Credit Management

Most credit management sites focus on debt management. But managing your credit is an important part of managing your life.

Without a good credit score you chances of getting a home loan, a personal loan, a loan to purchase a car, get a credit card or even open an account with a vendor are impacted.

The sad thing is that you may have paid all your bills on time for five years, then miss only one payment - and bam! it's noted on your credit history.

Know Your Current Credit Score

The first thing to do is to get a copy of your current credit report so you can see what your credit score is.

If an application for credit has been rejected within the past 60 days, the credit bureaus will send you a copy of your report free. Otherwise, depending on each state, you may have to pay around $9 for each report.

Check the report for accuracy. The onus of proof is on the credit bureau, so clear up any errors and disputes.

Establish a Good Credit History

Credit card payments are always tracked intensely so the easiest way to establish a good credit rating is to get a credit card, use it cautiously and pay the required amount each month.

If you don't trust your credit management skills, request a credit card with a low credit limit of around $200 - $500 first. This will prevent any temptation to run up big balances that you cannot pay.

If you cannot get a credit card, try to open a department store account and establish a good payment history that way. A gasoline card is another option.

Establish Consistency

Things like the time you have been employed in a job and lived at the same address all impact your credit score. They establish a reputation of consistency and stability.

If you do move around a lot, or you contract to different employers, establish a front using a trading company that in turn employs you, and a post office box for the address.

Negotiate Better Terms

After six months, reapply for a credit card if you were turned down the first time. Show that you have practiced good credit management by taking along copies of department store invoice statements and your banking statements.

If you already have a card, go back to renegotiate your credit card interest rate. If you want to raise the limit, now is also the time to do so.

First-time credit card holders rarely qualify for low interest rates. If you pay your credit card bill in full each month, the interest rate won't matter. But what you are attempting to do is to establish a better credit management reputation.

NEXT: What Your FICO Score May Be Costing You

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