How to Maintain a Good Credit Score
Apply for a Loan
Secured with SHA-256 Encryption
UPDATED: Sep 12, 2011
Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.
One of the most important things that many lenders consider is your credit score, which indicates the borrower’s financial history and his or her ability to pay back debt. A bad credit score, while not a death sentence, can cause a plethora of problems when applying for or paying back a personal loan.
A credit report, though different companies can vary, usually contains the same basic information, which a lender uses to grant a personal loan. The first is the individual’s personal information; his or her name, Social Security number, date of birth, address and employment information. The second is information about all the accounts the individual has open, including auto loans, credit cards and mortgages, and the payment history for those accounts.
The third item is the individual’s history of credit inquiries, or the number of times he or she has authorized access to his or her credit score. The final piece of information is the individual’s negative items, including overdue debt, missed payments, legal suits and bankruptcies.
The first step in managing credit is to review his or her credit report and know his or her credit score, the most common of which is called a FICO score. It is important to check this report – most financial planners advise about once a year – but making inquiries more often than that can also be harmful. One of the important reasons to check this score periodically is to check for any errors and also for evidence of identity theft.
An individual can check his or her credit score in three ways: online (for free) at annualcreditreport.com, by calling 877-322-8228 or by mailing a request form to Annual Credit Report Request Service at P.O. Box 105281, Atlanta, GA 30348-5281.
There are a number of simple measures an individual can take to maintain or improve his or her credit.
Some actions to avoid regarding your credit include opening multiple lines of credit in a short period of time, short selling a home, cosigning on someone else’s debt – especially if they stop making payments, consistently paying only the minimum payments on credit card bills, requesting his or her credit score too often and applying for cash advances from a credit card. These actions may not significantly reduce the borrower’s actual credit score, but they stand out as alarm bells for potential lenders.
To maintain a good credit score, good financial practices are usually sufficient. It is important to pay bills on time, keep outstanding balances low on credit cards, pay off debt and keep on top of all accounts.