Personal Finance and Investing

A credit score is a really important indicator on how likely you will be to default on a credit card or a loan. Your credit score is determined by a number of different factors, including your payment history, the amounts of money that you owe, the length of credit history, new credit, and what types of credit you are using. Do you pay your bills on time? Do you have any recent late payments? How many times have you been late? Are your cards maxed out, or have you accrued a large amount of debt? How long have you been making use of credit, and have you managed to establish a good credit history? Are you opening new accounts and borrowing more money? How many times have you recently asked for money? These are the concepts that alter whether or not you will be considered worthy of credit or borrowing.

Here are some basic do’s and don’ts for smart credit use to help you obtain a better credit score:

Do’s:

1 – Do make sure that your bills are paid on time. If you pay accounts 30 days late or more, this can have an adverse effect on your credit score. If you have missed payments, now is the time to get current and ensure that you remain current, because the sooner you begin managing your credit, the better off you will be.

2 – Do absolutely make sure that your credit balances are kept low. If you cannot pay the balance off in its entirety at the end of the month, stop charging more things onto the card because outstanding debts like these will lower your credit score.

3 – Do absolutely make sure that you re-establish your credit score, especially if you have dealt with serious credit issues in the past. If you get yourself back on track, and you show the world that you are worthy of borrowing or getting credit again, this will allow you to significantly boost your credit score in the long run which is what establishing a good credit score is really all about.

4 – Do absolutely check your credit score often, and monitor it frequently. It is important that you keep track of your credit score and credit report in order to understand how it changes over time. Sometimes your credit score can get dinged by the wrong information, and you cannot get these things removed from your credit report unless you’re monitoring it enough to notice that something is wrong. Tracking your credit report and score will allow you to have a consistent understanding of where you stand, so that you can work on improving your score over time in case you should ever need to borrow money again.

These four “Do’s” are vital when it comes to establishing and building healthy credit, but there is another side of the situation to look at.  There is another list of things to consider, only these are the Don’ts associated with credit score 101.

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