Do you want to buy a house or car in the future and your credit has been less than perfect? Have you broken some of the rules of credit and afraid it will come back to haunt you? Having good credit is essential, especially in this economy. Banks and lenders are becoming more stringent about who they extend their credit to and people with questionable scores who may have qualified 5 years ago, may not now. Our ten credit commandments will help you keep your credit score high, so you won’t be left out in the dark when you need a loan.
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Thou Shall Not Pay Your Bills Late
This is one of the most important of the credit commandments. A late bill result in a huge ding to your credit score. Make sure that you are paying your bills on time. Most creditors will report a late bill after 30 days. If you are forgetful, set up online bill pay so that you don’t have to worry about it.
Thou Shall Protect Your Identity
Identity theft is a rising trend. Don’t think that it can’t happen to you. There are products on the market now that protect and monitor what is being done with your credit.
Thou Shall Monitor Your Credit Score
Don’t go to get a mortgage or loan and be shocked about your credit score. You should check your credit score at least once a year. Clear up any negative
Thou Shall Take Responsibility for Your Bills
If you can’t pay a bill, call your creditor right away. They may be able to restructure your payments or help you in some way that you don’t need to go into collections.
Thou Shall Not Cancel Your Credit Cards
Cancelling old credit cards may impact your credit negatively. Think twice before you close old cards or once you pay them off.
Thou Shall Not Run Your Credit Too Much
When you are thinking about buying a car or home shop around for the best rates but be cautious of how many times you have your credit run. If you do use multiple companies, make sure you do it in a short time frame. Too many inquiries that are spaced out may decrease your score.
Thou Shall Not Use Your Credit Cards Recklessly
Be responsible about your spending. Pay your balances off each month and on time. If you can’t afford to pay it off in a few months, don’t buy it. Don’t charge purchases like entertainment and food unless you are paying them off when the next bill is due. Who wants to pay for years on groceries that have been long gone?
Thou Shall Pay More Than Your Minimum Balance
If you just pay the minimum payment, it will take you YEARS to pay off your cards and can result in thousands of extra dollars in interest charges. By just paying a few dollars extra each month, you can shave a few years off of the payoff.
Thou Shall Be Responsible For Your Finances
Taking responsibility of your finances is important. Making sure that you are spending within your budget, paying your bills on time, and if your employment or financial situation changes, make sure that you are taking care of your bills or getting the help you need.
Thou Shall Keep Your Ratios in Check
Paying off old debts before accruing new ones is key. Don’t run up all of your credit cards as it will affect your credit score. If you have $10000 worth of revolving credit and you are using $9999 of it, a creditor may be hesitant in extending credit to you. Same thing goes with your debt to income ratio. If your ratio is high, it may mean that you are over extended and it can prevent you from getting new loans or special interest rates.
Remember, keeping your credit score high will help you pay less money in the long run. Follow our ten credit commandments and you should have no problem. Have you used these tips or others to help raise your score? Share your experience in the comments below!