Simple Rules for Better Credit Score
There are several rules of thumb you should follow in order to keep a good credit score from the very beginning.
Rule 1: Cover your payments immediately after their receipt
Immediately after you receive your bills cover them. Any delay till the due date may endanger your ability to pay them even you have the financial ability to do so. For example, your Internet connection may break down or the payment may be lost in the mail.
The major factor that influences one's credit score is the on time payment. Failure to do so may have a negative impact, whose effect may be felt for the next seven years. Additionally, any late payment can be charged a late fee by your company.
If you have taken loans or have credit cards, it is also advisable to make payments higher than the minimum required. This will lead to the earlier paying off of the credit/loan and subsequent savings from interest rates.
Rule 2: Avoid maxing out of credit cards
Another rule of thumb is to utilize the money you have up to 30% of the credit limit, because lenders keep track of how much of the credit you use. This advice will help you to avoid getting into deep credit debt and at the same time save you some higher interest rate charge.
Rule 3: Avoid carrying a balance
Many people fall in the common misconception that in order to build a credit history one should carry a balance from one month to another. However, it is not reflected in your credit score and no distinction is made between those who do carry and those who don't. You should make those purchases that you can afford to cover later. This will decrease your chances of incurring deep debt and will also save you some interest.
Finally, apply the necessary discipline needed to not only build up a better credit score but also keep it good.
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