Wednesday, 24 October 2012

Ways to contribute to your credit score

Whether you or your family members are students looking for ways to get a head start on earning a high credit rating, or whether your an experienced borrower who just hasn't given it much thought, it's a good idea to refresh yourself every so often on the behaviours that lead to a high credit score. Not only is a good score beneficial to you in and of itself, but it can also indirectly lead to better insurance rates for you, so it really pays to know what these behaviours are, and to put them into practice.

Open a credit card – if you're just starting out, this is the simplest way to begin. By opening a credit card, you can start demonstrating, on a low scale, that you are able to pay for what you have borrowed in a timely way.

Spend wisely – while your credit card may be your first foray into the world of credit score building, it could also be your nemesis if you don't use it properly. Experts recommend that you aim to charge ten percent of your limit, and try not to exceed thirty. However, if you do exceed that suggested amount, be prepared to make your payment right away.

Check your statements – this may sound obvious, but sometimes when we get busy, little things like checking statements can fall through the cracks. However, this is actually really important to do because of the prevalence of credit card fraud. More than likely, there will be at least one occasion in your credit card using life when an instance of fraud occurs on your card. If this is a card you seldom use, you may not know this, and those missed payments may count against you if the credit card company does not know those charges are fraudulent. While credit card companies are very good at catching fraudulent activity even before you notice it, there are some transactions of this kind that they don't catch, so do your part.

Don't close an unused account – even if you're not using a certain credit card, don't take it upon yourself to close it. Keeping it open will contribute to a higher score.

Pay bills on time – this refers to bills of every kind. By making your payments when they are due, you won't necessary raise your score, but you will protect it from the points you would inevitably lose if you were consistently late with payments.

Have a variety of debts – of course, it goes without saying that you should not sign up for more debt than you can manage. However, borrowing from a variety of sources will help increase your score. An example of this would be having a credit card, and having a car loan.


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