Your credit reputation will impact your future in many different ways. From the minute you get your first credit card or rent your first place, you’ll start building a “credit history,” which includes your payment history on credit accounts as well as other details related for your financial matters like repaying loans for your automobile or home. A good credit report should always be your goal. Here are four ways to get you on the path to a strong credit reputation:
Make sure your credit report is accurate – Take advantage of your one free annual credit report. If you see anything out of line, contact the credit bureau immediately.
Pay your bills on time – Whether it’s your gas card or your mortgage payment, be sure you pay your bills on time. The longer you pay your bills on time, the better your credit score will be. Your payment history makes up one-third of your credit score, so you need to take this very seriously. Read the fine print on the credit application and be knowledgeable about late fees, interest rates, and when payments are due.
Keep your credit utilization low – The more credit you have left available on your credit lines for use, the better your score will be. For example, if you have a credit card with a credit limit of $5,000, you should avoid having your balance on that card stay at $4,950. A utilization rate equals a lower credit score, because you have a lot of debt to repay.
Maintain only a few cards – A credit history is critical to a good credit score. Keep only a few cards with you at all times. Pay off your lowest debt first. Keep your oldest cards if it makes sense financially, because they maintain your credit history length.
Get a credit card only if you’re prepared – Don’t be persuaded to sign up for a credit card if you don’t need one or can’t handle the responsibility. If you make only the minimum payment on credit cards, this is an early sign of credit trouble.
Keep private information private – Don’t share your credit card number or your social security number, especially if you didn’t initiate the transaction. Ensure you use trusted sites while shopping online, and use a temporary virtual card number if you want to add another layer of safety to your purchases.
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