Having a high credit score and good credit history can set you up for many perks. It shows potential lenders that you’re likely to repay loans in full and on time, which can help you lock in better rates on car loans, mortgages and other financial products. 

Here are a few do’s and don’ts for managing your credit. 

DON’T MISS PAYMENTS:

This is the biggest no-brainer, but it’s importance cannot possibly be stressed enough. Your payment history makes up 35 percent of your credit score.  Therefore, a single missed payment on a small credit card might not seem like to big of a deal, but that missed payment can sit on your credit report for at least seven years. Make more than one or two missed payments, and it will really start hurting your credit score. 

DON’T OPEN OR CLOSE A LOT OF TRADELINES:

Tradelines is a fancy word for credit accounts. If you open multiple accounts at once, it will ding your credit. If you close a lot of accounts at once, it too will ding your credit. Your credit score is calculated by your credit history and how long you’ve kept some of your credit open.

DON’T LOOK AT YOUR CREDIT OFTEN: 

Don’t let anyone look at your credit. By allowing creditors to “pull” your credit, you are potentially reducing your credit score. The assumption is that by letting creditors pull your credit, you are applying for more credit. If you’re curious about your credit and want to know it for yourself, you are allowed one free report each year.

DON’T CLOSE YOUR OLDEST CREDIT CARDS:

Part of the credit rating formula is longevity. Fifteen percent of your FICO score is the average age of all your trade line.

DO SET UP ALERTS:

Credit card websites allow you to set up alerts and notifications.  If you have difficulty keeping track of expenditures, you can set up email or text notifications to warn you when you’ve reached a certain limit and before payment is due. 

DO CALL LENDERS:

Ask lenders for your interest rates to be decreased. Having lower interest rates will help you to pay off your debt sooner, decreasing your credit utilization. 

DO CREATE A PLAN:

Work out a payment plan to pay down your debts and stick to it. Carrying a high balance on a credit card costs you lots of money in interest, and drags down your score. Always pay off debts with the highest interest rates first.

Every monetary decision you make can influence your credit rating. Remember, there are many things you can do in the day-to-day management of your finances that can improve your credit score. 

If you have questions about these Do’s and Don’ts give me a call or email me today.  

Until next month,

Erik Kaplan
THD Credit Consulting
(800) 822-7120

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