Proper credit management is key to building and keeping the best credit score possible. Credit scores determine approvals for different types of financing. People who practice good credit management often receive lower insurance premiums. Know the factors that affect credit and then take steps to improve your habits.
Pay More Than the Minimum
Credit card debt can impact personal finances and credit approvals. Debt accumulation can follow compulsive shopping or cash-flow problems. Even with past mistakes, you can conquer credit card debt and improve your credit score. The amount of debt you have accounts for 30 percent of your credit score, but paying more than your minimum on credit cards each month and paying a little more towards other debts can help pay down balances quicker and improve your present score.
Pay Off Balances
Another method for proper credit management is paying off credit card balances completely each month. This method helps avert high balances. If you've recently paid off a credit card, this method helps keep your balances to a minimum and prevents future issues. For this technique to work, only charge what you can afford to pay off in a month's time. If it helps, give yourself a spending budget for your credit cards and don't exceed this budget.
Pay Bills On Time
Payment records with your creditors and lenders make up 35 percent of your credit score. Keep this fact in mind and always pay your creditors by the due date -- even if you're only able to forward a minimum payment. The minimum is better than nothing, and missing payments will result in late fees and possibly negative information on your credit report.
Know Your Credit History
Don't ignore your personal credit report. This document reveals your past and present credit patterns, and this is what lenders and creditors use when deciding to extend credit to you. Mistakes on your report can trigger mortgage, credit card and auto loan rejections. Check your reports annuallly from Annual Credit Report and contact your creditors to get errors removed and outdated information updated.
Comparison Shopping
Shopping around for new credit accounts helps you secure the lowest interest rate and the best financing package on loans. Before agreeing to an auto loan deal or a mortgage loan, compare the offer with offers from two or three other financial institutions. Take into consideration the interest rate, the loan term and the monthly payment.
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