Good Credit Practices for Protecting your Credit and Increasing your Credit Score

Your credit history is an important part of your future; therefore, you should continuously practice good credit practices. Approval for a loan, mortgage, rental application, or even employment hiring decisions may be affected by your credit history. As a result, a good credit ranking can become a valuable asset, while poor credit practices have the potential to not only limit you borrowing capabilities but affect other factors of your life as well.

To assist in good credit practices, there are some basic practices...

Be consistent in your identification. Carefully review all credit applications to make sure the same name is used each time (for instance, if you use your middle initial, do so on all applications).
Keep track of your charges and do not exceed your credit limit. It can be easy to use your card to make purchases. Be careful though! Your card has a preset limit. On many cards, if you charge over that limit, you can be assessed an over-limit fee, and in the long run, you may not be able to pay your monthly balance off.
Budget yourself and stay within that budget. The best way to not overspend is to spend within your budget. Even though you have the ability to buy things now and pay later, you still have to pay eventually. Over time, even a small balance can become large if you don't make necessary payments. Also, be prepared for unforeseen problems. A credit card can be an invaluable resource in an emergency, but you won't be able to use it if you don't have the available credit. If you start having difficulties paying credit card bills, contact your creditors as soon as possible.
Pay on time. Make payments on time and always pay at least the minimum amount required. When late payments are made, or no payment is made at all, this information is reported to the credit bureaus. The credit reports maintained at the bureaus are what most (if not all) companies use to make credit decisions about home loans, car loans, personal loans, and credit cards; therefore, paying on time is the key to a good credit rating.
Notify creditors of address changes. Immediately notify creditors when you move to ensure bills will arrive at the new location on time. When possible, report any change of address prior to moving.
Notify creditors quickly should you experience problems making a payment. Many times, the creditor will work with you to make payment arrangements or options to assist you. Together you should be able to figure out a realistic payment schedule.
Report lost or stolen credit cards. If your card is lost or stolen, notify your credit card provider as soon as possible. You are not liable for any charges if you report the loss before the card is used. If the card is used before you report it missing, the most you will owe is $50.
Check the accuracy of your credit report. The Fair Credit Reporting Act controls how your credit history is kept, used and shared among lenders. It is designed to promote accuracy and ensure the privacy of the information used in credit reports. Regular credit report accuracy checks with the three major credit bureaus – Equifax, Experian, and Trans Union can help to identify potential errors in your credit report. Typically, there is a charge for obtaining a credit report, but it is important to maintain the accuracy of your credit report. Anyone who takes adverse action against you in response to a report supplied by a credit reporting agency (CRA) such as denying your application for credit, insurance, or employment must give you the name, address, and telephone number of the CRA that provided the report.

To receive a copy of your credit report, call or write the three national credit bureaus:

Equifax P.O. Box 105873 Atlanta, GA 30348 1-800-685-1111

Experian P.O. Box 2104 Allen, TX 75013-2104 1-800-682-7654

Trans Union P.O. Box 390 Springfield, PA 19064-0390 1-800-916-8800

If you discover an error, take care of it early. Billing and credit report errors can quickly destroy a credit history that has taken years to build. As a result it is extremely important to note and immediately correct any errors that may affect your good credit standing. If there's an error on your credit card billing statement, notify your creditor right away. You will not have to pay the disputed amount until after the problem is investigated, and your nonpayment of that amount will not be reported to the credit bureaus during the investigation. Whatever you do, do not ignore the error. If you fail to contact your creditor and refuse to pay the disputed amount, it will usually be reported to the credit bureau as late or insufficient payment.

If you find an error on your credit report, write to the credit bureau immediately and explain why you feel the information is incorrect. Include any paperwork that will support your claim. Under federal law, if the credit bureau cannot verify the information as correct, the credit bureau must correct the error or delete it from your file. If you disagree with the credit bureau's findings, write a brief statement to the bureau explaining why. This statement will become part of your credit report. See above for information on contacting the 3 major credit bureaus.

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Good Credit Practices for Protecting your Credit and Increasing your Credit Score