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After spending several years in social services, Nicole has finally followed her lifelong dream of being a full-time writer. In addition to her work for The Hudsucker, Nicole is also a staff writer for Womanista. An avid comic book fan, BBQ aficionado, professional makeup artist and first-time mom, Nicole can be found exploring Kansas City rich history when she's not blogging about suburban life at Suburban Flamingo.

Credit Check: Building and Maintaining Good Credit

Image Credit: Jim Wileman/Alamy

Once upon a time all you needed was your word to get you by. In the not horribly distant past you could pop into your local grocery store, pick up the necessities and have them charge it to your account with the clerk knowing that you’d be by in the future to settle your check. Renting an apartment once required only two things, income sufficient enough to pay the rent, and maybe the word of someone you had lived with before to say that you weren’t going to destroy the place. No one looked to see if you paid your bills on time before giving you a job.

However, today it isn’t your word that gets you by. Instead we live in a world where credit is the ever-increasingly important metric by which we judge people worthy of a place to live, a job to work at, and whether or not we can be trusted to buy now and pay later. How then does one build credit and, once they have it, keep it on the good side?

Credit and how credit scores are tabulated isn’t a universal or entirely straightforward equation. There are numerous credit reporting agencies and they all have their own way of calculating their credit scores and reporting things back to consumers. Fortunately they all share some general principles on what they consider good and responsible. Even more fortunately those positive principles are both how you build and keep good credit.

First, you want to pay your bills on time, every time. One of the biggest red flags that you can’t handle your accounts is a history of consistent late payments. On the flip side of that, when you pay on time consistently you show that you are able to manage your money and bills. Being one or two days late generally won’t impact your credit report, but it can trigger late payment fees which can create chaos with your personal budget and credit availability.

Credit availability can also impact your credit worthiness. Credit models examine your debt to available credit ratio to see how much of your credit you are using. As a result of this, you want to try to keep your balances low as compared to your overall credit limit. As a rule of thumb you want to be using only 30% maximum of your available credit to maintain “good” credit. Paying your bills on time will help with that, as will paying off balances in full each month or, if that is not possible, paying off existing debt before charging new.

So you pay your bills on time and you keep your debt to credit ratio low, but what about taking out new lines of credit? Wouldn’t that keep the ratio in the good range? Yes, it would, but it would also be a red flag. Credit scores look at the length of your credit history and lots of new credit applications in a short period of time, or when you are nearly maxed out in other lines of credit can signal that you are in a situation where your cash flow may be challenged.

These three things will go a long way to helping establish good credit and then maintain it over time. You will also want to regularly check your credit report (at minimum once a year) to make sure that what is being reported is accurate and, most importantly, belongs to you. Following these simple tips should help you get into a good place and let you stay there.

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