The Credit Scoop

I’ve never heard so many people talking publicly about credit. And it’s been wonderful to hear more and more people taking stock of their unhealthy credit use and control of their financial lives. But I’m worried when I hear folks saying things like “I’ve learned my lesson, I’ve paid off my credit cards, closed them out, and now only use my debit card.”

Because debit cards are not approved lines of credit that go on your credit report, because they do not to show any kind of history, without other lines of credit, one has no payment history to speak of. And this is not good for your FICO score.

Here are some tips to keep in mind to help you from walking away from credit and to keep you building better credit.

1.      Every year, take advantage of any 0% transfer credit card balances. This will build new credit while saving money on interest at the same time. It’s best to build at least two new accounts a year.

2.      Look at your credit report and make sure all your credit card companies are reporting a high limit. I see many creditors only report the balance due.

3.      Maintain recent activity on accounts. Take out the store card you have not used in years and use it! If you are going to shop in that store, you might as well use the card they gave you and pay the bill when you get home.

4.      Pay down your credit card balances to 20% or less of the high limit.

5.      Monitor your credit to be aware of who is reporting what on you.

Embrace and enjoy the credit you have established over the years. Do not throw it away.