How to Keep a Credit Score in Good Standing

A credit score is the tool used to measure your financial trustworthiness. Good credit scores mean that you will be able to get a loan or credit card at a better interest rate than if you have a bad score. A high credit score shows banks, department stores and other creditors that you are less of a financial risk. Having a bad credit score may make it difficult for you to get a loan, mortgage, rent an apartment or purchase a new vehicle. It is important to maintain a solid credit score in case you need to borrow money.

Instructions

1

Budget your money each month. Make a simple budget in a notebook that shows the bills you owe each month, the amounts you give to charity, your savings goal and the amount needed to pay all your bills, including those that only come due quarterly, semiannual or annually.

2

Pay your bills on time or before they are due each month. Whether you pay your bills online or send them via mail, you need to allow extra time for the place of business to receive and process your payment so that it is credited to your account by or before the due date. Consistent and on-time payment of your bill each month is one of the best ways to keep your credit score healthy.

3

Choose a home with payments that will only require 28 to 33 percent or less of your income each year, according to the CNN Money website. (see reference 3)

4

Keep your debt at an acceptable ratio in comparison to your income. Even if you have never been late on a payment, the creditors will look at how many credit lines are available to you and assess your risk of getting in "over your head" financially.

5

Use credit wisely. Just because credit is available to you does not mean you should abuse it. Many people assume that a financial crisis will not happen to them or that can keep their finances under control. However, it only takes one major mishap to cause precariously placed financial blocks to tumble.

6

Establish an emergency fund. Financial experts like Dave Ramsey advocate keeping at least $1,000 in an easily accessible savings account (see reference 2). This will prevent you from having to use credit cards when a financial crisis arises, thus incurring major debt that can negatively affect your score.