Friday, January 25, 2008

Some Tips to Keeping a Good Credit Rating

Your credit rating or credit score speaks volumes. And what it says is of interest to those who can lend you money, lease you a car, offer you a credit card or provide you with a mortgage. A good credit rating means that you are a good credit risk, making it easier to borrow money and at a preferred rate. So having a good credit rating is an asset you’ll want to protect. Here’s how:

Pay your bills and pay on time.
Payment history accounts for as much as 35% of your score and even being a few days late could cost you points.

Keep credit card balances in check.
Maxed-out credit cards are a red flag. Ideally, your debt-to-credit ratio should be around 30% so on a credit card with a $2,000 limit, you shouldn't carry a balance of more than $600.

Limit yourself to two to four credit cards.
Too many credit cards can set off warning signals but too few won’t provide enough credit history for a proper evaluation.

Don’t apply for credit you don’t need.
It can be tempting to apply for an in-store credit card when it comes with a discount but frequent applications for credit may negatively affect your score.

Stability counts.
Moving frequently and changing employers might erode your credit rating. The longer you are at your current address or with your employer, the better the opportunity to enhance your credit-worthiness.

Check your score.
You should probably review your credit rating from time to time to make sure it’s accurate and be sure to correct any errors. Reports are available online from rating agencies such as Equifax and TransUnion.