How to protect your credit score

You might know why your credit score matters, but it might help to know how to make it look better.

03:45 16 September 2013

Although we often hear the terms “credit score” and “credit rating”, it might not mean much to us unless we have already suffered from having a poor credit score. Understanding a few key things about credit scores when you first become financially independent can help you make wise decisions that will provide a brighter financial future.

• Credit scores are numbers that tell lenders how credit worthy are. It lets them know if you pose a risk to them because they might lose money, or if you have a reliable history which promises to make them money.

 

• Credit scores are obtained by using a collection of financial data such as how bills are paid, how much debt is owed in relation to the income, and whether or not any past debts were in collections?

 

• You can protect your credit score by making your payments for all bills and loans on time and regularly. In addition to that, make sure that you don’t have an unusually high amount of debt in relation to your income. While it may not necessarily show much in the credit score it, lenders will scrutinize the information and will be leery of loaning further funds to someone who seems to be overextending themselves financially.

 

• If you don’t have a credit history to speak of, you may need to rely on the credit card industry to help get you started, but it can also get some people in trouble. Keep very good track of your payments, due dates, and any additional information. 

 

• If you want to view your credit score, you can request the information yourself. If you do that, you will be able to view your credit score without creating the negative effects that a typical bank enquiry would have on your score. Too many enquiries for credit can alarm potential lenders.