budgeting tools, calculator, tax forms all piled up

The Building Blocks of Excellent Credit

By Martin A. Smith, CRPC®, AIFA®, President of Wealthcare Financial Group, Inc.

Do you want to build excellent credit? If you are shopping for a mortgage or car loan or a credit card, simply paying your debts on time is not the only requirement to building excellent credit. Here are some other considerations:

Payment History: Making payments on time is one of the most important factors that contributes to your FICO Score, a calculator that most lender’s use to determine how much of a credit risk you are, if they will lend to you, and what your interest rate will be. A lender will take note of any late payments that are past due 30 or more days, including collections activity and negative public records.

Amount of Indebtedness: Suppose you have a credit card with a $1,000 credit limit and you make your payments on time every month, but your outstanding balance owed is $850, a high ratio of the credit available to you. In this example, your credit score will be negatively impacted. Why? Lenders will view this type of credit use as potentially careless and conclude that you might not have enough income to hold you over until your next pay day without using your credit card as a crutch.

A good rule of thumb is that the percentage of your total credit use should be no more than 30-40 percent (and that’s stretching it!) of your credit limit. If you experience an interruption in employment, it would be more difficult to pay down $850 than it would be to pay $300. Lenders are more likely to view someone who maintains a high credit usage percentage as a potential default risk.

Amount of New Credit: How much new credit do you have and how long have you had it? Lenders understand that over time, your credit report will reveal a lot about your behavior as a personal financial steward of your finances. If you are new to having a credit card or a mortgage then this could cause lenders to be somewhat cautious because they don’t know enough about your credit use.

Order Your Free Annual Credit Report

The Fair Credit Reporting Act requires each of the nationwide credit reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report annually. It's important to check your reports to make sure they don't include errors.

To order your free annual credit report, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.


Get started today! Take the Military Saves Pledge to reduce your debt, monitor your credit diligently and begin building your credit block by block. Doing so will help you build a strong foundation for your financial future.


Learn how to build excellent credit with tips from @WealthcareFGInc >> http://bit.ly/2wqCMbG 

Tweet this now

Tip of the Day

  • Written by Guest Blogger | February 26, 2014

    #Save automatically using an allotment with #myPay to automatically transfer funds monthly into a #savings account http://ow.ly/sGWxb

Saver Stories View all »

Building a Six-Figure Savings While Enjoying Life

Written by Jackie Toops | November 13, 2020

Does the idea of saving up hundreds of thousands of dollars seem impossible? How about doing it while still living an enjoyable lifestyle?

For military spouse Martina and her husband, an E-5 in the Navy, accumulating a six-figure savings has become a reality. One might think that in order to save this much, it would take a great deal of sacrificing and forgoing a certain quality of life, but Martina and her husband would disagree. “Over the past few years (about five), we've managed to save almost $120,000 while mostly living on one income. We've learned so much about easy ways to save money and live a good life,” shares Martina.

Read more...

Making Saving Automatic Leads to Personal Success

Written by Lila Quintiliani | May 27, 2020

Ryan’s savings journey started when he was an active duty airman. Frequent deployments and temporary duty assignments gave him the opportunity to save. By the time he transitioned out of active duty, he had built up a healthy rainy-day fund and had started to aggressively save for retirement.

Read more...

Living the Dream: This Military Couple Retired Early

Written by Jackie Toops | March 18, 2021

“Continuous dedication to financial peace pays off,” shares military couple, Denise and Jim. They would know, because at ages 52 and 53, they are already retired. The couple enjoyed life as an Army family for 32 and a half years and started planning for retirement decades ago. Denise shares, “We are not working a paid job, but are volunteering and meeting some personal fitness goals and enjoying some time together after many years spent geographically apart. It can be done!”

Read more...