How to Keep Your Credit Score High

Your credit score is one of the most important numbers that can affect you. It will follow you throughout your adult life, and will affect the rate at which you pay for your mortgage, the type of mortgage for which you are approved - and even the cost of your home insurance premiums. Creditors and lenders share information about your payment and borrowing habits, and use these data to determine your overall credit worthiness through a score that ranges from 300 to 850. This is why one of the smartest FHA home loan tips is to manage your credit wisely, and do everything within your power to keep your score high.

Follow these steps to maintain your credit record and, potentially, boost your credit score over time:

• Check your credit report at least once a year: If you check your credit report annually, you can verify that all of the information is accurate. Often, a simple clerical error can affect your credit score. What if a credit card that you closed years ago is listed as active with a $10,000 balance? Make sure the information is accurate; if it isn't, report any errors to the credit bureaus and lenders/creditors involved immediately.
• Pay your bills on time: This could be perhaps the best way to boost your credit score and establish an excellent reputation for credit worthiness. Nearly one-third of your credit score is tied directly to your payment history and consistency. If you miss a payment or make late payments routinely, your score will suffer. If you run into a problem and can't make a payment, contact your creditor and ask if you can make temporary arrangements. Do everything you can to make payments on time - it will save you money in interest charges in the long run.
• Borrow only what you can afford: It might sound like an obvious rule, but too many consumers ignore this one. If you borrow beyond your means, you will end up with high credit card balances and an unending cycle of debt. Your credit score will go down if you carry credit-card balances in excess of 30 percent of available credit. In other words, if you have a credit card with a $10,000 balance, you should never carry more than $3,000 in constant debt. Resist the urge to open new accounts and rack up high balances - your credit score also goes down if you continue to open more and more revolving (credit card) accounts. Credit scores rise when a borrower demonstrates sound borrowing by opening few accounts and maintaining them wisely.
• Stay educated: By being a wise consumer, you're likely to use your credit wisely and, ultimately, have a higher credit score. For a small fee you can check your credit scores at each of the three primary credit bureaus, Equifax, Experian and TransUnion. As a rule of thumb, consumers with credit scores above 700 receive preferable interest rates and loan programs. Do what you can to gradually raise your score and get it close to 700 - or even better, above!