The information on your credit report and information that makes up your credit score does not stay on the report forever. You can take active measures to make sure your credit report gets better. There are many things you can do to improve your credit or maintain the good credit you have. The following are some suggestions.

• Pay your bills on time. Delinquent payments on mortgages, automobiles and national credit cards can have a major negative impact.
• Pay your loans first. Missed payments can hurt your credit rating, so it’s important that you pay your loans are paid before you spend money on other things.
• Pay off credit cards every month. Pay down high outstanding balances. If it is difficult for you to pay off your card monthly, consider putting the card away so you won’t use it. Try using your card for emergencies only, and pay with cash or check for everything else.
• Remind yourself that credit cards are loans.
• Charge less than the maximum amount available on your credit card. Keep your balance low so creditors do not think you are in debt.
• Apply only for the credit you need. Every time you apply for a credit card, it appears on your credit report. Creditors may be concerned that you are using too much credit. Avoid applying for credit cards to get a free gift or discount on a purchase. Do not take on new debt, especially while you are in the process of purchasing a home.
• If you feel you can wisely use a credit card, choose one with a low interest rate or no (or very low) annual fees. You can use the Internet to shop for a card with low fees and low interest rates. Compare the fees and rates of any offers you receive in the mail. Do not pay an upfront fee to get a lower rate; it is often a scam.
• Credit cards issued by department stores or other stores usually charge higher interest rates than bank credit cards.
• Try to pay more than the minimum amount due each month. When you only pay the minimum payment, you end up paying a lot of money in interest charges. To avoid those fees, make larger payments than suggested.
• Use your credit card to establish good credit.
• Look for ways to cut your expenses and increase your income.
• Keep track of bills and past due notices. If you keep old bills, you’ll have the information in case there is a dispute with a creditor.
• Keep your debt ratios at or below the following industry standards:
  • Housing: < 29% of gross income
  • Total (including housing): < 41% of gross income
  • Note that only leaves 12% for auto, furniture, appliances, electronics, etc.
• Remember that gross income does not pay the bills; net income does. Yes, you may qualify to buy that house, car or entertainment system, but can you afford it?
• Take steps to protect your ID. Don’t leave purses and wallets unattended. Shred old financial documents and new financial solicitations before throwing them out. Don’t give out ID information to phone solicitors before verifying their authenticity. Review credit card statements thoroughly for unauthorized charges. Report any discrepancies or thefts immediately to your creditors.

Information in this section was provided by Jon Clayton, Director of Educational Services at Memphis Consumer Credit Association.