Hot Tip
If your address changes, notify your creditors immediately.
When making a credit card purchase, ask yourself how quickly you'll be able to pay it back.
If you've been turned down for credit because of information in a credit report, you have 60 days to obtain a free copy of the report.
Maintaining good credit
Do you want to maintain your good credit rating or improve your credit rating if it is less than satisfactory?
Here's the good news: You can build and maintain a healthy financial history. In this section, you'll learn how to build a good credit profile, how to keep your debts manageable, where you can go for help if your debts become too high, and what to do if you're denied credit. You'll also learn how to manage your money with an interactive budget worksheet.
- Build a good credit profile
- Notify creditors of a change in address
- Manage your debts–reduce them too
- Find out why your credit application is denied
- Use the budget worksheet
Build a good credit profile
How you handle your credit cards and other loans affects your creditworthiness. Remember to use your credit responsibly and be sensitive to the terms of the payment agreements you made when you established your accounts. Whether you choose to pay the total outstanding balance on your bills each month or just the minimum payment due, your payment must reach the financial institution or business by the due date. If the due date is not convenient because it doesn't coincide with your paychecks, contact the creditor to see whether your billing cycle can be changed. Or adjust your budget accordingly. [top]
Notify creditors of a change of address
Whether you're moving across town or across the country, make sure your creditors always have your most recent address so that you'll receive your billing statements on time. Some creditors allow you to notify them of your change of address online. This also includes temporary address changes (like when snowbirds head south for the winter). [top]
Manage your debts–reduce them too
"Where did all my money go?" The easiest way to find the answer is to take the time to establish a monthly budget. Differentiate between the things you "need" and the things you "want." Start with your fixed expenses or "needs"like rent, food, utility bills, phone bills, car loans, and insurance payments. Then figure in variable "wants"like clothing, eating out and entertainment. Subtract your expenses from your income, and you have your starting point. If the sum is below zero, it's time to reduce your expenses by cutting out any unnecessary spending on "wants." You'll be amazed how much money you'll save by taking advantage of discounts. [top]
Some tips for spending less:
- Before you make a purchase, ask the merchant if a discount is available.
- Check out coolsavings.com to see whether they have coupons for merchants in your area.
- Review websites like buy.com before making any major purchases. They may offer the item you're purchasing at a lower price.
- Think before you buy. How many hours of work at your job will it take to pay for what you're purchasing? Don't spend more than you can pay off in a reasonable time.
- Look for supermarkets that offer "clipless coupon" store cards. When presented to the store cashier, these cards enable you to take advantage of special pricing and bonus buys on advertised items.
- Instead of running to the local convenience store to satisfy your late–night cravings, consider a 24–hour grocery store. Items in grocery stores are generally less expensive than items in convenience stores.
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Find out why your credit application is denied
If you've been denied credit because of information supplied by a credit bureau, federal law requires the creditor to give you the name of the bureau that supplied the information. If you contact that credit bureau within 60 days of receiving the denial, you are entitled to a free copy of your credit report.
If you find an error in your report, you are entitled to have it investigated by the credit bureau and corrected at no charge. However, if negative information on your credit file is accurate, then only time and responsible credit habits can help restore a bad credit history.
If the creditor informs you that your credit application was declined because of an "insufficient credit file", contact the creditor to discuss your situation . It might agree to give you a lower initial credit line to start your credit file, as long as you have income that supports your ability to pay the account. After using your credit responsibly for a period of time, you can request to have your line increased.
It's important to note that, under the Equal Credit Opportunity Act, financial institutions must make credit equally available to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age, and without regard to whether all or part of the applicant's income derives from public assistance, or if the applicant has in good faith exercised any right under the Consumer Credit Protection Act. [top]