Credit has been tough to obtain these days, especially with a moribund real estate industry, and a lingering recession that’s continuing to do a lot of damage to investor and consumer confidence. Whether you want to buy a new home or car, or wish to avail of a personal or student loan, it pays to have a good credit score. A good credit score enables you to establish credit-worthiness, and allows you to get easy access to loans and other forms of financing, at lower interest rates. Here are five good ways for protecting a good credit score. Maintain A Low Credit Card Balance According to the Fair Isaac Corporation or FICO credit scoring system, having a low credit balance as compared to the amount of credit you’re authorized, helps to make you a good credit risk. For instance, if you had a $60,000 credit limit on your credit card, and you’ve only so far used $6,000, or 10% of the credit limit, your balance must never go up to as much as 30 percent of your card’s credit limit. Always make sure that you maintain a balanced proportion of used credit to available credit. The higher you credit balance goes, the more damage it will do to your credit score. Pay All Your Bills On Time According to credit experts, an estimated 35% of your credit score is based on payment history. By consistently paying your bills on time, whether they are credit cards or utility bills, insurance premiums, parking tickets and even library fines, your credit score will be further enhanced. Late bill or loan payments generally cut as much as 100 points from your credit score, which reduces your chances of availing loans and other forms of credit. Do Not Co-Sign A Loan Co-signing for loans perhaps may be one of the dumbest moves you can ever make. If ever you’re lured or tempted into helping a family member or friend get a loan, your act of kindness may actually do a lot of damage to your credit score. Because you agreed to co-sign, if the other person is late in making payments, your credit report will get a major blow in credibility. Co-signing also means that the individual you were co-sign for was not able to get the loan without your signature. Always be wary of co-signing a loan, especially if you cannot guarantee that the person will be able to pay his or her payments on time. Continually Keep Your Accounts Active Most creditors and lending agencies would rather prefer to see a verifiable credit history on their clients. If you wish to pay all your outstanding balances, and close all your accounts, your creditors won’t be able to determine if you’re in good financial standing, or if you’re paying your balances on time. However, don’t get used to transferring your balances from one credit card to another, because this will only do nothing but slash off more points from your credit score.
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