Are you taking care of your credit?

And when we are talking about a half a million dollar mortgage over the next 30 years, the slightest variation in interest rate means thousands of dollars more that you would have to repay your lender.

So how do you make your credit the best possible? Click here for a Free Credit Consultation – Includes Credit Report Summary & Score

• Look for any mistakes or wrong information. It is very important that you check your credit score periodically. That is, at least once a year. That will make you aware as soon as possible of any incorrect items that may appear there. For example, if someone stole your identity, and opened credit cards in your name they never repaid. That can affect your credit score in the wrong way. You can learn more about it here.

• Careful who you associate with. If you co-sign a loan, or add someone as an additional cardholder, you are responsible for the debt they take on, and, in case of a default, your credit score will be affected. While it is commendable to want to help your family member, partner or friend, proceed carefully whenever you take debt with another person’s name attached.

• Borrow only what you can afford. Credit is pretty easy to secure these days, and lenders love to charge you high interest on your debt. But that can become more than you can chew. Making only the minimum payment every month on your credit card will take months to pay it off entirely. If you got yourself in a situation where it becomes harder and harder to meet your credit obligations every month, there are solutions, such as debt consolidation, that can help lower the monthly payments, while prolonging the repayment period. It is better not to get there in the first place.

• Know the cost of debt. Before you swipe your card, ask yourself “Do I really need that?” “Can I save for it and buy it in a few weeks or months instead of putting it on credit?”and most importantly, “How much is the total price of this item going to be, after I make all these payments?”. Even for a mortgage, you sometimes end up repaying as much as twice the price of the house over a few decades! Not to say you should wait 30 years to buy a house in cash, but every dollar you borrow is going to be more than a dollar you have to repay.

• Don’t close old credit cards. Card that you have had for a few years, and that you barely use, add a positive factor to your credit score. Keep them open and if you don’t want to use them on a daily basis, just put a small recurring charge, like your Netflix bill, with autopay every month. That will keep your credit history solid.

• Have a low utilization ratio. Lenders like to see that you have access to credit in the form of high credit limits, yet have a low balance on your cards. If you have good credit, you can request an increase in credit limit every now and then, to lower your utilization ratio.

Remember that keeping a good credit is a long term endeavor. You will be thankful the day you need to borrow money that you can do so in the best conditions possible.