Good Credit Best Practices from Equifax

October 30, 2014

credit card debtIf you will be purchasing a home at some point in the not-too-distant future, you know how important a good credit score is for obtaining financing and favorable terms on your mortgage. Follow these good credit best practices from the credit pros at the Equifax Finance blog, as explained in the recent article, “

Five Credit Habits to Avoid.”

Applying for too much credit – every time you apply for credit, either a new credit card or a loan, a hard inquiry appears on your credit report. The more hard inquiries that are found on your report, the riskier you appear to lenders. Opening up to many new accounts at one time also affects your average account age. Lenders usually look more favorably upon longer credit histories than shorter ones. The length of your credit history accounts for approximately five percent of your credit score.

Having only one type of credit – at the same time, it is important to have a number of different types of credit (student or auto loans, credit cards, mortgages, etc.) in your credit file. Holding different types of credit accounts can show lenders that you are a reliable borrower, capable of handling a diverse range of credit. Your diversity of accounts makes up about 15 percent of your credit score reflects the kinds of credit accounts you use and how many of each you hold.

Neglecting to regularly monitor your credit – Pull your credit report and carefully review it at least three times per year. You are entitled to a free copy of your credit report each year from each of the three major national credit reporting agencies (Equifax, Experian and TransUnion). Review your payment history, balance amount, and account age for each credit line and confirm that your personal information is accurate. If you happen to find a mistake, it is important to quickly report and dispute it.

Get the other two habits at the Equifax Finance blog, where you can find many helpful posts on credit topics and issues. The blog also has helpful articles on other personal finance topics like retirement, insurance, identity theft protection and more.

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