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How to Build and Maintain Good Credit
In today’s society, credit is our gateway to purchasing big
tickets items like a home, cars, electronics and many
other daily needs. When you buy something on credit you
are responsible to repay it under the contract with the
lender. If you do not pay the debt according to the terms
and agreement your credit score will be affected. When
you have bad credit you will be denied financing up to
90% of the time because the lender looks at you as a
serious risk, which is not good.
So how do you build and maintain a good credit?
Establish chequing and savings bank accounts
This is the basic step necessary to build credit. Lenders see bank accounts as signs of
stability. Opening a chequing and savings accounts is one of the few things young people can
do to start building a financial history. While you can't get a credit card in your own name
until you're 18, many banks have no problem letting you open an account.
Always pay your bills on time
This is one of the major factors that keeps people from increasing their credit score. When
you make a late payment, the lender will mark your credit and this will substantially affect
your credit score. Some people do not listen to this and charge more than they can afford.
They get caught in a trap that they can never get themselves out of because they can barely
afford to pay the payments.
Check your credit report regularly
Your credit report is available to you at little or no charge from major credit reporting
agencies like TransUnion or Equifax.
Your credit report contains all your financial obligations and accounts associated with you.
This is what banks, mortgage, credit card and auto loan companies use when reviewing your
application. Every transaction or purchase that you have made shows on your credit report.
Check your credit report for inconsistencies, incorrect information or accounts that you do
not know about. If there are any corrections that need to be made, follow up with the credit
bureaus.
Do not spend more than your credit limit
A limit is set for you so you do not go over it. A creditor looks at you and thinks that you
spend beyond your means and instead of you trying to improve your score you are hurting it.
The best way to avoid going into serious debt or financial trouble is to avoid using credit at
all, use cash or debit directly from your bank account instead. If you are in a situation where
it is an emergency use credit and then pay it off immediately. The problem with today’s
society is that we spend way more than we make and this is what gets us all in trouble.