Due to the fact that credit scores are a vital part of obtaining virtually any type of financing, everyone should put the maximum effort into maintaining their debt obligations. Although there are a number of ways to build your credit, any financial hardship you endure may impact your score.

Someone does not have to be in an extreme financial hardship to feel the impact of a ruined credit score. The smallest payment defaults from a cell phone bill to insurance payments can make a dent in your credit history.
Take for example a common scenario where you have a $700 medical bill that goes through some kind of mix up and debate. During all of the debate, people may not even realize that their case is sent to collection before they pay it. If you make the decision to apply for a mortgage, you could be find that all the confusion lead to either an error, or a very real mistake being added to your credit report. In the end, this dilemma will always lead to a more expensive loan or even a denial.
It’s crucial to note that collection accounts stay on everyone’s report for 7 years. During that time, no one can predict on how high mortgage rates can climb. Credit should never be taken lightly. This means that when you have a monthly payment due on your cell phone or credit card, pay it off as quickly as possible no matter how big or small it is.
Credit reports from all 3 of the credit bureaus Equifax, TransUnion and Experian should be thoroughly checked at least once a year. Applying at AnnualCreditReport.com will allow you to do so, and all consumers by law are allowed one free credit history report a year. Even if you cannot find another free source to view the content of your credit, paying a small fee is justified by the importance of your credit.
A 2013 Federal Trade Commission report found that 25% of all reports contain some kind of error that could affect a credit score. Errors made by the bureaus themselves are another reason why keeping up with your own report is an essential of life. In addition, the FTC report also found that 5% of Americans saw their credit scores alter by over 25% when errors were corrected.
According to FICO, some decisions that could help consumers out when it comes time for them to make lending decisions are:
1. Prompt payments
As mentioned already, paying bills on time is a 100% way to make sure that your report is clear of any blemishes In addition, payment histories make up 35% of anyone’s total credit score. Setting up automated payments and reminders is one way of doing this.
2. Credit utilization
An additional 30% of one’s score relates to the total amount of credit that you are using. Getting your credit card balances down to 20-30% of your credit limits is a wise spending decision too.
3. Size of your credit history
Being wise about how you use your accounts is key. Opening new accounts will maximize your score, but remember be smart about how you use it.
4. Rate Shopping
Comparing mortgage rates is a tool we always encourage. Doing this however comes with rules too. FICO indeed does keep track of your shopping habits, and favors consumers who make wise spending decisions and who appear to have a knowledge of what they are doing. In essence, short bursts of research are the best way to maintain a good credit relationship.
5. Checking your credit score on a regular basis
6. Mixing up your credit

Although having multiple accounts is good, opening large accounts right before you apply for a mortgage is bad. FICO indeed likes to see a healthy mix of loans and lines of credit, however mixing huge loans right next to each other reflects an irresponsible consumer.

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