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4 Steps To Creating Good Credit
By: James Dimmitt
As a consumer you’ve learned the importance of establishing a
good credit rating with your lenders. Whether you are shopping
for a new home or auto, or searching for the best deals on
insurance, your credit worthiness will be judged by your credit
rating or credit score.
A bad credit history or bad credit habits will place “black
marks” on your credit profile. These include things such as late
payments, having an account assigned to a collection agency, and
of course bankruptcy.
Establishing good credit habits and therefore a good credit
rating will improve your credit worthiness. This will be
reflected in potential lenders offering you substantially lower
interest rates and better deals on credit offers.
Here are 4 tips to help you create a shining credit profile:
1) Pay Your Bills On Time
Lenders only have your past payment history on which to decide
the type of credit risk you present to them. How you pay off
your debts now indicates to them how you will pay off future
debts.
2) Don’t Use Too Many or Too Few Credit Cards
How much is too much ? How little is too little ? Many credit
experts and financial planners suggest two to four credit cards
is just the right mix.
3) Pay At Least The Minimum Due
Always pay at least the minimum due payment, but never less. And
remember, just paying the minimum payment means it will take you
years and years to pay off that credit card.
Example: Paying off a $2,000 credit payment at 18% APR with a
minimum monthly payment of 2% ($40 dollars or less) will take
you 30 years to pay off the amount plus interest.
4) Review Your Credit Report Regularly
Monitor your credit report from all three major credit bureaus -
Experian, TransUnion, and Equifax - on a regular basis. Check
your credit profile at least annually. Review it carefully and
make sure that any past mistakes or disputes have been
corrected.
Also, if you notice an account listed that you know that you
have not personally opened, contact that creditor and the credit
bureaus immediately. This could be a sign that you’ve had your
identity stolen. Request to have a fraud alert placed on your
profile and account to protect yourself and your credit.
Identity theft is the fastest growing consumer crime in America,
with an estimated 1 million people victimized each year.
Establish good credit habits early in life and reap the benefits
that your good credit rating will provide you for the rest of
your financial future.
About the author: © 2005, http://www.yourfreecreditreportnow.com
Author: James H. Dimmitt James is editor of “To Your Credit” a
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