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Credit score: How to build a good one?

By Janet Lacey
Published: Sunday, November 8th, 2009

It is easy to dream big, but very difficult to make it a reality. There are many constraints in the process, the main one being that of having enough money to turn dreams to reality. More so in situations today where one has to work hard to build credibility to get loans approved. Documents being scrutinized, initial investigation by banks, the long time it takes for the entire process may all tire you and in fact, may compel you to give up on your dreams. One way to stay away from such situations is to maintain a good credit score. To understand how it helps, you must understand the rules of the game in using the credit score and secondly, you must know just how to build a credit score to your advantage.

First of all, if you belong to the category of people who thinks it is scary to be paying your bills on a monthly basis and hence maintain a poor credit score, you need to start off by changing your mentality so you can see the positives of maintaining a good credit score. The next thing, you will have to do is know exactly how you can build that credit score and improve on it too. Making it happen overnight could lead to a nightmare. It is preferred that you try to walk one step at a time towards this goal. Start off by trying to go through your credit reports. They are a clear indication on you spending habits and hence, it will help you understand if there are any faults in the way you are spending your money.

It is best to believe what you learn on your own rather than follow the herd mentality. There are many who get influenced by their peers and end up making the decision to close all their old accounts. This is not as advantageous as you really thought it would be. Maintaining the old accounts is seen as a sign of consistency by the bank authorities. It makes it easier for them to trust you. On the other had, if you think you are on the safer side by closing these accounts, the bank may get suspicious on your financial situation.

A simple and easy way to maintain a good credit score is to see that you make your bill payments on time. For those who leave this for later, there is a risk of lowering your credit scores owing to the delay. The majority of the population having a low credit score agrees that it is because they have delayed or not bothered about paying their bills. At a point where money is dear to all, a slightest delay may cause quite a loss to you.

It is not easy trying to master a new art. Maintaining a good credit score is an art by itself. You must understand the numbers fairly well, be wise in spending the money, not get carried away with other’s fears and worries. While it sounds easy at the upfront, not many find this task easy to follow. Hence it becomes all the more important to start slow and also and not get put off by a small mistake or two. Keep the tips handy and set the new trend for yourself.

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