June 24, 2008
NEW YORK (CNNMoney.com) — From buying insurance to getting a mortgage, your credit score is your financial DNA. Personal Finance Editor Gerri Willis is here with her dos and don’ts of establishing good credit.
1. Don’t close credit card accounts
If you shut down a credit card account, the total amount of your available credit is lowered, and your balances look much larger in comparison. This ratio then hurts your score.
2. Forget Retail Cards
Every time you open an account with a store to get that 10% discount, you are giving the retail lender the ability to pull your credit score. And that can lower your credit score.
3. Pay more than the minimum
Paying your bills on time is about one-third of your FICO score.
4. Don’t lose hope
Most debts, except for bankruptcies, are erased after seven years. If you’ve had a foreclosure or have a few delinquent payments, you can still raise your credit score to above average.
The older this negative information is, the less important it is to your credit score.
