Maintaining Credit:

 8 Steps to improve your credit

1.  Pay Your Bills on Time

Make it your personal goal to pay your credit and other obligations on time and for the required amount each month.

Debt obligations will include:

- credit card charges

- loan payments

- rent or mortgage payments

- utility bills

- service or product bills

- taxes, etc.

Take advantage of automatic payments and other online bill payment options offered by lenders and credit card issuers. This will ensure timely payments every month.

If you forget to make a payment, act promptly on any notices of non or late payment. Call the bill servicer to notify them that your payment will be sent immediately. If you act fast enough, this negative infraction may not be reported to credit agencies.

Make sure you do not ignore any creditor notices of non-payment. Contact the creditor to fix the problem as soon as possible. Even if you have already incurred penalties, you maybe able to convice the creditor to remove or correct these issues.

Adverse conditions such as late or non-payments are two of the most common items reported to credit agencies. You can start building strong payment patterns by making on-time payments each and every month.

Your credit report will also list all open credit cards and loans, listing the amount borrowed and the amount owned on the account. Your objective is to build a pattern where you payoff large credit card balances in full each month. This pattern conveys a sense of responsibility for your debt obligations.

Another way you can build strong payment patterns is by charging everyday living expenses on your credit card, deducting the charge from your checking / savings account, and then paying off the monthly credit card charge in full each month.

Important Note: Please follow these rules before you use this method:

As your credit rating improves, you will soon receive pre-approved offers from credit card companies and lenders with attractive rates and programs. You should limit your credit to 3-4 cards maximum. Maintaining a large collection of cards can hurt your credit rating.

Since you maintain 3-4 credit cards (VISA, MasterCard, Discover, American Express, or other), it isn't necessary to hold onto gasoline cards, retail store cards, and other specialized credit cards. Again, holding multiple cards can hurt your credit.

Excessive loan balances (especially loans that exceed your Debt-to-Income ratios) can effect your credit rating. Maintaining a good credit rating requires that you reduce your debt holdings by consolidating balances, closing unused credit card accounts, and paying off outstanding loan.

Using your credit up to your maximum credit line balance can impact your credit rating. Maximized credit lines (including home equity lines, credit cards and unsecured credit lines) indicate that you are a consumer who borrows willingly. Many lenders consider this a great risk and may not approve you for additional credit. A good rule to follow is to keep your balances at or below 60 percent of the available credit line.

About 1-in-4 credit reports have errors. Either a payment on a loan amount has not been recorded correctly or another billing company has posted incorrect non-payment information to your account.

Your credit report also maintains records on your employment, salary, bank accounts, etc., especially the information that you supplied when making previous credit applications. You should review your report annually for errors and make the necessary corrections as instructed by the credit agency. Credit Reports >>>

Every time you apply for credit, seek some kind on contractual service, or in some cases employment, a credit inquiry will be made on your report. Multiple inquiries over a short period of time may have a negative impact on your credit score. Models show that multiple inquiries over a period of time indicate an applicant who is anticipating credit problems. So limit credit inquiries when only necessary.

What about having multiple lenders compete for your loan?

Many Internet services and brokers allow you to submit one form and have up to four lenders review your credit information.

Credit agencies understand that these services may require an inquiry by "multiple lenders" at the same time.

These kind of inquiries, coming from multiple lenders within 20-30 days of each other, indicate that you are shopping for the best deal. Credit agencies will count these inquiries as being only one inquiry. This allows you to shop and negotiate best deal without being penalized on your credit report.

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If you find yourself spending more money than you make, don't rely on your credit card to pay for things that aren't necessities. If you do, you are only making a bad situation worse.

Take the time to establish a monthly budget. Differentiate between the things you "need" and the things you "want." Start with your fixed expenses or "needs"—like rent, food, utility bills, phone bills, car loans, and insurance payments. Then figure in variable "wants" like clothing, eating out, and entertainment. Subtract your expenses from your income and you have your starting point. If the sum is below zero, it's time to reduce your expenses by cutting out unnecessary spending on "wants."

In most cases, cutting your expenses is the first step towards paying off your debts and becoming more financially independent. To help you move in the right direction, here are a few tips on how to do this as painlessly as possible:

• Be careful with your credit card. It's not free money! Pay on time and pay at least the minimum due each month (but more is better if you can). Be aware of finance charges..

• Avoid "impulse purchases". Think about it: do you really need that magazine, extra-large pizza with all of the toppings or designer shirt? Or can you do without? You'll be surprised at how much you'll easily save by adopting a more disciplined spending routine.

• Learn to cook. The difference in cost between a week of eating at restaurants and a week of groceries will send you running to the supermarket.

• Buy in bulk. You'll always need toothpaste, toilet paper and cereal, right? You might as well save some money by buying in bulk.

• Clip coupons, watch for sales and shop at outlets. Find out where the best prices are and look out for opportunities to increase your savings. Many grocery stores now double the coupons you find in the Sunday newspaper. It may only be 30 cents here or a couple of bucks there, but over a year, it all adds up. If you can't cut your addiction to designer labels, try the outlet stores. Imagine the fun of finding a pair of $36 designer khaki shorts for $9.09.

• Look for ways to lower education costs. If you're a college student, check out off-hour courses. Some colleges set lower rates for evening, weekend and summer courses. Other schools have innovative tuition plans. Some schools give tuition discounts to students who persuade other students to enroll. Dorm supervisors may get free room and board. Some schools reward students who maintain a straight four-year graduation schedule. A little research may result in substantial savings.

• Keep track of all ATM withdrawals. If you use an ATM that is not operated by your bank, the bank that owns the machine may charge a transaction fee ranging on average from 50 cents to $3.00. If you only make one withdrawal a month, this may not be much of a problem. However, several small withdrawals will add up. Just think: two weekly withdrawals of $20 with a $2 fee adds up to $208 a year in fees alone!

These are just a few suggestions. A group called the Consumer Literacy Consortium has a pamphlet titled 66 Ways to Save Money with some more great tips!

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If you've been denied credit for any reason, you should receive a written explanation from the financial institution describing the reasons for your denial. If you were denied because of information supplied by a credit bureau, federal law requires the creditor give you the name of the bureau that supplied the information. You have 60 days to contact the credit bureau if you would like a free copy of your credit report. If you find an error in your report, you are entitled to have it investigated by the credit bureau and corrected at no charge. However, if negative information on your credit file is accurate, only time and responsible credit habits can help restore your credit history.

It's important to note that financial institutions must make credit equally available to all creditworthy applicants. Under the Equal Credit Opportunity Act, you have certain rights that protect you against unfair credit discrimination. Under this Act, you cannot be denied credit because of:

• Age (unless you are under 18)
• Sex
• Marital status
• Race
• Religion
• National origin
• Income derived from public assistance
• Intent to have children
• Birth control practices

You can only be turned down for credit based on:

• Your credit history
• A current or former spouse's credit history
• Other financial information

If you suspect discrimination by a bank, savings and loan or credit union, ask for the name and address of the federal agency that enforces the Equal Credit Opportunity Act (depending on the institution, this will be either the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision or the National Credit Union Administration). The Equal Credit Opportunity Act mandates that the creditor must give you this information. Not every institution can act on your individual case, but they can track your complaints, along with other similar ones, in order to find a pattern of discrimination.

If you suspect discrimination by a retail or department store, finance or mortgage company, utility, state credit union or government lending program, contact:

Consumer Response Center
Federal Trade Commission
Washington, DC 20580

The Federal Trade Commission (FTC) cannot intervene in individual disputes. However, the information you provide can show patterns of discrimination in which the FTC can act.

You can also direct complaints against all types of creditors to:

Department of Justice
Civil Rights Division
Washington, DC 20530

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 5 reasons to check your credit:

Ideally, your credit report is an accurate, up-to-date reflection of your credit history. However, since we don't live in an ideal world, there are many reasons that your credit report could contain inaccuracies that might prevent you from receiving the credit you deserve. The good news is you can take action to keep your report accurate.

Here are FIVE REASONS why you should review your credit report regularly:

1. Inaccuracies & Mixed Credit Files: Many inaccuracies on a credit report can be the result of simple human error, and are therefore are not difficult to dispute. Whether the inaccuracies relate to payments not credited, late payments, or data mixed in from the credit file of someone else with a name similar to yours, you will want to contact the credit bureau to dispute inaccurate information promptly.
   
   
2. Tracking & Payments: One of the most important elements of credit is a demonstrated history of on time payments. Once you send the check though, anything can happen--a delay in the payment being received can kick you over to a 30-day delinquency. This has a negative affect on your credit, and creditors don't take it lightly. If you call your creditor and explain the situation, they might adjust the info, but you need your credit report to know whether you have a delinquency or not.
   
   
3. Identity Theft: This issue alone is reason to order your credit report immediately. Identity theft is an insidious crime, involving a thief who assumes your name to open new accounts, divert your card statements to another address, and run up all sorts of bad debt without you ever knowing about it until collectors come calling. The best way to catch a thief who is using your name is by getting a copy of your credit report, which will show you if there are accounts listed you know you haven't opened. For example, if a thief has intercepted a pre-approved credit card offer in your name and sent it in with a change of address, your credit report will include the account.
   
   
4. Inquiries: If you're shopping around for a loan or more credit, you should know when creditors check your credit, it places an inquiry on your credit report. Inquiries can add up, which is often interpreted as negative by creditors. For this reason, too many inquiries can actually make getting credit more difficult. Moreover, if you didn't authorize someone to look at your credit report and they did, they may have broken the law.
   
   
5. Credit Fraud--Unauthorized Charges: Credit fraud involves the theft of your credit card or account number to make unauthorized charges to your account. Though consumers are protected financially from this abuse, other creditors may take note of all this activity and decide to raise your interest rates or refuse to grant you a loan. Ordering your credit report will help you catch new activity on accounts that you haven't been using, or may have closed. When it comes to managing your credit worthiness, your credit report is your best resource. Your credit report gives you the opportunity to manage your credit wisely, while planning your credit strategy for achieving future goals.

* To receive a free copy of your credit report, go to our Credit Reports section now!
 

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