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Debt Management Guide 2008
Joys of good credit
Good credit can improve your financial health in a lot more ways than most people realize.
Joys of good credit
Keeping credit score high is tough

It's not enough to earn a stellar FICO score. Now try to keep it. As too many people have sadly learned, the world is full of obstacles waiting to knock you down.

So when you are living above 720, the struggle, experts say, changes from obtaining that lofty perch to maintaining it. Sorry, Charlie: This means you'll never get off the hamster wheel.

"You want to make sure you pay anyone you owe money on time, without fail," says Craig Watts, public affairs manager and spokesman for Fair Isaac Corp. "The principles of good financial management are going to protect you when you have a high score."

Sweat the little stuff
These days that bill-paying extends to anyone who works with a collection agency to go after missing fines. In some municipalities, that means an unpaid parking ticket or library late fee can lower your score.

"One of the tricky points I'm asked about is from people who are protesting a bill or parking ticket. They want to protect their credit scores and the simple answer is that you can't," Watts notes.

You can put up to 100-word explanation on your credit report, but you have to call that to the attention of any lenders you approach, and they'll decide individually whether that matters.

According to Watts, at least two credit bureaus have announced they're trying to suppress such accounts from reaching your credit report -- but why gamble?

Any time you miss a payment in this stratosphere -- and Watts is talking about a 30-day delinquency, the shortest to be reported -- you'll fall further than someone at a lower level. Say, for instance, your score is 800. Mess up that first time, and it's entirely possible you'll be knocked all the way down to 700.

That happens, in part, because the late payment signals unusual action, says Evan Hendricks, author of "Credit Scores & Credit Reports: How the System Really Works, What You Can Do."

"Someone with a high FICO score thinks, 'I'm paying my mortgage on time, I've had credit cards all these years and have never been late on a payment so obviously the little things can't hurt my score.' It's quite the opposite," Hendricks says.

The bad news keeps piling on -- once you tumble, count the time it takes to heal that wound in years as opposed to months, says Watts. "Generally speaking, after three or four years, that delinquency will count less against your score, so it will start rising again as long as you keep your payments up to date from that point forward," he adds.

If these hardball tactics frighten you, set up as many automatic payment plans as possible with your bank, recommends Philip X. Tirone, a senior loan officer with United Pacific Mortgage who wrote "The 7 Steps to a 720 Credit Score."

Watch the fine print
If you want to continue building your score between 720 and 850 as a hedge against 100-point drop mistakes, drill into the details before you take out new credit cards. Many of the low interest rate or zero-percent balance transfers come with a hitch -- the credit card company doesn't report your limit to the powers that be. If you want that perk, you'll need to bump yourself into a higher interest rate bracket, says Tirone.

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