6 Easy Credit Tips

The financial crisis has been devastating for Americans from all walks of life, except, for those working on Wall Street. One in six Americans who want a job are unable to find one. And, for the majority of those lucky enough to have steady employment, the current state of the economy is forcing ordinary Americans to rethink and, most likely, to reshuffle their personal finances in order to weather the financial storm.

For these reasons, it has never been so important to establish a good credit rating than today. Here are some tips on maximizing your credit rating, and thus, your economic freedom in these trying times.

• Check out your credit. You are entitled a free look at your credit report – lenders use these to rate your credit prospects – once a year at AnnualCreditReport.com. Use this opportunity to see how the lenders see you. Lenders use your credit report to determine your credit score, a three digit number which gauges your credit rating.
• Pay your bills on time. Late payments could haunt your credit rating for a lifetime. If you can’t pay your debts on time, then look into bill consolidation, and consolidate your debts against your equity, such as a house or car. Save yourself from an unnecessary credit life-sentence. It can take years for the effects of late payments to fade from your credit rating.
• Don’t max out! The amount of credit you use and with timely payment are the most important factors considered when calculating your credit score. If possible, don’t charge more than 30% of your credit card limit. Ideally, you shouldn’t even use more than 10%.
• Set up savings accounts. Savings and checking accounts are viewed as an indicator of stability and, depending on the fees, are essentially no-risk accounts.
• Apply for a store card. Department store charge cards are easier to get than credit cards. The only drawback is that they don’t swing as much weight for your credit rating as bank cards, but, as per usual; risk is proportionate to reward.
• Share liability and credit. By sharing an account, or having someone with a good credit rating co-sign with you on a loan, you can share in their good rating. You might even be able to get loans you wouldn’t have been offered normally. However, this decision shouldn’t be taken lightly, as your co-signor will share the liability if you default on the loan; so be careful.