Good Credit is Important

January 14th, 2010 | Posted in Good Credit

Having good credit is something that is essential.

Not only do you need a good credit score to get a credit card, buy a car or house, you will pay a much higher interest on these purchases if your credit is poor.  It is becoming increasingly popular for employers to even check credit as part of the application process.

Here are some ways you can ensure you have a good credit score.

• You need to establish credit.  It is better to have both revolving and installment credit.  Revolving credit is like a credit card and installment would be a mortgage or car. You may have heard horror stories of people who racked up thousands of dollars in debt in credit cards and then couldn’t pay them and now you want to avoid that trap. The truth is that it is about how you manage your credit cards. You don’t need several credit cards, you don’t need an enormous credit limit, you simple need one or two that you use sparingly to show you can handle the credit.

• Pay On Time – This is vital. 35% of your credit score is based on your payment history.

• Don’t Charge Over 30% on Your Cards – 30% of your credit score is based on your credit utilization.  To have the best positive impact on your score, you really need to keep your balance under 25-30% of your available credit.

• Keep Checking Your Credit Reports – Your credit needs to be protected and you are the only one who knows what should be on the report and what should not.  Almost 30 million people have been affected by theft identity over the past 5 years.  And more than 70% of credit reports contain errors. You don’t need to obsess over it but you should check your reports annually.