Reading Time: 4 minutes How to maintain a good Credit score!  Many people are bothered about it. Why? Credit plays a very important role in economic development.  Businesses use credit to purchase productive resources and individual use it to drive consumption.  Lenders use credit scores of potential borrowers to take lending decisions. Your credit score determines your ability to obtain credit.  The better your assessment, the easier for you to get loans from banks and other formal financial institutions. Good credit score also means that you get the loans at lower interest rates amongst other benefits.  Role of Credit Bureau Credit reference agencies or credit bureau have the responsibility for collating credit information and borrowers financial history.  Using predefined parameters, these credit reporting agencies  also calculate and rate borrowers.  In the United States of America, there are three main credit bureaus.  Theses are: Experian, TransUnion and Equifax. Each of these agencies covers different region of the United States.  Experian serves Central region, TransUnion, West and Equifax covers South and East areas. So when you apply for a loan from a bank, or want to increase your credit limit, the bank will request for your credit report from one of the credit bureau.  Some employers of labour also request for credit reports on certain categories of employees. The lender or potential employer will use the credit report to assess your suitability or reliability as the case may be. It is therefore important that people conduct their financial affairs carefully.  Even if you have never borrowed before. How to Maintain A Good Credit Score If you desire to keep good credit rating, as I think you should, here’re my ten top tips. #1 Develop good money management principles  Knowing how to manage your money well is the first step towards building a sound credit profile.  Many people are in debt trap because they have very poor money habits. Set up a budget and keep to it. Spend less than you earn. By all means, don’t buy things on impulses; plan your spending.  Actively manage your bank account by knowing all the details of what goes into it and comes out of it. These are some of the personal money management strategies that will help you live productive life, stay out of debt and maintain healthy credit records.  The reason is that if you maintain good money habits, you will not likely borrow unnecessarily. Most people hamper their credit records due to irresponsible borrowing. #2. Build Your Credit Profile Start building your credit records positively.  This you can do by opening and maintaining active accounts that lenders report to credit bureaus.  A great way to start is to obtain a reward credit card.  Reward Cards come in either of cash back, that is, a card that gives you back a percentage of your spending.  Or travel credit cards, which gives you point for every dollar spent and which you can redeem in the form of free travels. #3. Keep Records of Your Spending You must track your spending.  This does not only help you maintain a good credit record.  It’s a very essential money management strategy that improves your personal finances. What would you be keeping records of? Cheques you write, Usage of ATM Card, Credit Card transactions, Debit Card transactions, etc.  Always confirm transactions in your account and report discrepancies within a reasonable time. #4. Always Pay Your Debt Promptly Whenever you had cause to borrow, endeavour to pay promptly.  If for any reason you are unable to meet the deadline, report quickly to the lender and get an extension or renegotiate terms.  Never give the lender any cause to forward your records to the credit bureau as delinquent transaction. This advice applies whether you are taking a personal loan, business loan or spending from credit cards.  And with particular regards to credit cards, ensure you pay more than the minimum monthly payment, if you are not able to clear the entire outstanding balance.  This helps to reduce finance charges. Do not miss payment, it has a negative impact on your credit history. #5.  Keep Within Your Credit Limit Not spending above the credit limit on your card or a line of credit from your bank will give you a credit boost. As a matter of fact, it is best  to spend below your credit limit.  Sound practice is not to allow your credit card debt exceed more than 20% of your annual income. #6. Update Your Contact Information Are you moving or changing your contact address? Don’t forget to update your contact information with your lender or card provider.  It is a mark of credibility.  This will also ensure that your statement and important correspondences are delivered to your new address. #7. Set Up Automatic Payment Setting up an automatic payment system for your loan repayment or credit cards payment is a great way of ensuring you don’t miss any payment.  At least set it up for the minimum amount due. #8. Have a Limited Credit Cards The more often you apply for credit cards, the more inquiries on your records.  New accounts and regular inquiries are capable of depressing your credit scores. #9.High Credit Utilization    Keep your credit utilization ratio at between 10 – 30%.  Credit utilization is the amount of draw down on your available credit.  That’s the amount of credit you have used out of what has been made available to you.   Lenders pay attention to credit utilization because high credit utilization may mean that the borrower live his life more on credit.  And this can be a red flag that may affect your credit score. #10. Monitor your Credit Report Something can go and errors appear in your credit report that may lead to a bad credit score.  There could be a fraud on your credit card or identify theft that may impact on your credit report. So it is important you pay attention to your credit report.  Identify any inconsistent and call the attention of the credit monitoring services or reporting agency to get it corrected. In Conclusion Having a good credit score gives you a lot of benefits.  It enhances your your financial position and presents you as a better borrowing candidate.  You will be in a position to borrow more and less interest if you have a good credit record.  So it is important you know how to maintain a good  credit score. The first step  really is to understand the factors that affects your score .  This include payment history, credit usage, your credit history and credit mix.  Understand these factors and know how they impact on your credit score.  Then arrange your affairs in such a manner that you score high on each factor.     

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