A good credit score is a vital asset for your financial present and future. To a large extent, your credit standing determines what opportunities are open to you, especially as it concerns finances. Therefore, the importance of building a good credit rating cannot be over emphasized. 'It's a thing you really can take to the bank'.

There are several steps you must follow and some rules you will have to adhere to if you sincerely want a good credit standing. However, after establishing your credit worthiness, you will find that it was worth the stress.

Debt is one monster that pulls down your credit and destroys your credit history. It does more harm than is generally acknowledged. The first step in building a good credit rating is always to cut down on debts as much as possible. It is recommended that you keep your total short term debts e.g. credit card balances, large telephone bills, installment loans etc. at a total of not more than 20% of your total income. This will make it easier to pay off the debts, without missing payments or defaulting. It also creates a very low debt profile that looks very good on your credit report.

Another strong point you can make while building good credit is a solid income history. Maintaining a good record with banks and other creditors will also go a long way in portraying you as credit worthy.

A secured credit card is another tool you will find useful in your quest for a solid credit standing. With secured credit cards you have to maintain a minimum deposit in your account. The attached credit line is always a percentage of the minimum deposit. This serves several purposes and is very useful in building a good credit rating. A secured credit card ensures that you don't over spend or accumulate unhealthy debts. It creates financial discipline in you that is essential in maintaining a good credit history. You won't need to bother about secured cards, it is not in any way different from regular cards and no one will know you have a secured card unless you tell them.

To build good credit, it is also useful to get national or local retailer's card. It is always easy to win credit from retailers and once you have established a good track record with a retailer, you could use the reference to boost your credit and also to secure additional credit from others. You will find it quite easy to establish a good record with retailers and will also be pleasantly surprised at the positive influence it can have on your credit rating.

Apart from retailers' cards and others, it will also help to open a checking account when building your credit. When potential lenders check your credit with your bank, they, most often, only learn about your initial deposit. It makes sense, therefore to open your checking account with a large initial deposit, as much as you can afford. It is also reasonable to keep the account balanced and active and to ensure that you do not overdraw the account. Just like repairing bad credit, building a good credit rating requires time and a lot of financial discipline, but in the end, you will be proud of what you have achieved.

About the author:

Michael Russell Your Independent guide to Finance