Credit News

Understanding Credit & How to Build it to access the Financial System

By Araceli Villanueva

When I meet a client, the first thing I do is to view the client’s credit report to analyze it and asses the current credit profile (if any) or to give them the steps to build a great credit history.

Its important to know how the credit score system works. It is a scoring system that works with formulas. The scores are generated depending on the type of credit, time of credit established, amount of inquiries by lending institutions and the activity of the tradelines (accounts).

The following are the main type of credit accounts that drive the credit scores formula to generate GREAT SCORES. Credit cards aka Revolving (R) accounts, Installment aka (I) for example car payments or personal loans, Mortgage aka (M) are for house loans.

Here are Important questions for ask oneself regarding credit and then to plan to get all the financial products available to our benefit:

  1. Why is it important to establish credit?
    1. What are the first steps to generate great credit scores? 
    2. Why higher scores are better?
    3. What is considered a great score and what does it mean to me?
  2. What are the advantages of using credit cards regularly and how do they affect my credit scores and report?


  1. Its important to establish credit because only with credit history the lending institutions will give us access to their products. 
    1. 1st, if there is existing credit history is always rule #1 to pay everything on time. 2nd, Have between 3-5 revolving cards (store and credit cards), no more, no less. 3rd, DONT spend over 35% of the total credit limit on those cards at any given month. Following these simple steps will keep scores higher than average.
    2. The higher the credit score, the better the rates, offers, rewards, etc we can get on all these financial products.
    3. Lending institutions consider 760 or higher the best credit scores. The better the score you have, the more benefits you get from any lending product (credit loans, credit cards, mortgage loans, business loans, etc)
  2. Use credit cards or department store cards regularly and pay them on time. Also DON’T use them over 35% of the total balance. Based on my years of experience, these accounts are about 50% of the formula to generate great scores.

Follow these steps and keep them regularly below the above percentage, pay on time and that is the beginning to build a great credit history. When I meet my clients I go into details and give them “homework” and on going coaching and monitoring of their credit report until we get the desire results. At the same time we review their income, assets and give them advise on how to keep their finances, income, job and assets to prepare for the purchase of their home and or access other type of credit products and how to use them.

The first consultation is complementary! If you would like to get your credit analyzed, please contact me and I will be happy to coach you on your way to navigate the financial system! Araceli Villanueva 305-206-5144

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