How to Protect your Good Credit

If you already have a good credit rating you may be wondering how to maintain it.  Luckily maintaining a good credit rating is not very difficult to do. 

Keep Your Current Accounts Active

It may sound odd but banks and other lending institutions value customers with debt more than they value customers who are debt free.  This is because the interest on the debt earns the bank money.  Money simply sitting in a savings account costs them money.  So when they are looking at giving you a loan they will take a look at your current accounts.  If you have a credit card or a loan that you are making regular payments on they are more likely to give you a loan than if you have an inactive credit card bearing a zero balance.  While this situation may make your financial position look better it does not help the bank determine how well you can handle debt as they have no payments history to look at.

Do Not Co-Sign a Loan

When someone asks you to co-sign a loan with them it is important to think about why they need you to do this.  Often it is because they cannot get a loan under their own name.  This means that the bank considers them to be a bad risk.  If you co-sign a loan with somebody and they fail to make payments the responsibility for the loan will then fall on your shoulders.  You can either pay off the loan or it will have a negative impact on your credit.  Many people have found that their credit score has been ruined due to a loan they co-signed with a friend or family member.

You can also protect your credit score by keeping payments to your debts on time.  It is also important that you do not carry too much debt.  If your monthly debt repayment amount exceeds what you are earning you will be looked at as insolvent.  This means that it will be very difficult for you to get any finance until some of that debt is paid off.  Lastly it is important that you protect your financial information.  Do not disclose your pin numbers, date of birth or other identifying information to people or websites you do not trust.  If you do you could fall victim to identity theft.  This is when a person impersonates you and gets out loans under your name.  They then spend the money and do not pay it back leaving you to clean up the mess.