Most adults will establish credit during their early adult years, and building a credit history allows these individuals to get financing to purchase a home or automobile. Sadly, some consumers do not understand the ins and outs of credit. As a result, they make poor credit decisions that ultimately destroy their personal credit score.
Debt Relief
Debt is a way of life, especially if you decide to buy a home or car. However, even if you can't live your days completely debt-free, you can aim to reduce balances on unsecured debts such as credit cards. Credit card debt has a major bearing on your personal score, and owing less than 30 percent of your credit limit is a key aspect in keeping a high credit rating. Plus, lenders and creditors reviewing your credit report will notice your low debts. This demonstrates self-control, which may prompt lenders to approve your application and assign a low interest rate.
Credit Report Inquiries
Creditors will request a copy of your credit report before approving your application and issuing a line of credit. Credit report checks show as an inquiry on your credit file and too many inquiries can lower your personal credit score. Keeping credit applications to a minimum helps you maintain a good credit rating.
Collection Accounts
Creditors will make several attempts to collect an old debt. Failure on your part to forward payment forces creditors to send your account to collections. Collection accounts that appear on your credit file hurt your personal score and may remain on your file for seven years. Avoiding collection accounts is one aspect to good credit. Rather than disregard collection attempts, work with creditors to create an affordable payment schedule.
Credit Report Information
It is imperative to know the contents of your credit file, since credit reports provide your credit history and creditors place a lot of emphasis on credit scores. Acquire this information by ordering copies of your report at least once a year. The website Annual Credit Report provides consumers with one free report a year.
Timely Payments
Forwarding monthly payments after your due date is a surefire way to destroy your credit rating. The amount you owe and your payment history play a major role in credit scoring. Mistakes happen and most people will submit at least one late payment at some point in their life. However, the problem lies with consistent lateness or a complete disregard for due dates.
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