How to Keep Your Credit Clean

Keeping your credit clean will depend on how well you pay attention to those three little numbers in your financial life. Your FICO score are those three numbers that can make your life wonderful or drop it down into the pit of despair. The FICO score is the number that many credit card issuers, mortgage lenders and other consumer finance companies use to determine how safe your are to lend you money. Here are some great tips on how to maintain a winning credit score and keep your credit clean.

1. Keep Your Credit Clean by Paying Your Bills on Time
Not only do you need to pay your bills on time, you need to do so every time. Any late payments are reported immediately to the credit bureaus and they will not look good on your credit report. A bad credit report will make it tougher to get credit and will boost your interest rates. If you need financing for a home or car, a lower FICO score could make that impossible.

2. Keep Small Balances on Several Credit Cards
Many credit cards companies will get nervous when they see a credit cardholder carrying cards that have been charged to the maximum amount or near the credit limit. If your balances are too high, there is a perception that you are living on just credit. Though many credit cards offer advantages such as reward points to use them, it might be a better strategy to spread your spending on multiple credit cards and to stay well within the credit limits.

3. It is not Wise to Shift Balances from Credit Card to Credit Card
Many times, we are presented with opportunities to shift our balances from one credit card to another to take advantage of a lower interest rate. However, you do this often enough; it becomes a warning signal to credit bureaus that you do not have the funds to pay your bills. It is better to pay off your debt than it is to move it around.

4. Limit Your Credit Card Applications
If you are applying for multiple credit cards, credit lines or other financing, credit bureaus become wary and will reduce your FICO number. Improve your credit score by obtaining more credit over time and building a credit history. This will make the bureaus more comfortable and lenders are more receptive to lending money to someone with a long credit history. Applying for too many credit cards in a short time will indicate a risk.

5. Avoid Personal Bankruptcy
Consumer financing companies are not very forgiving when it comes to personal bankruptcy. A personal bankruptcy filing can stay on your credit report for up to 10 years. Do whatever it takes to pay your bills, a loan from mom and dad, or a second job to keep your credit score intact. Beware of consolidating consumer debt companies that offer to help you settle with credit card companies for less. You maybe reducing your debt, but your credit score is still impacted.