{mosimage}Keep my credit healthy through 2008
"Getting out of debt," topped "losing weight," as the number one New Year's resolution last year. Spending money from your future earnings is very easy to do in America. It has almost become a way of life. Once you have established yourself, it is easy to get credit. Actually, it is a little too easy. Today, for every $5.00 the average person makes, he/she must use one of those dollars to pay against their debt. That number is getting bigger each and every year.
This doesn't mean that credit is a bad thing, but it can be, when used irresponsibly. It can be a very good thing if you use it responsibly and primarily to achieve bigger goals. Your bigger goals might include purchasing a new car or home. Keeping your credit spending balanced and clean is very important to your future. Here are a number of simple steps that will help you keep your credit record in excellent shape:
1. Limit your sources of credit. The fewer cards and accounts you have, the less complicated it is to keep track of. It also creates less temptation to spend. Your best bet is, to have only one credit card, save it for emergencies, and keep it paid up.
2. Watch your credit card transactions closely. Be especially careful to make at least the minimum payment every month.
3. Keep good records. Always know how much you owe on all of your accounts and how much you are carrying over from month to month. You'll need your charge slips, bills, and canceled checks if you have a dispute with a creditor. Keep this information organized and keep it for at least seven years.
4. Avoid finance companies. In the world of credit, many lenders consider that borrowing from a finance company equals being a bad credit risk. Generally, people only borrow from these sources when they can't get a loan from any other source. Develop a relationship with your bank and borrow from them first.
5. Communicate with your creditors. If you move, get married, divorced, or change your name, notify all your creditors in writing. This helps keep your credit records up-to-date, and it ensures that you won't be late in making payments simply because your bill didn't get to you.
6. Close inactive accounts. If you no longer use a certain charge account or bank card, notify the creditor in writing that you are closing the account. Otherwise it can show up on your credit report for years and be a source of errors.
The single biggest source of negative ratings in most credit files is late payment. Paying on time, in full, does more to build and keep a favorable credit rating than anything else. Your debt and credit definitely affect your future success. They are worth acting responsibly with and paying attention to.
