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Steps to Healthy Credit

There are five main and basic steps to help you work towards healthy credit. Managing credit can be easy if you take the time and gain a little knowledge on how your scores are calculated.

  1. Be Punctual- Be sure to always pay your bills on time each month. The biggest negative on your credit would be acquiring late payments, collections, and public records. Payment history calculates 35% of your score.
  2. Manage your debts- It is best to always keep your credit card balances paid to a 0 balance. Having a balance over 30% of your available credit limit is a risk you take at lowering your scores. Amounts owed calculate 30% of your score.
  3. Give yourself time- Time is a significant factor towards building healthy credit. Establish a long history of paying bills on time and using your credit responsibly. It is best to keep the oldest account on your credit report opened in order to lengthen your history of active credit use. Length of credit history calculates 15% of your score.
  4. Avoid excessive and unnecessary inquiries- Large number of inquiries in a short timeframe can be seen as a sign that you are opening numerous accounts due to financial difficulties or that you are overextending yourself by taking on more debt than you can handle and repay easily. Apply for new credit only when necessary and in moderation. New credit calculates 10% of your score.
  5. Healthy mixture = healthy credit- Have a good mixture of credit. The best ratio that has been determined is 3 revolving lines of credit to 1 installment line of credit. This will show that you are able to responsibly maintain different types of credit. Types of credit in use calculate 10% of your score.

It is also important to check your reports and take necessary steps to remove inaccuracies. Don’t let your credit suffer due to inaccurate information. You have the right to dispute inaccuracies on your credit report. Be sure to contact the creditor or collection agency associated with the account and the 3 credit reporting agencies to correct it immediately.

 

 

MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. For any questions or to schedule a free credit consultation, contact us at (866) 217-9841.

 *The information in this article has been provided strictly for educational purposes.

 

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