Best Answer: One of the most important things you can do to get a good credit score is to pay your bills on time. Every bill - every month - on time. 1 late payment can drop your FICO score 70-100 points. Almost 40% of your FICO is the ability to pay your bills on time.
Don't take out more credit cards than you need. Many people think the more credit you take the better. Not so. Get only what you need.
When you do have a credit card- keep a low balance. About 30% of your FICO score is your debt to credit ratio. The lower the debt, the better the ratio.
Here's an example. You have a credit card. It has a limit of 10,000. You owe 9500.00. As such, you only have 500 available credit. Your debt/credit ratio would look like this: 9500/10,000= 0.95 = 95%
Now, compare that to this example: your credit limit is 10,000 but you owe 1500. Now the ratio looks like this: 1500/10,000 = 0.15= 15%.
In the second example you have only used 15% of your available credit. This is much better for your credit score (FICO) than carrying a higher balance.
One of the biggest mistakes people make when they are young - is getting a lot of cards and maxing them out. Not such a problem when you are in college. However, when you graduate and start looking for a job - many employers will pull your credit score. A bad credit score can keep you from getting a job. I handled this by always having a 1 credit card rule. I never had more than 1 credit card (usually a Visa or Mastercard). I figured that I could only do so much damage since I had just one card. Most people that owe huge amounts of credit card debt usually have multiple maxedout cards.
It's good that you are thinking about your credit now. You can get additional information at www.myfico.com and at www.suzeorman.com.
Suze Orman is a financial planner that has a show on CNBC and several books. She has one for young people called The Money Book for the Young Fabulous and Broke. I've not read this one but it should be worth checking out. In the mean time - catch a few of her shows, you will learn a lot about credit there. http://www.suzeorman.com/igsbase/igstemp.
MSAD · 7 years ago