Credt Scores and Mortgages
A credit score is a terrible thing to waste: Keep you credit score healthy by following some simple advice
Manage your debts well
This is perhaps the best and simplest advice available for maintaining a good credit score. Having debt, in and of itself, will not necessarily damage your credit score.
Your credit score is a snapshot analysis of your past credit history, and is used by lenders to figure out how much of a risk you represent to them. Credit scores range from a low of 300 to a high of 850. The higher the score, the better you look to lenders. To be eligible for a lender's best rates, you need to have a credit score of 700 or higher.
Oddly enough, recent studies have shown that consumers with debts in amounts above the national average - tend to have better credit scores. This is because they know how to manage their debt well.
Here is how you can manage your debt so that you can keep your credit score high:
- Do not miss payments or make payments late. There is a universal default penalty whereby credit card companies are allowed to increase your interest rate if a late payment shows on your credit report for any credit account or loan on your report!
- Keep your debts at 50 percent or less than your credit limit. This shows that you are responsible in managing your credit.
- Avoid making too many applications for credit in a narrow time frame. Asking for too much credit in a short period of time is view by credit reporting agencies as a sign that you are getting in too deep with credit.
- Do not overextend yourself when it comes to credit. It is easy to do. When your balances get too high, you will find yourself merely servicing the interest on your debt without making a dent in the principal.