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Maintaining Good Credit

Now that you have worked hard to restore and re-build your credit, it’s important that you keep it that way. Follow these tips to make sure your credit stays on track in the future.

Pay your bills on time. Setting up on-line payments for your bills is any easy, secure and convenient way to simplify your finances. Automatic payments will make sure your bills are paid on time and will prevent you from incurring any future late fees or negative marks on your credit file.

Show you can use credit responsibly by having a few revolving accounts open and active. Charge small amounts regularly on each card -- but keep that balance at or below 35% of your credit limit. Some consumers use their credit cards for staples such as gasoline and groceries and pay the balance off each month.

Use your credit wisely. Do not open unnecessary credit accounts. The extra 10% off you save to open a department store credit account may be quickly offset by the possible decrease in your credit score because (1) you may spend more increasing your debt, and (2) you are adding an additional trade line and inquiry to your credit file. Before you apply for additional credit, make sure your rent, mortgage and car payments can be easily met. If not, do not apply for additional credit until your income and debt are under control.

Be cautious with credit card solicitations. Credit card companies frequently target consumers for additional credit card offers based on past spending histories, specifically, consumers with a past spending history indicating a pattern or willingness to charge big balances at high interest rates. Keep in mind, these offers are not based on your income and just because you receive one of these offers, it does not mean that you can afford the additional credit.

Do not close credit accounts unless it is absolutely necessary in order to obtain a loan. When you delete a trade line you also delete the corresponding credit history and may inadvertently lower your credit score.

Pay down or pay off credit cards before seeking an auto or mortgage loan to obtain the biggest score increases.

Review your accounts and make sure your credit limit on revolving accounts is reporting correctly. Consumer advocates have reported that it is a practice among credit card companies to understate current credit limits in order to thwart competitors from targeting these consumers for other credit offers. In other words, the lower the credit limit, the higher the debt to credit limit ratio, and the less appealing the client looks to other lenders.

Review your credit fie for duplicate accounts. If a lender sells your loan, make sure the original loan is reporting closed so your debt is not overstated.

Review your credit file at least twice a year for errors and omissions.

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