Credit Reports: Boosters



There are several things that can make a credit report look better than others.  For the most part, maintaining a clean record can keep the credit file looking its best.  Things such as maintaining a debt-to-income percentage of less than fifteen percent, keeping the same house and car for more than two years in a stretch, keeping credit balances low, and maintaining a decent amount of available credit are ways to build and maintain healthy credit reports.

Excluding a mortgage, creditors and financiers will look at debt of over fifteen percent of income as a sign of a person living beyond their means, leaving a ‘bad mark’ on record.  In contrast, keeping the debt level below that mark will encourage lenders to look more fondly on loaning funds out.

Maintaining longevity with a home and car loan, along with no delinquent payments, looks great on a credit file.  When a creditor pulls up a file, they have the capability to see not only how much debt a person has, but how long it’s been on the file, and how much has been paid.  Signs of stability and discipline always look better than changing the debt often.

One of the most obvious but also the most neglected ways of keeping credit files in check is paying off loans and credit card balances.  This is one of the basics of credit that look great when creditors look up an account.  A common misconception, and at times a costly error, is that of closing credit accounts in an effort to reduce the perceived debt, thereby improving credit score.  Unfortunately this can in fact have a detrimental effect on credit reports because it decreases the total available credit.  In terms of good credit reports, the more available credit there is on file, the better.

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Wednesday, April 28th, 2010 Credit Report

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