Some Tips That Can Help
1. Be careful at ATMs and stores where you use your card. It isn’t difficult for someone to see the pin number your punch in.
2. Make sure you put your credit card receipts in a safe place. Very few credit card receipts list your full account numbers and expiration dates, but you may run into a situation where it does. It may be something as innocuous as a small charity function using an old credit card machine. Stay on your guard no matter where you use your card.
3. One of the cheapest ways to protect yourself is with a shredder. Shred everything, including credit card receipts (after you’ve reconciled your bill), old bank statements, medical statements, everyday bills, and pre-approved credit card offers. Any document that has personal financial information can be an open door . As an added bonus, if you have a fireplace, use the shredded paper as kindling. Then you definitely don’t have to worry about it.
4. Do not provide your Social Security number, bank account number or credit card number to anyone who contacts you through telephone solicitation. You may think you are talking to someone reputable but acting is one of any identity thief’s skills.
5. Monitor your credit accounts carefully, so you’ll know if a bill’s missing or unauthorized purchases have been made. Close out unused credit cards and then shred them.
Building Business Credit
Bad credit can keep you from buying a home, financing your education, and even from getting a job. This is why it’s so important to build a good credit history.
Starting with your first credit card, everything you do that involves credit becomes part of your credit history. To have a good credit history, you have to use credit responsibly. But what counts as using credit responsibly?
1. Charge only what you can afford to pay
When you get into the habit of charging only what you can afford, it lets future lenders and creditors know that you are a responsible borrower. You’ll find it easier to borrow money and get new credit when you show that you know how to only borrow what you can pay back. Not only that, only charging what you can afford helps you avoid excessive debt.
2. Use only a small amount of the credit you have
Maxing out your credit cards – or even coming close – is one of the most irresponsible ways of using credit. Chances are that you can’t afford to pay off a maxed out credit card balance. Lenders know that borrowers who max out their cards often have difficulty repaying what they’ve borrowed. Staying below 50% of your credit limit is wise, below 30% is best.
3. Start with only one credit card
Many first-time credit card users accumulate a collection of credit cards within their first few years of using credit. Don’t do this. The more credit you have, the more you’ll end up using. Learn how to be responsible with credit before you apply for additional credit cards.
4. Pay your balance in full and on time
If you’re only charging what you can afford to pay, this won’t be a problem. Paying off your balance each month shows that you’re capable of paying bills, something creditors and lenders want to see. Since a large part of your credit score includes timeliness of your payments, paying your balances on time improves your credit.
5. Carry a balance the right way
Having a credit card balance isn’t bad as long as you do it the right way. Make more than the minimum payment each month to pay off your balance as quickly as possible. Avoid making late credit card payments and continue to keep your balance at a reasonable level. If you follow these principles, carrying a balance won’t hurt your credit.
Credit Restoration 101
1. Make A Plan And Stick To It.
You must be serious and committed to making changes in your lifestyle – changes that will bring financial peace of mind. Above all, restrict yourself to absolutely necessary purchases. Borrow wisely. The two most important questions to ask yourself: “can I afford it?” and “do I really need it?” As tempting as it is to cut up all of your plastic, you must maintain responsible credit card use – your new payment history will gradually rebuild a better credit rating for you.
2. Prompt Payment Of Bills.
Especially of credit cards, is the surest way to repair your credit rating. As you have discovered, we leave “financial footprints” for all to see. Payment of our bills, both amount and timeliness, are tracked by credit rating agencies such as Equifax Canada and TransUnion of Canada.
3. Say No To Grace Periods When Offered By Credit Card Companies.
It’s hard to resist such offers, and because your budget is light, you naturally want to “legally” skip payments — but don’t do it. It’s a bad credit habit; only a financially strapped customer would fall for this, and you no longer want to send out that kind of message. Pay at least the minimum balance if you are really tight, but ideally you want to pay above that.
4. Always Try To Pay More Than The Minimum Balance Due.
Not only does it polish your credit rating, but it also saves you a lot of money in interest, and makes a huge difference in your eventual goal of debt retirement. A key credit skill.
5. Keep Your Balances Low.
This is an important strategy, and one that will reflect well on your use of credit. You want to keep your balance way below the credit available to you.
6. Don’t send out financial distress signals.
Avoid excessive inquiries for credit. Do not use credit from one company to pay off credit to another. The creation of multiple new accounts is another red flag that works against you.
7. Maintain and use between two to four cards.
Less that two and it takes longer to create a new payment history. More than four, and you look like you cannot manage your debt. Remember – responsible, steady, and reliable use of your cards is your first and best defense against a poor rating.
8. Try To Keep Your Oldest Most Established Credit Card Active.
The longer your history is with a certain company, the better it is for your credit rating. This is your most important account. If the interest rate is excessive, contact the company and explain your situation to them. Let them know that you are serious, and eager to maintain them as a creditor. Their goal is to keep a reliable customer, so make that work for you.
9. Slow and steady wins the race.
You’ll be rewarded for responsible longtime credit handling. Be patient — the passage of time will earn back your good credit profile.
Then, when you do need credit for a major purchase — such as a car or a house — it will be there for you. Once recovered, maintaining a good credit rating takes vigilance, but it’s worth the effort. You’ll be able to live and enjoy a financially stable life.
