit cards, a house loan, or a car loan, make sure you use the same name. If you don’t use the same name, your credit score can be greatly affected. You might be able to fool the credit agencies for a little while, but they will catch on, and that’s when bad things happen to your credit score. Also, if you have good credit, you want to maintain that good credit under the same name. You don’t want to start another credit history with a different name. This won’t help you maintain or improve your good credit score.
By John Ivie