"How do I build my credit?"
This is one of the most common questions I am asked. In this series, I will be sharing various ways that one can build credit while still winning with money.
Part One – What Determines My Credit Score?
It is important to first understand how one's credit score is calculated. There are some key characteristics that are used by credit monitoring companies (Experian, Equifax, and TransUnion) to determine your credit score.
- Type of Credit There are two key types of credit. Installment (car payment, house payment) or Revolving (credit card, line of credit)
- Total Available Credit This is the total of all credit limits.
- Total Credit Utilized This is the total of all current debt.
- Length of Credit Relationship The longer the credit relationship, the better.
- Payment Timeliness Obviously, payments need to be paid on time to achieve the highest scores!
- Requests For Credit Made For Potential Purchases
- Public Records Bankruptcies and judgments are not helpful to one's credit score!
You can check out some of the related articles/links below to learn more about credit scores.