Tips on Establishing an Excellent Credit Rating

Tips on Establishing an Excellent Credit Rating
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Overview
Establishing an excellent credit rating is important to most Americans; however, many consumers are misinformed about credit ratings and how they are calculated. Let's review the best ways to establish and maintain an excellent credit rating.
Keep Balances Low
Much of your credit rating is established by calculating your use of available credit, also known as your financial liquidity. Low balances (such as on your credit card) in proportion to available credit limits will help maximize your credit score.
Pay on Time
Making payments on time is a sure-fire way to establish an excellent credit rating; financial institutions start reporting payments late once they reach the thirty day mark. If you are unable to make a payment by the due date make sure you make it before it becomes thirty days late.
Live Within Your Means
High debt levels can be a burden to your credit score. A high debt to income ratio can make lenders cautious about extending you credit. Make sure you are living within your means when it comes to auto loans, mortgages, and revolving credit accounts.
Don't Close Old Accounts
Closing old accounts is a very bad idea even if you haven't used them in awhile. Credit scores are partially calculated by your overall balances versus your available credit; closing an account reduces your available credit and can lower your credit rating.
Settle Old Debts
Collection accounts and charge-offs from years past can haunt your credit bureau for seven to ten years. Paying them off will not remove the items, but it will show that you made an effort to pay the debt back and can improve your credit score.
Resources
reference
My FICO