Tips on How to Keep Your Credit Score from Lowering

by Thane Rutledge
If your credit score is under 630 or so, then you have a problem. If it's in the 500 area, you definitely have a problem. If you have a score in the 400 region, well, you have your work cut out for you.

While working as a loan agent, I came upon credit issues with clients everyday. I saw great credit and bad credit, exceptional credit and abominable credit. By working with so many credit issues for such a protracted period of time, I learned a lot and I'm happy to pass that info on to you.

Believe it or not, it's a lot easier than you might think to at least maintain your score but it's also not that hard to improve your score. There's really no great mystery to it. Having credit worthiness is the heart of our capital system today and needless to say, if you don't have good credit, then you won't get a mortgage, a HELOC, a credit card, a car loan, not even an ATM card without limits. Taking care of your credit is important

Okay, enough preamble. This article will give you basic, simple, yet practical tips that can help you to keep your credit score from lowering and allow you to even improve it. Let's get started.

1. Not a lot of consumers know this but according to the Big Three of the credit world, Equifax TransUnion, and Experian up to approximately 30% to 35% of your credit score is determined by your payment history. This didn't always used to be the case but it is now. Believe it or not, if you miss just one month's payment on a tradeline, it can drop you 100 points. That 100 points could be the reason why you get that better interest rate on your home equity line of credit or that car loan or that business loan.

2. Here's the simple yet powerful secret of getting a good credit score: your credit rating and score is made up of your demonstrated ability to pay all your bills on time. Pay your bills within the time allotted to you by the company that extended to you the credit. Prompt payment in housing and car loans have especial weight but lenders certainly don't diminish the demonstrated ability to pay a credit card consistently on time. Okay, first thing to do proactively besides paying your bills on time is to get a copy of your credit report. Mistakes on credit reports are common my friend. In my experience, about 1 in 5 have an error although the industry tolerance is 1 in 10. That's nonsense. It's worse than that. If there are any mistakes on your credit, they can be fixed. You'll need documentation to prove your claim but if it's clear and you make it easy for the credit company, they will remove mistakes and that will automatically cause your score to go up. At the end of every credit report are the names and address of the Big Three. Contact them and get it started.

3. Avoid bankruptcy and foreclosures. A bankruptcy will lower your score from 150 to 200 points. If at all possible, avoid it. Bankruptcy statements on your credit report actually stay there for for up to 10 years. Foreclosures around nine to 10.

4. Close old accounts. The number of tradelines (accounts) that you have open is a determining factor in your credit score. By consolidating your debt into one credit card if you can and by closing unused accounts, this will help your score. I still remember the very first loan I did on my own. The man had about 15 tradelines open and even though he paid his debts faithfully, his score was only around 540. I got him a debt consolidation loan on his refinance that allowed him to take some of his equity out (he had a lot of built up equity) and he used that to pay off all his debts. Within six months, his score was in the high 690 range. For some lenders, they consider that A-paper territory. You should do the same.

5. Not a lot of people know this but your credit card company sends out a report once a month to the credit bureaus regarding your outstanding balance. By having a low balance, or none at all, you are showing yourself as financially responsible to the Big Three and the consequence? It's then part of their calculation to improve your score.

There you have it. In summary, your credit score determines so much of your financial life. Like I said, getting a car loan, a mortgage, or a school loan is determined in many cases on your credit score. It's even becoming important as a determining factor in gaining employment. The current company I work for asked me to sign a waiver allowing them to check my credit. I was surprised for it was only the second time that has happened to me. I suspect it will become more common.

Now you have the knowledge you need to improve your score and in how to maintain it.

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