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Three Credit Score Tips

Keep Your Credit Rating High – Three Credit Score Tips to Help

Presented by Charles L Harmon

If you live in the United States you not have “big brother” watching over you but three large corporations keeping tabs on you. It’s almost like the Internet where they can follow almost your every move, but it’s in real life of how you spend your money and on what.

There are three major credit score reporting organizations in the United States; they are Equifax, TransUnion, and Experian.  The job of these three agencies is to report on the creditworthiness of each individual person in the country.

They do so by taking inventory of your previous credit and payment histories, your income, your income-to-debt ratio and calculating a score for them.  The resulting calculation is reported as both a “credit report’ and a “credit rating.”

It is, essentially, the three credit score reporting agencies that produce the information that banks and other lenders use when deciding whether or not to offer you credit, what terms they are willing to offer you, and what your interest percentage will be.

Needless to say, the three credit score companies wield a great deal of power over the average American consumer, so it is definitely in your best interest (no pun intended) to establish and maintain as high a credit score as possible with each of the three credit score reporting agencies.

How do you go about establishing a good credit rating?  How do you keep it once you do get it?  Although there are many folks and groups who specialize in repairing credit and teaching you about credit, the basics of having a good credit score are really quite simple.

First and foremost is making sure you pay all your bills in a timely manner.  Once you have gotten some sort of credit, right from day one, it is imperative that you make at least the minimum monthly payment on time each month.  Late payments are recorded and are a red flag to other lenders and to the three credit score companies.

Although the minimum monthly payment is required, it is a good idea to pay more than the minimum every month on revolving credit such as credit cards.  If the minimum is all you pay, you will virtually never get rid of that bill, so for your own comfort and peace of mind, you should pay more than the monthly minimum; in fact, you should pay as much as you can afford each month. You will save interest and it looks good on your record.

The second most important thing to remember is to live within your means.  If you go around charging all sorts of really cool stuff like designer clothes and big screen televisions, but you don’t have a job that will allow you to pay for these things in a timely fashion, you would be much better off saving up to make the purchase.

Alternately, you can save up almost the whole amount, buy the item on credit, and when the bill comes in send all that money you saved up as a big payment.  Then, pay off the remaining small balance a bit at a time.  Doing this will look good to each of the three credit score reporting agencies and will likely increase your credit score.

The third most important thing to do is to make sure that you keep an eye on your credit history.  You would be amazed how many errors pop up, and identity theft is a real possibility in this day and age.  You don’t want mistakes ruining your chances of getting a decent deal when you need credit for big ticket items such as a house or car.

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Here’s a heads up for those applying for a house. I bought a new house a few years ago. Before I got the loan there was a prequalification to check my credit and see how much loan, if any I could qualify for. Everything went well. My credit was clean on all three major credit bureaus.

However that must have sent a flag to some unscrupulous collection agency because when the time came (about 45 days later) for the actual loan papers to be drawn up and processed the final credit check revealed some problems that weren’t there before. I had had some problems with credit cards some 15 – 20 years previously and now they were appearing on my credit report. It was well past the Statue of Limitations, and even worse, one item showed a recent unpaid payment within the past three months which was also false.

Although those accounts had previously been off my credit reports for over a decade it kept me from closing on the loan. I wanted the house badly so I wasn’t going to let a bogus set of entries stop me. So unfortunately I was forced to make an arrangement to pay off some bogus bills I did not owe. There was no time to work with the credit agencies before the loan was to close so I was stuck. It cost me a cool $1000 I did not owe, just to clear up the matter. Not good, but I did end up with almost a $500,000 loan and got the house. Just be aware of such shenanigans, although I hope it never happens to you.

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