It really is
pretty easy to get and keep a good credit rating...
You just have to be smart and responsible!
Here are some
basics:
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1) |
Establish
Credit and Keep it!
Yes, do get a few (3, not 20) credit
cards (the biggies, like Visa,
MasterCard and American Express)...
Use them a little and completely pay off
the bills each month... And keep
the cards forever! Longevity of
credit is a big deal. Having a
credit card for 10 years is a big plus.
Opening and closing credit cards will
count against you in a big way. It
makes you look flaky.
Tip: You can
use your American Express Card (which
you HAVE to pay off completely each
month) to pay your other bills, like
phone and electric. At the end of
the year, they send out a great year-end
statement that will tell you a total of
how much you paid for each over the
course of the year... And, you
won't have to write as many checks each
month. It really simplifies
things.
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2) |
Pay your
bills on time!
Usually, you can be a little late with a
payment and you'll just get a big late
fee ($35-$65 or more). But, when
you are 30 days (or more) late, that's
when you get turned in to the credit
bureaus. It's like getting in
trouble at school and being sent to the
Principal's office... and this one
stays on your permanent record for SEVEN
YEARS! It goes without saying
(but, I'm doing it anyway) that
defaulting on a loan is a killer.
The next company will just assume you
won't pay them either.
Also, remember
that late payments makes your credit
card interest rates go up!
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3) |
Have your
bills automatically paid out of your
checking account each month!
This one is related to #2 with a twist.
If your bills are automatically paid,
you'll never be late. You just
have to be very sure that you always
have enough money in your checking
account! You can also pay your
bills online. They'll send you an
e-statement via email. You just
log into their site and set everything
up so you can hit one button and pay the
bill right out of your checking account.
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4) |
Don't max
out your credit cards!
If you have a credit card with a limit
of $2000... and you have charged
$2000 on it, this will hurt your FICO
score and make you look over extended.
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5) |
Never
bounce a check!
"Bouncing a check" means that you've
given someone a check for, say, $20 and
you only have $19.98 in your checking
account. You don't have
enough money in your checking account
for the check and this means the check
is bad. Actually, writing a bad
check is quite illegal! You can
get fined, lose your privilege to write
checks and you can even go to jail.
Always, always,
ALWAYS know exactly how much is in your
checking account. Even if you go
over by one penny, that's too much.
Tip: Some
banks (credit unions, especially) will
connect your checking account to your
savings account, So, if you go
over, they'll automatically move the
money from your savings to your checking
to cover the check. They'll
usually do this for free three times a
month... After that, they'll
charge you!
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6) |
Never get
a cell phone, bank account, credit card
or anything else with a friend!
And this includes boyfriends and
girlfriends that you are madly in love
with and think you're going to marry.
Why? Because the second you do
these things, you'll share more than a
little kissing spit, you'll share your
FICO score! If they have a bad
FICO score, it will transfer right over
to you. Also, if they bail out on
the bill and/or the relationship, you
can get stuck with a big bill. If
they make late payments, it will be the
same as YOU making a late payment.
When you get
married (if you aren't already), you can
worry about how you're going to mix your
finances. Until then, DON'T DO IT
-- EVEN A LITTLE! (If you've
already done it, get your name off there
immediately!)
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7) |
Never
co-sign a loan for a friend or
potentially flaky relative!
See #6 for the reasons.
"Co-signing" a loan means that you
guarantee that the loan payments will be
made. If they bail on the loan,
guess who gets to pay it off?
That's right -- the stupid person who
co-signed the loan... That's you,
Baby!
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8) |
Don't
apply for too much credit at once!
Lenders see who else has been checking
your credit, when they look at your FICO
score. If they see a bunch of
inquiries and it looks like you are
going to start spending a chunk of
money, they'll think you're about to go
nuts and steer clear.
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9) |
Check your credit report for errors!
A new law has
passed that says you're allowed to get
one free credit report a year. (It
usually costs about $35.) Here's
where you can get your free credit
report -- and remember that you don't
have to buy anything or pay any money to
do this!
AnnualCreditReport.com
1-877-322-8228
Snail Mail:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
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