With these 5 important tips for protecting your credit score, you can keep your good credit rating or learn what to avoid to improve it.
- Don't take instant credit offers from department stores and don't open new lines of credit.
"Would you like to save 10% on your purchase right now?" When we pay for things, we have all been asked this question. Every store that sells things wants to give you their own credit card. This will hurt your grade. Opening a new line of credit is not worth the small amount of money you might save because it will hurt your credit score. The credit scoring system looks down on department score credit because it isn't very good. Don't try to get the card. You might want or need to get a new car loan, a new home loan, or to refinance your current home loan. Applying for store credit to save a few dollars could hurt your chances of getting an important loan at a good rate until the middle of next year.
- Avoid Overspending
Credit is affected by how much money you spend. 30 percent of your credit score is based on how well you handle your debt. When your credit card balances are more than 30 percent of their available limits, the system sends up a red flag and your score drops right away. The reason for this is that if you suddenly use up all of your credit cards, the system will think you are having money problems. You should only charge if you can pay off the full amount before the next statement date. Also, if you spend too much and charge too much, you'll have to carry a bigger balance for a longer time. Keep your balances as low as possible at all times.
- Don't be late with your bills
The way you pay your bills makes up 35% of your credit score. One 30-day late can cost you 50 points or more. Usually, December is the busiest month of the year. You might be too busy to pay your bills on time because you have a busy schedule with work and social plans for family and friends, or because the holiday season is so busy. Make it a top priority to pay all of your bills on time. Make a file for all of your bills and make sure to pay them on time. You'll save points on your credit score and ridiculous late fees of $39 or more by doing this. Also, if you don't pay your bills on time, you lose any special financing rates, and your account will be set to a much higher interest rate. If you don't pay your bills on time, it can hurt your credit score, cost you a lot in late fees, and cause your interest rates to go up a lot. I recently got a call from a customer who had been late, but not for 30 days. His card rate had gone up to more than 30 percent per year.
- Plan ahead and get ready for giving gifts.
We all do it. When we go to a store to buy something specific, we often get sucked into a spending vortex. panic spending because the store doesn't have the item you went in to buy; deciding that if you buy this item for this person, you have to buy this item for another person; giving in to the temptation of the latest must-have gadget. If you do your research online, you can avoid this retailer trap. By planning ahead, you can find out where you can buy certain things and how much they will cost before you even walk through the door of the tempting store. By doing this, you can avoid the retail traps and keep your spending in check (and your sanity). The number of people using online shopping sites has grown a lot. Since last year, more than 30% more people are going to these sites. The Internet has a lot of information. In fact, www.pricegrabber.com tells you who sells the most popular holiday items and how much they cost. Remember that paying your credit card bill before the due date will help your credit score. Another great place to find the item for less is www.froogle.com.
- Be smart with your credit.
Keep track of the amount you owe on your credit cards and try to keep them as low as possible. Studies show that as people add more debt to their credit cards, they become less interested in their balances and even in taking on more debt. By keeping track of balances, you will feel like you are in charge of your finances and credit score. Make a list of the people you owe money to, how much you owe them, and how much your minimum payment is. It will help you keep track of your bills and start making plans for how to pay them off.
