How to Maintain and Create a Good Credit Score

How to Maintain and Create a Good Credit Score

I recently listened to a talk by Advantage Credit, Inc Credit Reporting Services, who gave some really good tips on maintaining or creating a good credit score, and since this is a question that we get a lot, I thought, with permission, that I would share.

1. Keep revolving balances below 30% of the high credit

2. Have no more than 3 revolving accounts with balances

3. Have 4 or 5 more revolving accounts that are open but have no balance

4. Don't close old revolving accounts unless you have to. When you close an account you are closing the history

5. Don't open new accounts unless you have to. Until they have some history they will have a negative affect on your credit score (unless you need to establish credit)

6. Pay your bills on time. One 30 day late on any account can drop your score as much as 100 points

7. If you're paying off a collection account, pay off the collection agency and not the original creditor

8. When you pay off collections try to negotiate with the collection agency to remove it completely from the credit bureaus

9. Need to establish or re-establish credit? The best thing to do is get a secured credit card. A good choice would be the bank where you have your checking account

10. Late payments and collection accounts will stay on your credit report for 7 years--if you find some that are past this 7 year mark you should dispute them with the credit bureaus to have them deleted

11. Shopping for an auto or mortgage? Try to do it within a 45 day period. Inquiries accrued in a 45 day period for the same industry will only count as 1 inquiry

12. Do not co-sign loans. If they make a late payment it will end up on your credit report

13. If you are negotiating a payment plan with any of your creditors, also negotiate how it will appear on your credit report. If they report it as-- paying under a partial or modified payment plan--it will have a negative affect on your scores (Loan Modifications) or--settled for less than full balance (Short Sale). In the case of Short Sale you would want the reporting to be "paid"

14. If you have an account with a long history and only one late payment, ask that creditor if they will do a one time courtesy removal of the late payment

15. Have one or two installment loans. Having no installment loans or more than two can start to have a negative affect on your scores

16. If you are considering a debt relief program, choose a nonprofit company that has been in business a long time and has a good better business bureau rating. The incorrect method of debt relief could be detrimental to your scores

17. Once you have decided to purchase or refinance your home, do not make any other purchases or run up the balances on your credit cards until after the transaction is complete

If you have credit questions, this company is a great resource in Arizona. Their phone number is 1-800-670-7993

I definitely learned some things that I didn't know taking this class. One of my favorite take-aways was to sign up for a security freeze with each of the 3 credit beureaus, so no one can open credit without you lifting the freeze. It's only $5 per agency and $5 to lift when you need to, which is cheap for the protection.