Building Good Credit

By Ellie Kay
Financial Columnist

CBNMoney.com – Good credit scores will impact the mortgage rate you pay for a home, the bottom line on your car payment, the amount of insurance you pay, and can even determine whether you’re hired for the next job! FICO, or credit scores, are routinely checked by everyone from lenders to employers.

Here are some steps toward building good credit:

Don't hit all your credit limits. If you're using 60% or more of your available credit, it's a sign to lenders that you might become overextended. The best FICO scores are for those who have higher credit limits, but are currently using a minimal amount of credit on those limits.

Limit inquiries into your credit record. Minimize the number of times you apply for credit, because each inquiry will appear on your credit report, whether you get the credit or not. Keep in mind that all inquiries for one purpose, such as a mortgage, will count as one.

Don't miss payments. Automate as many payments as possible if you can keep up with these automated payments in your accounts at home. If you make sure the funds are there, then you will never be late on payments. Everyone from health clubs to electric companies have these services available.
Keep long-standing accounts but close accounts you don't use. If you’ve had a credit card for a long period and have a good history with that card, then keep it, as that will help your credit score. However, keeping a lot of department store charge accounts means you could be faced with the temptation to go on a spending spree at any time. Closed accounts also help minimize your risk to identify theft. The best credit portfolios have some revolving debt (credit cards) and installment credit (home mortgage or auto loan.)
Shop around. Not all credit cards are created equal. Some have annual renewal fees and higher interest rates. Others may offer a lower limit but charge higher fees for cash advances. For a comprehensive view of each card’s offerings, go to www.bankrate.com.

Ellie Kay is a best-selling author, popular conference speaker, a frequent media guest on Fox News, CNN, and CNBC, and a commentator for “Money Matters” radio show.

For her free newsletter and money savings links, go to www.elliekay.com.