Follow Us: Google+
 
Bankrate.com

credit cards

4 ways to prevent bad credit

If you're preparing to apply for a home, auto or student loan, you'll want to be sure your credit report is pristine and your debt is manageable. Follow these four tips to avoid bad credit and maintain a flawless credit score.

  • Pay your bills on time. "If there were 10 credit commandments, this would be the first one," says Stacy Francis, president of Francis Financial in New York. "It's the most important and simplest thing for you to do to prevent bad credit."
  • Don't get too close to your credit card limits. "If you have a credit card that has a $5,000 limit, don't get up to $4,999," says Francis. That can send your score down -- even if you pay off your bills each month. It's best to use 30 percent or less of your available credit.
  • Pay bills in full. Minimum payments can trap you into a cycle of increasing debt that can lead to bad credit. Use your credit wisely and be sure not to buy anything that you can't pay for at the end of the month.
  • Don't apply for too much credit too quickly. Having credit is great, but getting it is tricky. If you apply for a couple of credit cards, a home equity line of credit and a personal loan in quick succession, lenders will start to wonder if you're digging yourself too deeply into debt. Space out your requests for credit by six months or even a year to pacify lenders and keep your credit score high, Francis says.

News alert Create a news alert for "bad credit"

advertisement

Show Bankrate's community sharing policy
            Connect with us
Compare Credit Card Rates



advertisement
Most Read
  1. 10 ways to turn off a homebuyer
  2. No more Social Security at 62?
  3. What TV homes cost in real life
  4. 5 frugal ways to expand living space
  5. Naughty things credit card won't buy
  6. What it takes to remodel kitchen
  7. Danny Bonaduce's house for rent
  8. Bruce Willis' house for sale
  9. 12 meanest cars for the environment
  10. Celebrity estate planning mistakes
Credit Card Averages
Product Rate
Balance Transfer Cards 16.00%
Cash Back Cards 16.34%
Low Interest Cards 10.93%
Rewards Cards 15.80%
Compare rates:
 

A little research could save you BIG on interest.

Don't have time? Our rate-tracker tool saves you time and money. Delivered Thursdays.
 
advertisement
Another study shows the imperfection of credit reporting. Almost 1 in 4 encountered problems with their credit reports.
Partner Center
advertisement

Advertising Disclosure: Bankrate.com is an independent, advertising-supported comparison service. Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.