Maintaining Your Credit

Reproduced from www.fairisaac.com*

There is no mystery about how people can improve their scores. Credit scores reflect people's long-term patterns of credit use and repayment history over time. Scores automatically improve as one's overall credit picture gets better. That means showing an historical pattern of paying your bills on time and using credit conservatively. Maintaining good credit is a lot like maintaining a car - you want to make sure it is always in good repair, and attend to any problems right away.

A few specifics

Remember that you are ultimately in control of your credit score. The best way to be eligible to receive credit is to responsibly manage your credit obligations. Here are a few specific tips:

• Always pay your bills on time.
• Keep credit card balances low.
• Apply for new credit sparingly.
• Check your credit report periodically for any inaccuracies.
• Correct any inaccuracies with all three national credit bureaus and your lender. Do not rely on "so-called" credit-fixing services. Fix errors at the source.
• Minimize the number of times you give creditors permission to check your credit record. Such credit checks are called "inquiries."
• No credit score is forever. You can take steps today to begin improving your score.

Benefits of a Good Credit Score

Whether you're currently looking to buy a house or car, or you expect to buy one in the near future, you'll be happy to learn that over the last several years the path to securing a loan has become shorter and easier to navigate. That is due in part to the use of credit scoring in those industries. Scores give lenders an accurate and objective assessment of how likely you are to repay the loan.

How does scoring help me?
Credit scoring offers real benefits to consumers:

• Scoring ensures equitable treatment. Scoring evaluates all applicants' credit information by the same criteria. Opinions do not enter the scoring equation - facts replace myths and personal prejudices about what constitutes a good future customer.
• Scoring speeds credit decisions. Scores help lenders return decisions more quickly and sometimes with less applicant information, even over the phone or over the Internet.
• Scoring helps make more credit available. By helping lenders control losses and costs, scoring helps make more credit available to customers. Historically, the less information lenders have available to distinguish among credit risks, the more conservative their lending policy tends to be. This means less credit is available to everyone -- lower-risk customers as well as higher-risk -- and the cost of that credit is greater. Credit scoring gives lenders an important piece of information that allows them to lend to more, not fewer, people.

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*Reprinted with permission of Fair, Issac and Co., copyright 2001. For more information visit www.fairisaac.com

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