Building Good Credit


building good credit image credit: Google

Income has nothing to do with a good credit score. A good credit score comes mostly from paying your installments and revolving credit on time, and avoiding or clearing up collections, civil judgments, tax liens or a bankruptcy.

The very best way to improve your credit score is to pay down credit card debt. Take any strategy you like best, just do it. Some take the highest interest rate, some take the card with the highest balance. Just begin. Also, try to stay under 10 percent of the credit limit on any card.

In general, bankruptcy is cleared after ten years, but on tax liens the ten years begins when the lien is released due to payment.

Paying off  and closing accounts may not work to your advantage if you’re building good credit. Timing is important. The idea is to show you have long standing credit. Before you close an account, you may want to make sure you have another option showing you’ve had long term credit somewhere. The idea about owing on a credit card is to show you are diligent about paying it off. It doesn’t need to be an expensive item, or on-going. A credit report only shows if you paid the bill on time. It doesn’t help you if you pay the bill early (including accelerating payments such as mortgage and  car loans.) It does hurt you if you pay bills late.

A potential employer can look at your credit history, but they cannot get a hold of your credit score. This seems to be a growing trend (according to Society of Human Resources Management, more than half check credit history during the screening process, depending on state, if legal.)

 

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