Easy Ways to Mess up Your Credit Rating

Posted on February 4, 2008
Filed Under Finance

While it isn’t hard to acquire and maintain good credit, it can also be easy to lose it. And given that a good credit rating is of ultimate importance in buying real estate, it’s important to keep yourself in good standing.

If you live with roommates, and get the utility bills in your name, you need to realize that no matter what, you are the one ultimately responsible for those bills being paid. Be sure that your roommates are reliable, and set up a specific date by which they must have paid their share of the bills. If someone moves out, discuss with them beforehand when they will be paying for their last months bill. In this case, you could even get a payment before they leave, based on an estimate of what the bill will be. It is probably easier to estimate the bill based on past bills than to track down a payment from someone who has moved away, and now has all the expenses of moving into a new home.

If you move into a rented house, be sure of what you are paying for before getting utilities set up in your name. A friend of mine in college rented the top floor of a house, and only after she had the phone in her name did she realize the line applied to the downstairs suit as well. The lower suit was illegal, and didn’t have it’s own phone line. This was in the era before cell phones were common, so not only did she endure the inconvenience of getting calls for her neighbors, stomping on the floor when it was for them, she ended up getting stiffed on the last bill after she got fed up and moved out. Make sure this never happens to you.

Also, if you do move out of a rental situation and roommates are staying behind, be sure to cancel any utilities that are in your name. Never leave anything in your name for someone else to pay. No matter how good a friend they may be, it isn’t worth risking your credit and having to pay off someone else’s bills.

Be on-time with all your payments. Keeping your bills up-to-date is one of the most important things you can do to maintain a good credit rating. If you let your credit card debts get too high, you are jeopardizing your rating. Even making monthly payments, if your debt creeps above around ten percent of your total credit amount, you could be in trouble credit rating-wise. Plus, being on-time with payments means less interest paid, less penalty fees and less money spent in the long-run.

This article was produced by the writing team of Justin Lee, expert Montgomery County MD realtor. If you are looking for real estate in Montgomery County MD, Justin is the REALTOR® for you.