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Dos and Don’ts in Credit

Loans are difficult to obtain now, so it is more important than ever to know some key Dos and Don’ts with regard to protecting your credit as it is reported to the credit agencies.

1.  Check your credit report for inaccuracies.

79% of the 202 million credit reports have some form of error or mistake.

2.  Look for double reporting.

Collection accounts are sold to other agencies.  Only the original creditor and final collection agency should remain open.

3.  Look for High Limit or High credit

Some creditors do not report high credit or high limit, for fear of solicitation.  You want to make sure these limits are reported.  Otherwise, an account could be placed in maxed out status.

4.  Pay down credit cards to 50% or less.

Below 50% will put you in positive territory.  Ideal target is 20%.  FICO states that the top FICO score holders have an average balance of

7%.

5.  Settle Collections and Charge offs for deletion.

Paying a collection account will have a neutral to some positive affect.  A deletion letter will generally have a good increase to the score.

6.  Do not close your credit card accounts.

30% of your FICO score is revolving debt.  The scoring system wants to see available credit.  If you close the account, it goes to 100% maxed

out no matter what the balance is until 0.

7.  Avoid Past Due Accounts.

This has a huge negative impact.  A past due account can be reported 1 day after due date.

8.  Use your credit cards once every 6 months.

If there is inactivity on your account for at leastt 6 months, then your FICO score may go down.

9.  Review your credit report every six months.

You may obtain a free report from all three bureaus once a year at www.annualcreditreport.com or for a fee from www.myfico.com.

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