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The 4 Keys To A Good Credit File

Keys to establishing and then maintaining a good credit file

Repairing your credit file is one step.  Establishing and maintaining your credit file is another.  Here are some ideas to help you get a good credit file...  and maintain a good record.

Get credit in your own name - Whether single, married, separated, or divorced, you are entitled to a credit file in your own name.  If your spouse or former spouse had or has bad credit and most credit was in the spouse's name, it would definitely be advantageous to have your own credit file.   Even if debt was joint this could be a wise strategy because by separating the files and insisting that your file not include any of the spouse's credit, some negative credit could easily disappear.

Know how credit offers are evaluated - When you apply for credit, most often a credit or risk score is assigned to establish your probability to repay the debt.

  • Capacity:  A creditor wants to understand your ability to repay.  But additionally they want to know how much debt you can realistically be expected to pay back.  How long have you been on the job?  What is the likelihood of advancement?  Is your job and industry stable?  Are you a secretary or and executive secretary?  What is your current debt ratio?  What kind of debts do you have?   Are they all unsecured such as credit card?  Is there secured loans such as car or home?  How long have you had these accounts?  Do you have a good history of on time payment?
  • Collateral:  Do you own a home, mutual funds,  etc.   This area could be crucial in procuring a loan if you have many late payments. 
  • Character:  your character shows through in objective manners such as, how long on the job and how long at your residence.   Similarly do you have checking and savings or just checking.

Bolster Your Chances of Approval:

  1. Always apply in the exact same name.  Don't use a middle initial sometimes and not others.  Be consistent.
  2. Bolster your credit application.  If you have negative remarks is there a reason?  If so state it VERY briefly.  If you are an administrative assistant, don't say clerk typist.
  3. Apply for credit when you are most likely to get it.  For example apply when employed, have lived someplace for a lengthy time, have not had too many inquiries, etc.
  4. Apply with creditors with whom you have a history.

Apply Credit Wisdom When You Have Credit:

  • Scrutinize pre approved cards.  Many of these can be used for special catalog purchases only and are not accepted by most creditors.  Similarly don't be swept up because it offers rebates or other gimmicks.  What is the interest rate, annual fee, grace period.  Sometimes the gimmick could be a "good deal"... but sometimes the price might be just too high to pay.
  • If you have a card, protect it.  For example, normally do not give your number out to a salesman who calls you on the phone.  You have no idea who you are talking to unless you placed the call.
  • Rather than going over your limit, ask for an increase.   Send your creditors a change of address.
  • Once approved for a card, do not go on an ego trip and "stock up" on more cards.  There is a great danger in relying solely on credit  and running up balances. Guaranteed,  they will get out of control.  Similarly many creditors will frown on too many credit cards that are unused.  You can feel greater power by refusing an application, than by accepting another one.  Once you learn to control credit, credit applications will always be available to you. 

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