Reliable Consumer Credit Advice

Everyone from friends to co-workers can offer advice on credit. However, improving a bad score and maintaining a high rating calls for adhering to reliable credit advice. There is plenty of information available. Do your own research to ensure that you're making the best credit decisions.

Check All Three Credit Reports

Every consumer has three credit reports and three credit scores. When applying for mortgage loans and home loans, lenders tend to pull all three scores and use the middle score to determine eligibility and the interest rate on your loan. Get a free copy of your report for all three bureaus once a year from Annual Credit Report and check your personal score with MyFICO.com.

Delinquencies

Raising your credit score often calls for good payment habits. Payment history makes up 30 percent of credit ratings, says MyFICO.com. A good payment record entails making on-time payments each month. Late or skipped payments shed points off your credit score and makes it harder to get financing.

Minimize Debt

Debts not only affect whether you can get a loan, they also affect the interest rate on such loans because lenders take into account your debt load in determining your risk of default. Keep a good credit score by keeping your balances manageable. Debts can easily get out of hand. Paying off new charges each month alleviates high debts and helps you maintain a good credit rating.

Closing Credit Accounts

Closing or canceling a credit card doesn't make the balance disappear. People who have difficulty controlling their spending may decide to close credit card accounts to avoid accumulating additional debt. This a huge mistake, because the length of your credit history factors into your credit score. For example, canceling a credit card that you've had for 10 or more years can significantly shorten your credit history and trigger a decrease in your credit score.

Moderation

Because high balances and debt can lower credit ratings, some people refuse to use credit cards and pay for everything in cash. While this approach alleviates debt problems, it doesn't help your credit score. Scores are based on credit usage. And if you don't have credit or use it, creditors will not update your credit file to reflect good payment habits. Acquire credit, and then use credit responsibly. As discussed, pay off balances in full and only borrow what you can afford to pay off.