It is vitally important to have good credit today.  Not only does it determine the interest rate you will pay when you buy a car or a home, but a good credit history is also a factor when you are applying for a job, renting an apartment, obtaining car insurance rates or applying for a credit card.  What may seem like a tiny mistake to you, can actually drag you down for many years.  One late payment, maxed out credit cards, or taking out several loans at the same time all appear to be minor mishaps, however, the credit bureaus view them as a black mark on your credit report and creditors respond accordingly.

It is not that hard to establish and keep good credit, especially if you are just starting out.  Follow these simple rules, and your credit will sparkle.

Check your credit report

Before anything else, you want to see what creditors are saying about you.  Do this by going to  At this website, you can obtain your credit report for free annually from the three major bureaus: Equifax, Experian and Trans Union.   Credit reports are used to create a credit score, which is a three-digit number lenders typically used to gauge your creditworthiness. However, with this free credit report, your credit score is NOT included.  Credit scores range from 350 to 850 and lenders respond best when the score is greater than 620, which is the minimum credit score required to get a home loan.  Lenders will look at the report itself, as may the landlords, employers and insurance companies who use credit to evaluate applicants.


Establish checking and savings accounts

Lenders view checking and savings accounts as signs of stability, yet many people overlook this simple thing.  Opening an account is also one of the few things you can do to start building a financial history. While you must be at least 18 to get a credit card in your own name and can be legally held to a contract, many banks have no problem letting you open a bank account.


Understand the basics of credit scoring

A basic knowledge of credit scoring will help you build your score.  Two of the most important factors in building your score are:

  • Whether you pay your bills on time.
  • How much of your available credit you actually use.
  • What is the mix of credit that you use – revolving or installment
  • How many tradelines (that’s credit-speak for number of accounts listed on your credit report) do you have.  Ideally, to maximize your credit score, it is recommended that you have 4 to 5 “active” tradelines.

It’s absolutely essential that you pay all your bills on time. All it takes is a single missed payment to trash your credit score — and it can take seven years for the effects to completely disappear.


You also don’t want to max out any of your credit cards, or even get close. You will get the best possible credit score and prevent yourself from getting over your head in debt if you keep your credit balances to less than 30% of your credit limits.  (This means if you have a $3,000 limit your balance should stay below $1,000.)


And remember, you don’t need to carry a balance on a credit card to have a good credit score. Paying your bill off in full is the best way to keep your finances in shape and build your credit at the same time.


So here are 6 ways to help and improve your credit score:  To be continued in Part 2…

Click here to go to Part 2



9 fast fixes for your credit scores – 1 – debt management – MSN Money

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Seven Steps to Stellar Credit

Five Credit Score Secrets of the Young and FICO-Savvy | Fox 

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