Data on your credit report can be detrimental to your overall financial health. Your credit score assists potential creditors in computing loans like mortgage, car, etc. Some employers are judging prospective employees based on their credit scores. A score will determine if you can be trusted and are able to manage finances.
An excellent score of 760 to 800 will qualify you to receive a fairly low interest rate over the life of a loan. On the other hand, a low credit score of 620 to 639 will place you in the high-risk bracket. Hence, this will yield you a very high interest rate. Therefore, it is imperative that if you possess an excellent credit score, you should endeavor to retain this. And, if you have a low score, you still have hope to greatly improve your score. Ten things you can do to clean up your credit score are:
SETTLE BILLS ON TIME
The most fundamental thing you can practice is to pay your bills on time. In this climate of economic downturn, it’s vital that you try to pay even the minimum balance. By all means, prevent your account from going to a collections agency. Once this occurs, it can remain on your credit up to seven years.
MAINTAIN A LOW CREDIT CARD BALANCE
It is best to keep your purchases below 35% of your overall available credit limit. It is better to spread a huge amount with a few cards instead of maxing out one card.
AVOID CHARGING FOR A LOVED ONE
It might seem selfish, but most times family members and friends will ruin your credit. Everyone has that pal, son or daughter who constantly needs assistance in you charging that item. Bear in mind that the card is in your name and you are responsible for all the charges, including interest and other fees.
FREEZE YOUR CARDS
If you have maxed out your cards or you see where you are out of control with your spending, this is the time to take drastic steps. Perhaps one of the ways to take back control is to freeze them or cut them up.
AVOID DEPARTMENT STORE CARDS
There is no need to have several department store credit cards. These cards carry huge interest rates and have hidden fees. If you need to purchase a big home appliance, shop around for a good card with low interest rates and be cognizant of the fine print on these cards.
HAVE SEPARATE ACCOUNTS AFTER A DIVORCE
It is customary to have joint credit cards with your spouse. Divorce does not exempt you from your former spouse’s financial obligations. Therefore, it is vital that you remove your ex’s name from the joint accounts or close the accounts.
INQUIRE OF YOUR PARTNER’S MONEY HEALTH BEFORE MARRIAGE
This might sound unromantic, but it is advisable to inquire about your partner’s feelings on money matters. This way you get a sense of their managing money and credit history. Bear in mind that if you have an excellent credit history or score and your potential spouse has a poor one, later on when you tie the knot yours could become contaminated. Maybe it is a good idea to discuss beforehand, and rectify it if need be. In many relationships, finance seems to be a divider if one is irresponsible.
NEGOTIATE WITH YOUR CREDIT CARD COMPANY
It is not rocket science – you can be your best advocate. Your creditors are not enemies. They are willing to reevaluate and work out a plan suitable to your financial needs. Perhaps interest rates and the minimum balances can be reduced in order to accommodate you.
AVOID NUMEROUS INQUIRIES
Each time you apply for a new card, the prospective creditor always checks with the major credit reporting agencies like Equifax, etc. This inquiry is retained on your records for up to two years, and, in the long run, could reduce your credit score.
USE CASH FOR AD HOC TRANSACTIONS
Remember that all card transactions generate additional fees. Avoid using your credit card to pay for yard work and other ad hoc jobs around the home. Pay the babysitter, gardener or handyman cash for services rendered.
A clean credit score is very important. Thus, if you require the same, there are a few sites on the internet that will help you to repair your credit. However, make sure that you do your homework and check with the Better Business Bureau before transacting any business. Some of the sites are: