Your Credit Worthiness

May 19, 2008

A pristine credit record is a tremendous asset in today's lending market place. Not only will a lender for a housing loan require a FICO score above a certain level, so too will lenders of student financing and other major loans. The FICO (Fair Isaac Company) score has become the standard for determining consumer credit worthiness. You can now order your own credit report and check it to be certain that it is correct. Errors can occur and you are the person who can recognize them.

Here are a few suggestions for establishing a good credit history.

Pay your bills on time. The record of your payment history accounts for 30% of your score.

Maintain a mix of credit; car loan, credit cards, etc. A blend of credit boosts the score.

Establish your own credit history by obtaining credit cards in your own name.

Don't max out your credit balances.

Confine loan shopping to a few weeks and don't shop too much. Each inquiry to your credit can affect your rating.

Don't keep opening new accounts.

Lastly, closing accounts does not usually improve your credit score. Keep them open even if you are not using them.

Of these suggestions, the most important two are not to overextend your credit and PAY ON TIME. Even if you can only make the minimum payment - make it on time.