The Ten Commandments of Good Credit
Here are ten good habits to adopt to build a good credit report—and pay less interest to boot!
| Commandment | Comments | |
|---|---|---|
| I | Always pay on time. | Late payments lead to interest charges. If necessary, use an approved payment plan. |
| II | Always pay the balance in full. | If it’s too high, pay as much as you can, and never less than the minimum payment due. |
| III | Live within your means. | Try to keep your monthly debt lower than 10% of your net monthly income. |
| IV | Don’t go over your credit limit. | If needed—and if you can handle it—ask for a higher limit. |
| V | Make a budget and stick to it. | Spend wisely—once your paycheque comes in—and go over your affairs regularly. |
| VI | Don’t collect credit cards. | The more you have, the easier it is to slip up. Also, avoid cards with high interest rates. |
| VII | Don’t transfer your balances needlessly. | Only do so when an interest rate is significantly lower, and not just for a short period of time. |
| VIII | Always have an emergency fund for the unexpected. | Have at least three times the amount of your fixed monthly expenses, or, ideally, the equivalent of six months’ salary. |
| IX | Tell your creditors when you move. | An up-to-date file avoids unnecessary snags. |
| X | Get credit insurance. | For peace of mind and to protect you and your loved ones if ever misfortune strikes. |
The Four Worst Things For My Credit Report
- Late payments
- Missed payments
- Bankruptcy
- Bounced cheques
Bankruptcy, for example, can tarnish your report for seven years. That's quite a ball and chain to be dragging around. Before things get out of hand, if you have trouble making a payment, talk to your creditors for help and advice.
If you are in dire financial straits, it’s always better to be proactive than passive.
