I’ve been asked about credit tips a few times since starting this blog so I figured I’d knock out 2 birds (actually 4 emails) with one stone… 🙂
I’m always up for getting ahead financially when I can, and a good credit score can be a good place to start. However, I haven’t had a need for a credit check for a while and don’t see an immediate need to have one, but I do know how to keep it in good working order just in case I DO need to use the score…
Monitor your credit report and dispute errors
Any errors in your report will pull your score down. Make sure that when you get your annual report, that it is error free.
Keep your old accounts open
In my bad decisions I’ve made in my finances I mentioned I closed my oldest credit card because I wasn’t using it. It was my first card I had ever opened. Bad idea because it showed I had credit for a while and it helps your score to show this. Scoring models look at not just how to use credit today but also how long you have used credit.
Don’t use all your available credit
Keep the balances under 35% of the total amount you’ve been allotted. Using this all up can cost you points.
Stay away from new credit unless you really need it
I have fallen for this myself at major sporting events here in Seattle. They’ll offer shirts or hats in the cold weather, and it seems like a good idea at the time; however, multiple applications can detract from your score. Department stores are another offender of this. Stay away unless absolutely needed.
Don’t shuffle your balances around
I know there are a lot of sites out there advocating this, but this can have an adverse effect on your score. Like the point above, you’re opening new accounts to consolidate your debt, which contributes to dragging down the ol’ score.
Know the going interest rates
If you ARE going to utilize your credit score, make sure you know the numbers. If you have a good credit score but are not offered a good interest rate, ask questions, negotiate, or shop elsewhere.