How to have good credit and raise your FICO SCORES.
Since most people have to finance large purchases such as cars or homes, it’s important to realize that good credit helps you save money by qualifying for lower interest rates. Bad credit on the other hand is costly because of higher interest rates and sometimes may even keep us from even qualifying for a loan.
So here are 7 suggestion aimed at helping develop a good credit history and improve your fico scores .
1. Pay your bills on time. AVOID LATE PAYMENTS, COLLECTIONS, OR CHARGE OFFS on your credit report.
2. Keep your credit cards balances at or below 40% of the limit. The closer you get to the limit, the lower your fico scores will be.
3. If you co-sign for someone develop a system to monitor MONTHLY that payments are being made on time. Do not wait months to do this.
4. Hopefully you never have to but if you ever need to declare bankruptcy ,if you had a foreclosure, or a short sale try to re-establish credit as soon as possible and exercise great care in handling credit accounts as we just discussed . Lenders understand these things happen in life but they will pay special attention to how you handle your credit afterwards.
5. Check your credit annually. You can do this for free just go direct to the three bureaus websites and follow the steps. In order to get your FICO scores you will have to pay a nominal fee.
6. If you are able, pay your credit cards bill in full every month. This is another subject in itself to be discussed at a later time, but try to charge only what you know you’ll be able to pay off as soon as you get the bill.
7. Do not name one of you children the same as you!
This will minimize the chances that if you have a grown up offspring who doesn’t manage his/her financial obligations well that such bad credit may be reported under your name since you have the same name and at some point you have shared the same address. Most people believe erroneously that credit bureaus search first by a person’s social security number in order to report credit. Credible sources state that this is actually about the third or fourth checkpoint in their list.