Building good credit your credit can determine what you can buy, what type of car you drive, your insurance rate and even where you can live and work. Therefore, it is important to build and maintain the best possible credit history.

Follow These Five Simple Tips To Building Good Credit!

1) Know the 20 percent rule!

Borrow no more than 20 percent of your income. To attain this figure, add up all your short-term debts, like installment loans and credit card balances, outstanding telephone bills if they are large, and notes due in a year or so. Exclude your long-term debts, such as mortgages. Then figure your annual income from all sources. Divide your annual income into your total short-term debts.

If the answer is 0.20 or greater, then you are borrowed to the limit that is generally considered safe.

2) Accentuate the positive!

A good income history is one of the strongest points you can make while building good credit. A good track record at the credit bureaus, with your banking institution and with creditors such as the telephone company and utilities goes a long way toward making you look good.

3) Get a secured credit card!

A secured credit card has a credit limit based on your cash deposit. A minimum deposit must be kept in a savings account and you only have partial access to this money. In other words, your credit line will vary from 50 percent to 100 percent of the minimum deposit secured by your savings account balance, which you agree to leave untouched while you have the secured credit card.

Secured cards look exactly the same as ordinary cards so no one is likely to suspect that your card is secured unless you tell them and while you are building good credit a secured card is like gold.

4) Open a checking account!

Make your initial deposit as large as possible. When potential lenders check your credit with your bank, they will learn only of your initial deposit.

After a few months of deposits and withdrawals, your average daily balance for the month will be reported to creditors who request credit information.

Start off on the right step: Keep this new account balanced and never overdraw your account.

5) Get a retailer’s credit card!

Apply for credit from local and national retailers.

It is often easiest to win credit from retailers. Use their references while building good credit to secure additional credit from others once you have established your creditworthiness.

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