Following good credit practices leads to better credit scores, desirable interest rates, higher credit limits, and an easier path to obtaining most forms of credit including mortgages, home equity loans, installment loans, and credit cards. If you have a good credit history, lenders seek you out with offers of credit cards, balance transfers, and loans instead of the other way around.
For borrowers who follow good credit practices, new credit opportunities are always available. The possession of a good credit history begins by following good practices with regard to each form of borrowing that you obtain. If you pay your bills on time, you avoid the risk of late payments and the accompanying fees and interest charges as well as a negative mark on your credit history.
If you pay the minimum amount due, the full balance of a credit card, or slightly more than the requested minimum sum, you develop a good history of credit, an essential aspect of creating a good credit score. If you have trouble paying off your credit debt in full each month, try spending less money or paying cash for some of your typical credit expenses.
Credit Scores, Histories, and Backgrounds
Each and every time you apply for a loan, credit card, or mortgage, the lender must perform a background check on your credit in order to determine your credit worthiness or the risk of lending you money. The three major credit bureaus, Equifax, Trans Union, and Experian maintain records that are available to lenders who request and pay for them.
Wouldn’t it be nice to hear that your request for credit has been approved with the statement, “Wow I’ve never see credit scores like this” instead of “Your request has been denied” and a wave toward the door? Of course it would, and that is exactly why you need to get into the habit of following good credit practices to maintain a positive credit score and history.
Obviously, borrowers with the best credit scores find it easier to obtain the best rates and deals when it comes to credit cards, mortgages, and loans. Increasing your credit score by following a few helpful tips could lead to big rewards down the line when you are able to obtain credit without any problems whatsoever. If you develop good credit and continue to follow these practices, it leads to a better credit history and score as well as more desirable borrowing terms.
Good Credit Practice Tips
– Pay your bill as soon as you receive notice that it is due in order to avoid the risk of forgetting about it;
– Pay at least the minimum due on each bill – more if possible;
– Keep track of how much you are buying through your credit cards each month;
– Try to set a limit for the total amount of money you can borrow using your credit cards each month;
– Use your credit card less frequently during the month following a large credit card bill;
– Avoid the temptation to obtain a store credit card for every store that you shop at. The greater the number of store credit cards that you own, the more difficult it is to keep track of what you borrow each month;
– Avoid transferring one credit card balance to another just to avoid making payments on the amount due. Eventually, this practice catches up to you and your wallet with a negative impact on your credit score;
– Try not to obtain too many new credit cards at one time;
– Avoid closing out more than one credit card account in any given month.
A good credit score is essential when an individual tries to obtain new credit. The easiest way to create a good credit score is to follow good credit practices from the beginning. The tips above will definitely help you get started!