Guest Post: Ms. Money Savvy
Lately, there has been a lot of focus on getting and keeping a good credit score. Here are a few things NOT to do if you want to maintain good credit.
- Make your payments late: Even one 30 day late payment can significantly reduce your credit score. Send in at least the minimum payment when you receive your credit card bill in order to avoid late payments. You can always make another payment during your billing cycle.
- Maxing out your cards: When you use more than 50% of the available credit on any one card, that tags you as a credit risk. You should strive to not carry a balance at all but if you do, make it less than 50% of your credit limit.
- Too many cards: While you do want to leave open the card with the longest history, there is no need to keep every card open. Take a look in your wallet and try to pare down to no more than three cards.
- Ignoring bills: If you allow bills to go into collections, that is a serious black mark on your credit. Whether it’s a $25 cell phone bill from college or an old store card with a $100 balance, be sure to pay all of your bills! If you think you’ve been billed incorrectly, call the creditor but don’t ignore it.
That said, it’s only fair that I tell you about a few ways to improve your credit score.
- Pay on time: This is the single best thing you can do for your credit. Paying on time proves that you honor your commitments and will continue to do so.
- Keep your debt to available credit ratio low: This means keeping your card balances well below your credit limit, even if the bill is paid in full in each. This shows you won’t abuse your credit and act responsibly.
- Have a mix of credit: One or two credit cards and one auto loan looks better than five credit cards. However, don’t open lines of credit you don’t need in attempts to improve your score.
- Check your credit report: Errors can happen and if you don’t review your credit report on a regular basis, you could be getting penalized for erroneous information. You’re entitled by law to at least one (depending on your state of residence) free credit report each year. An official site is http://www.annualcreditreport.com/.
If you follow these simple tips, you should be on your way to great credit in no time!
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