How To Build, Raise, and Maintain Your Credit Score

We have always been told to build and keep good credit. But what does that really mean? The problem is that the “financial experts” never explain how to build or raise your credit, or the meaning behind their advice. It gets frustrating.

Well, good news is that I have done the research for you. I have searched the Internet and flipped through numerous financial books to dig up this secret information (well not really- but it sure feels like it).

A good credit reputation begins with paying your monthly bills on time, and in full. I know that this task may be hard for some, but it is so important. Establishing good credit can be done through many different ways- including keeping credit charges within your credit limits, maintaining a steady job, keeping debt low and allowing time to accrue a credit history. 

Your FICO score, better known as your credit score, is another measure of how financially responsible you are. Do you know what your magical number is? The FICO score is a measure that banks use to determine if you quality for credit. It is a three-digit number that reflects your credit report. Your credit report is a detailed report containing your personal history with handling and borrowing money. 

FICO scores range from 300-850. The higher the score, the better your chance at qualifying for loans, credit, or lower interest rates. On average, scores are graded as follows:

Excellent = 750+

Good = 700-749

Fair = 650-699

Poor = 600-649

Bad = Less than 600

Now that you know what these scores actually mean, you may be wondering- where can I check my score? Well, to be honest, I have always been skeptical about websites that may ask for a payment or end up costing me money, however the site (is reputable and free!) Creditkarma.com allows you to check your score within minutes, after entering in some key personal information. You can also obtain your full credit report, which allows you to access an overview of your personal financial information. 

Let me ask you a question. Do you know what actually goes into determining your score? There are a few things that are taken into account when calculating your FICO score. 

1. Payment history 

Do you pay your bills on time?

2. Credit utilization rate

How much available credit do you have out and how much are you using?

*It is recommended to not exceed 30% of your credit line at a time. 

Example: If your credit line for one card is $1,000- you should not exceed more than $300 a month. If you do, it will count against you on your credit score.

3. Length of history

How long have you had each card and how actively do you use it?

4. Amount of new credit

What % of accounts  have been opened and how many inquires were made on your account recently.

5. How many types of credit

Credit should be varied. Example: student loan debt, car loans, as well as credit cards. You don’t want to have all of one kind.

Ladies, I am sorry if your head is now spinning with numbers and all sorts of information, but I want to congratulate you for getting through this post in its entirety. By doing so, you are helping to get your finances in order and become even more financially responsible than you were before you read this! Now I already know that our Society Letter readers are very wise and intelligent women, but the more information we know, the better off we will be! Right?

I am going to conclude this post by sharing some helpful tips with you all so you will be able to build and maintain a good credit score.

Tip #1: Minimize debt; Only charge what you can afford and pay off balances monthly and in full.

Tip #2: Be aware that closing your accounts can hurt you; Do not close more than one account per year or cancel multiple cards at once. Also avoid closing your longest account, which holds your longest credit history.

Tip #3: Choose credit cards carefully; Make sure you know all the facts before applying for a credit card and most importantly, know what the interest rates are.

Tip #4: Only apply for credit when necessary; Have one or two major credit cards and a few store credit cards, but I do not recommend having over five cards at a time. Do not apply to every credit card that comes in the mail. I know it can be tempting but just throw them out!

Tip #5: Take some time to look through your credit report. It will allow you to see how much credit that you have out at the moment and check if there are any “flags” that Credit Karma suggests you can improve. 

I hope that you found all of this information to be helpful and a great resource for you to look back on. Remember: Your credit score matters. Take your score seriously, and work on ways to improve it. Aim high!