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7 Tips on Building and Maintaining Good Credit
Good Credit is the key to a solid financial future. When establishing financial fitness goals it’s easier to build a credit score than to repair a bad one.
Having a good credit history is key to any financial plan. Credit scores take into consideration years of past behavior, so it’s important to establish a history of responsible credit practices and build your score by maintaining good habits.
Here are 7 tips to help build and maintain good credit.
- If you are just beginning to establish your credit history, open a checking account and keep careful track of your balance.
- Use debit and credit cards for convenience and safety, but not to overspend. Missed or late payments damage your credit and hurts your credit score.
- A good mix of credit (i.e., a revolving credit line and an installment loan) also boosts your credit score and further demonstrates that you can manage different types of credit.
- Demonstrate stability in the three to six months before a major purchase. Avoid opening or closing accounts or moving large amounts of money around.
- Build an emergency fund equal to at least six months of living expenses. If the unexpected happens, you will still be able to pay fixed expenses instead of falling behind.
- Alter your credit focus as you approach lifecycle stages. As you near retirement, for example, start paying down major purchases (such as a mortgage).
- Monitor your credit regularly so you can correct any errors and detect any potential signs of identity theft. Order a copy of your credit report annually from www.annualcreditreport.com.