Managing Your Credit

Savvy people know that managing your credit is smart move.   

A credit report is the single quickest way for banks, creditors and even employers to learn about your financial behaviors.   As such it is important to understand how credit scoring works.

 Credit scores are tracked by three companies: Experian, Equifax and TransUnion, and scores are determined by a variety of factors.   Your credit is assigned a score, ranging from 350-850, which offers a baseline estimate of a consumer’s willingness and ability to repay a debt based on previous history.  To receive the best loan terms possible, aim for a credit score of 740 or better.

Consider these five easy steps to managing your credit:

Less is more: Don’t apply for store credit just to get the 10% off.  Frequent credit inquiries and numerous revolving lines of credit (credit cards) will lower your score.

Know thyself:Pull a copy of your report at least annually for free from annualcreditreport.com to check for inaccuracies and address them as soon as possible to minimize their impact on your score.

Pay your bills on time: Pay the full amount due on secured loans each month. If you can’t pay the full amount due on secured loans, request to make an interest-only payment until you can make the full payment.

Play the percentages:Credit card balances below 50 percent of the credit line is good, but 30 percent is better.

Protect your identity: Keep your good credit score intact by shredding all unnecessary financial information. Protect online accounts with challenging passwords and be cautious when giving out your SSN as an identifier (for example on medical billing).