As a consumer, you know how important it is to
proving to your lenders that you have good credit. Your credit rating or credit score will be used to decide if you are a good credit risk when you buy a new home or car or look for the best deals on insurance.
Your credit profile will have "black marks" if you have a bad credit history or bad credit habits. These include things like not paying on time, having a debt sent to a collection agency, and, of course, filing for bankruptcy.
Setting up good credit habits and, as a result, getting a good credit score will make you more credit-worthy. Because of this, possible lenders will offer you much lower interest rates and better deals on credit.
Here are four things you can do to improve your credit profile:
- Don't be late with your bills
Lenders can only tell what kind of credit risk you are based on how you've paid in the past. The way you pay off your debts now tells them how you will pay off your debts in the future.
- Don't use too many credit cards or too few.
When is enough enough? How small is too small? Many credit experts and financial planners say that you should have between two and four credit cards.
- Pay at least what's owed.
Pay at least the minimum amount due, but never less than that. And don't forget that if you only make the minimum payment, it will take you a long time to pay off that credit card.
- Look at your credit report often.
Keep an eye on your credit report from Experian, TransUnion, and Equifax, the three major credit bureaus. At least once a year, check your credit report. Look at it carefully and make sure that any mistakes or disagreements from the past have been fixed.
Also, if you see an account on your credit report that you know you didn't open, you should contact the creditor and the credit bureaus right away. This could mean that your identity has been stolen. You can protect yourself and your credit by asking for a fraud alert to be put on your profile and account. Identity theft is the type of consumer crime that is growing the fastest in the United States. Each year, about 1 million people fall victim to it.
Set up good credit habits early on in life, and you'll be able to enjoy the benefits for the rest of your financial life.
