Monday, January 3, 2011

Building your credit rating

Don’t close unused credit cards- if the card has a low interest rate, use it periodically and pay off the balance quickly. This can keep your credit active and improve a low credit score.


Beware of closing accounts- get it in writing that the account has a zero balance before closing it. I have seen a $22 balance ruin a credit score because the borrower was unaware of the balance.


Spread out your spending- it is better to have 2 cards at 50% of the limit than to have 1 card at limit.


Never exceed your credit limit- even $1 over limit can lower your credit score. Always ensure your balance is below your limit before your interest calculation day. Your interest calculation date can differ from your payment date; check your statement to confirm.


Speak to professionals with shared goals- there is a different credit plan for someone eliminating debt than there is for someone getting a mortgage. Do your research before making any decisions about your credit.


Pay your bills on time- late payments lower your score and show poor repayment habits when it comes time to apply for more credit.


Know your score- protect yourself from identity theft by checking your credit at least once a year. The higher your score, the lower risk you are to potential lenders if you are applying for credit.

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