Sunday, January 10, 2010

9 Ways to Protect Your Credit and Increase Your Credit Score

If you do a search on the internet you will find thousands of websites that provide tips or tricks on how to increase your credit score or repair your credit. This means that there is something about having good credit. Good credit opens the doors to various benefits and perks.

Good credit increases your chances of being hired for a job, provides you with cash back rewards, good interest rate and terms, skip a payment options, notices about sales or discounts, automatic credit limit increases without a credit check, and more. This year make a promise to yourself to repair your credit and increase your credit score. Here are 9 ways to protect your credit and increase your credit score.

1. Create a spending plan. Create a budget or spending plan to keep track of your spending so you can readily see where you money is going and make adjustments.

2. Reduce spending. Live below your means. Use coupons; buy items in bulk or on sale to reduce the amount of money you spend each month. Buy more needs vs. wants.

3. Pay down debt. Keep balances at 30% or below the limit. Having credit cards maxed out or close to the limit decreases your credit score.

4. Pay on time. Pay your bills at least 7-10 days before the due date to avoid late fees and penalties. You made an agreement with your creditors to pay your bills on time so try your best to keep that promise.

5. Don't open too many accounts. Don't open more than one account per year. You may be surprised to know that opening more than one new account per year will lower your credit score.

6. Don't close accounts. Don't close accounts that have been open for 2 years or more and don't close accounts that are in good standing. Closing accounts can decrease your credit score.

7. Be honest. Explain to your creditor the reason why you didn't pay your bills and that you are ready to pay back the debt. You may have to convince them several times because you have a bad track record. Notify them in writing of your willingness to pay.

8. Don't Hide. You can run but you can't hide. Call your creditors to setup a payment plan but don't avoid them. They will find you.

9. Don't Believe the Hype. Many times creditors use threats, insults and dishonesty to get you to pay your bills. Know your rights and don't agree to anything over the phone. Ask them to state their terms in writing. Review the Fair Credit Reporting Act on the Federal Trade Commission website for information about your credit rights.

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