Good Credit Financial Solutions

Many people strive for a good credit score. However, building and maintaining a good credit rating requires constant work; a few bad decisions can cause a drop in your credit score. Solutions are available to help you acquire a better credit rating, and making good financial decisions is key to increasing your score.

Cash vs. Credit

The ability to just swipe a credit card allows you to buy anything when you're short on cash. But owing several thousands of dollars in credit or maxing out your credit cards will lower your credit rating. What's more, lenders take your debt balances into account when approving applications for mortgages and auto loans. Owing an excessive amount can result in a loan rejection or a higher interest rate. Using cash instead of credit is key to getting out from under debt. In addition, sending higher payments each month and negotiating better rates with your creditors helps pay down debt faster.

Timely Payments

Missing your monthly payments or constantly sending in late payments is a surefire way to bring down your credit score. Poor budgeting or money management may contribute to bad payment habits -- you can't pay with money you don't have. On the other hand, creating a personal budget and allotting a certain amount for recurring expenses, entertainment and recreation each month -- and staying within your budget -- can provide enough cash to pay your creditors on time. If you plan on buying a home or financing anything in the near future, now's the time to practice good credit habits to build your score.

Credit Applications

Preapproved credit card offers may fill your mailbox, and sales people may persuade you to complete an application for store credit to save on your purchases. Applying for credit may seem like harmless fun, but it's quite the contrary -- every time a creditor checks your credit report, you lose points off your credit score. Apply for credit only when you "need" to. And spread out credit applications to avoid damaging your score.

Credit Protection

Credit card fraud and identity theft can severely damage your credit rating. Therefore, the sooner you recognize problems with your credit, the sooner your can repair the damage and build your score. To protect your credit score and credit file, self monitor your file by ordering a copy of your credit report each year from Annual Credit Report, or sign up for a credit-report monitoring service.