Did you know that credit reports over the last decade are used by more than just lenders or those alternative financing institutions responsible for approving credit for credit cards, homes or automobiles?
Today, it is more important than ever to maintain a great credit score and have a system in place to pay your bills on time. In fact, it is not a secret that a growing number of companies — and many of them having nothing to do with offering credit to borrowers — are scrutinizing the data on credit reports to decide whether to hire, do business with or insure you for personal, life, health, property, homeowners or something as basic auto insurance. These companies have their own models and rules-of-thumb in place when considering job or credit applicants and, in most cases, their models are private.
Fortunately, having the knowledge early regarding these new developments in credit scoring will help many people plan out a strategy to build, restore or maintain favorable credit profiles. Credit is important even for the wealthy that are able to buy with cash because it paints a picture of how well one manages his or her lifestyle. In addition, it demonstrates to bonding companies, employers, lenders and anyone else interested in your profile that you are capable of keeping your word, thus allowing agencies, organizations and companies considering credit offers relevant and pertinent data to make a calculated decision based on both character and history.
Now is the time to start seriously managing your credit history and improving your credit score. Here are some tips I have identified that, if followed, will help to improve your credit score for the future:
- Paying down credit card and other debt.
- Making payments on time.
- Refraining from closing credit card accounts that have been held for a long period of time and that help reestablish a long payment history.
- Avoiding opening new accounts.
- Establishing a long term credit history using a secured credit card.
- Avoiding cosigning for others with less proven repayment history.
- Prohibiting authorized users from your account without established budget boundaries.
Valerie Samuel is a business and finance expert and author with more than 20 years experience in business development and banking. Email your questions or participate in this forum by submitting inquiries to [email protected] or by calling (212) 292.5127 or visit her website www.valeriesamuel.com for more information.