Would you rather strive to get good credit today than go through an ugly process of fixing damages later one? I say that if you are presently capable of higher scores, then go for it! I know of a friend who was too busy to even read materials on how to get better credit when he is more than qualified for one. Financial analysts say that it is much easier to get good credit from the very beginning than suffer the consequences later on (i.e. disapproved loan applications).

This friend knows better now and even advised his kids to do it right the first time. Now his kids had taken the opportunity and worked hard on getting good credit because it can affect their future. The kids have landed an excellent and stable employment, currently living in a decent apartment in an upscale neighborhood, and secured better rates for insurance policies.

My friend summarized his readings and said that there are four steps to establishing credit. The first one is to request your credit report only from reputable bureaus. In the US, the three bureaus are Experian, Equifax and TransUnion. This is an important step even if you are just about to build your credit. Expect that there will be no records of you. However, if in case, there is a record of you, then beware since you might have been a victim of identity theft. Remember to clear your name first before signing up to any account.

Second is to start early and establish a healthy and stable savings and checking account relationship with your bank. Creditors consider your financial health and base their decisions on how well your accounts are managed.

The third step to good credit is to understand how your credit score is determined. You are being scored based on how responsible you are in paying your dues on time. Remember that it is important to never miss a single payment. One missed payment equals getting that single mistake marked in your credit report for the next seven years. Imagine having to suffer from a single overlooked payment?! It could also be based on how wisely you are using your available credit. If you keep on going more than 30% of the limit, then beware. Keep at least 50% of your limit open and you will be fine.

Lastly, before making a purchase, make sure that you have enough resources to pay for it within the grace period to avoid interests and late fees. Avoid maxing out your card if you know you cannot pay it off. Prioritizing what you need versus what you want may be a good exercise for you.

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