How to Achieve a High Credit Score and Keep it that Way!

These days, consumers are hearing more than ever about the importance of having good credit. Having a good credit rating, also called a FICO score, have distinct advantages over those with poor ratings. Banks and other lenders are much more willing to lend money to a person with a high credit rating, and at a much lower interest rate.

The most important thing to remember when it comes to building or re-building credit is this. Always make your payments and never be late! Being late with payments on one credit card can cause the interest rates to go up on it and your other credit cards as well. A late payment is usually recorded on your credit report, and lenders can use that as a reason to raise interest rates.

Have a variety of credit extended to you. Major credit cards, department store cards, a mortgage loan, a car loan, small business loan, student loans, all of these can contribute to your final credit score. Just make sure you make payments on time! If you are able, pay off the loan amounts early, and pay off any credit card balances each month.

Contrary to what you may have heard, closing credit card accounts which you have paid off is not a good way to help your credit score. Part of your FICO score is based on your debt to credit ratio. For example, if you have five credit cards with a total credit limit of $50,000, but only $2500 is owed on the cards that would equal a good debt to credit ratio.

If, however, you owe a balance of $40,000 of your $50,000 credit limit, the ratio is not good. So, it makes sense that you would want to have as much available credit and as little debt as possible. Keep those credit accounts open; just make sure you pay the entire balance each month if you use them!

Don't be afraid of credit cards, and don't be afraid to borrow money. To build a high credit score, you must prove that you are responsible and will pay back what you borrow on time. If you are just starting to build credit, start small. A major credit card through your bank or a store credit card will get you on your way. Again, remember to pay off the balance each month, and to pay on time!