Keeping Your Credit Under Control
Maintaining a satisfactory credit history is very important because a consumer that is considered to be a higher credit risk might be denied services or charged a significantly higher interest rate. There are three major bureaus that report credit history: Experian, Equifax, and Transunion. There are sometimes differences in the data reported, so it is beneficial to obtain reports from each agency periodically.
Credit scores range from 300 to 850, and a score of at least 680 is generally considered good. However, it is best to aim for a score closer to 750. Some factors that lower credit history include late payments, high balances, length of credit history, and closing accounts. Payment history is the most critical aspect of credit score. One late credit card payment can cause a decrease of 100 points.
To avoid reductions or to repair a damaged credit history, it is important to become more comfortable with regulating personal finances. Repairing your credit will take time and effort. The following are a few tips for managing your credit:
1. Check credit reports for misreported information or unfamiliar accounts. Mistakes are sometimes made on credit reports and it is up to you to have them corrected.
2. Set up automatic bill payments or payment reminders to avoid late payments.
3. When possible, make larger payments to reduce credit balances more quickly and accrue less interest.
4. Try to limit yourself to one or two credit cards and dispose of the rest, or close the accounts.
5. Avoid filing bankruptcy, which will appear on credit histories for ten years.
6. Contact creditors to request lower credit limits or interest rates.
Even a few months of making regular on-time payments in greater amounts can yield a credit score increase. Remember, these practices should not be considered temporary, but a plan for reducing overspending habits in the future and eliminating your credit crisis.