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Establishing and maintaining good credit is essential.

Establishing and maintaining good credit is essential.

Establishing credit is a critical undertaking, and one of the most important things you need to establish early in your adult life. Good credit makes it easier to purchase a home or vehicle, obtain insurance or, in some circumstances, find employment. Here are five ways to ensure you maintain exceptional credit.

1. Establish Active Credit Facilities

Credit cards, car loans, lines of credit etc., are all types of credit facilities that are reported to credit agencies such as Equifax. We recommend at least three active lines be established with a collective limit of at least $2,500.

2. Make Your Minimum Monthly Payment

The best strategy to improve your payment history is to pay all credit facilities on time, every month. Each time you are late or miss a payment, it is noted in your report and is detrimental to your score.

3. Don’t Max Out Your Credit Cards

Lenders are nervous when they see credit facilities at the maximum. If you cannot pay off the outstanding balances monthly, your next best strategy is to pay them down to at least 60% of the credit limit.

4. Don’t Let Debts Go Into Collection

Having a dispute with your phone company over a billing? Ignoring the problem will not make it go away. Any debts that default into judgement or collections have a substantial negative impact on your credit score. Best to resolve the issue before it reaches that point.

5. Limit Your Number Of Credit Inquiries

Frequent requests for credit are often an indication of problems in terms of a need or in terms of being turned down by previous lenders. Some credit requests are simply unnecessary. If you are ever asked for your social insurance number, driver’s license, or birth date in conjunction with your home address, you can bet that your credit is being checked.

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