The Importance of Good Credit Series – #8
Keeping Your Credit Strong
Now that you have established credit, you must work diligently to keep it in good standing. Here are some things that will jeopardize your good credit if you are not careful:
1. Late payments. All late payments will be noted on your credit report, even if you make up the payment later. You must pay your bill before the due date. When making your payment, be sure to allow for the time it takes your payment to arrive at your lender’s office by mail. When in doubt, pay your bill a few days early to be sure it arrives on time. If you miss your due date, you could face costly late fees in addition to the negative credit implications.
2. Borrowing more than the credit limit. If you use your credit card to purchase more than your credit limit allows, you are required to pay the overage plus your normal minimum payment. Additionally, you may be required to pay a penalty fee for exceeding your credit limit. These fees can add up quickly. (If you need additional credit on a regular basis, you should ask your creditor to raise your credit limit. You also should review your spending habits to see if there are any charges you can eliminate or pay for with cash.)
3. Insufficient funds to pay for checks. In addition to incurring expensive bank fees, your returned checks due to insufficient funds may be reported to a credit bureau and may be reflected on your credit rating. Be sure you balance your checkbook, and be sure you have enough cash in your checking account to pay for every check you write. To keep your balance up-to-date, be sure to deduct from your check register all your ATM withdrawals, any fees charged for use of ATMs and any debit card transactions.
4. Defaulting on a loan. An unpaid loan balance reflects negatively on your credit report. You should contact the creditor to see if you can resolve the situation. It is best to resolve the situation, since the negative report will stay on your credit rating until you resolve it.
5. Unpaid liens (collection judgment) or child support. If you owe money because of a legal judgment, it can be reported on your credit history. Resolve these matters before you apply for a home loan. Consult with an attorney or your local legal aid society for