Personal Finance 101: How to Keep Your Credit in Good Standing

16
December

The barrage of recent television advertisements about credit scores has finally made many consumers realize how important it is to be aware of their financial standing, but the fact remains that an overwhelming majority of individuals still do not understand what factors come into play when calculating a rating. The good news is that it really is not difficult to keep credit in good standing. The real trouble is that rebuilding a credit score is a lengthy process that can take years to complete, so responsible individuals need to learn how to properly manage their finances. The following will serve as a basic guide and will include helpful tips to keep credit in good standing.

In order for a consumer to know that their credit report is in good standing, the individual first must obtain a copy from each of the three bureaus. The easiest way to accomplish this task is to enroll in one of the many different credit monitoring companies available, but it is also possible to obtain a completely free copy from each of the bureaus once a year. After pulling copies of the credit reports, an individual needs to verify all of the data that is currently being reported. While it may not seem like a big deal, even an incorrect address could potentially cause harm to a financial rating. It is necessary to understand that mistakes happen all the time, and a person could actually be penalized for the irresponsible actions of another consumer with a similar social security number. Any collection accounts or data that is being reported should be disputed with each of the three credit bureaus. The information will be corrected, and the result will be a gradual or an immediate rise in the beacon score. Monitoring companies will alert an individual at any time that changes are made to their information, and this can be one of the best ways to protect against identity theft and other major problems.

The proper use and management of credit available is one of the most important things that a future lender is going to look at, and it is also a major factor in the determination of a FICO score. Consumers should be careful not to overextend themselves, and the total amount of debt in relation to the amount available will be scrutinized. If a person has maxed out any of their revolving accounts, the result is going to be a drastically reduced score. Spreading out the financial obligations will often help keep the balances on individual accounts down. Any accounts that have been open for an extended period of time should not be closed due to the fact that the length of credit history is a major factor. Credit cards should be used occasionally in order to stay active, but paying off the entire balance is preferred.

Payment history is the biggest responsibility that any consumer has, and a single late or missed payment could immediately cause damage that will take years to overcome. Individuals must ensure that they never have any negative occurrences that will be reported, and if there are any they should be remedied as quickly as possible. A person needs to realize that creditors do not really want to ruin a person’s credit, so there may be a grace period or even a program available to help an individual that is facing trouble with their obligations. Being open and honest is the best way to communicate with creditors, and a few difficult conversations could prove to safe an individual’s credit score.

Wisely managing finances should not be seen as a huge project or a destination, it is a process that must be followed by consumers on a day to day basis. By being aware of how a credit score is calculated, individuals can follow the above tips and make sure that they are taking good care of their financial rating.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

Email  • Google + • Twitter

Comments are closed.