10 Steps to Avoid Bad Credit
Credit rating is a score accumulated from analyzing one’s debt and payments over a long period of time. Banks and financial institutions rely on credit ratings and scores to determine the default risk and the interest rate that justifies the risks associated with various loans. Credit agencies store a complete record of one’s financial transactions such as bank loans, credit cards, mortgages, auto loans and etc; it basically represents a citizen as a debtor and as a consumer. Lots of people stress over their credit rating while others are puzzled by the level of its significance in their life. As you already know, credit history plays an important role in your everyday decisions. The better your credit rating is, the lower the interest rate you qualify for, which will basically lower the cost of acquisition and enable you to buy more. Having a bad credit does the exact opposite. If you are not among the lucky ones and now have a-less-than-perfect credit, you will end up with higher interest rates, you will not necessarily qualify for financing even at higher rates, it may even effect your employment options and sometimes make it more difficult to qualify as applicant for an apartment. Is it hard to build credit and maintain it? No. Does it require rocket science? No. You just need a little discipline. Avoid bad credit with these 10 easy steps:
- 1. Build yourcredit history early
- 2. Be consistent with your bills.
- 3. Pay ALL your bills
- 4. Know what bills report to the credit bureaus
- 5. Missed a payment? Catch up!
- 6. Control your debt
- 7. Keep credit applications at minimum
- 8. Debit-to-Credit ratio lower than 30%
- 9. Check your credit report
- 10. Keep educating yourself