Friday, June 21, 2013

Personal and Business Credit Score

Your personal and business life, is a good credit score. In fact not only will a good credit score get you credit, but it will get you more credit at cheaper rates. And in reality by following a few simple rules, it is easy to get and maintain an exceptional credit rating. In fact it is not hard at all to go from 0 to 850 in less than 5 years.

Here are some of the basics that have work exceptionally well for me in several countries around the world.
Step 1: Get a credit card.

This is without a doubt one of the simplest ways of building a good credit history fast. Credit card agencies report regularly and so it will grow your credit history with haste. Of course the question is how to get a card if you do not have a history.

Most financial institutions would be willing to give you a credit card if you are willing to make a deposit for the value of your card limit, typical allowing them to hold that deposit in a savings account as surety. This way the bank has no risk, and you get your card.

And if you manage your card well, within about one and half to two years it would be possible for you to get unsecured credit.

Step 2: Pay your card in full

One of the most critical aspects of successful credit card management is that you do not use it as a loan. It should be a convenience card, and you should pay the full amount outstanding every month, and on time of course. So do not spend money on your card that you are not able to pay in full. The interest on outstanding amounts are astronomical and so avoiding unpaid debts on your credit cards are essential. The other benefit of paying your card in full is that your available credit to used credit ratios will look better, and this will improve your score even more.

Step 3: Get secured credit

If you do not own a home, perhaps it is time to consider buying one as soon as possible. This is a very cheap form of credit, and there are several options available that will allow you to minimize your monthly payment and still get the full benefit of positive reporting. Interest only type accounts, secured against your home, will make it possible for your to not only improve your available credit to usage ratio as well, but also reduce your payments monthly, making it easier for you to keep up. Remember though, paying on time is still essential.

Step 4: Manage your bill payments with diligence
Paying on time will prevent negative reporting, and so it is important for every commitment you make. Overdue accounts will get reported and cost you dearly on your score.

Step 5: Live within your means

Having a regular income will prove helpful for your relationship with your bank, and of course may impact on your credit score. What is more important though is that you live within your means. The banks and the credit agencies have several formulas and ways to calculate your financial position and so making sure that you can afford your commitments, before you make them, will show up somewhere. And if done properly.

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