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If your mind recoils at the thought of having a credit score somewhere in the annals of finance, don’t fret. In many ways, it’s similar to your physical health. Being responsible and knowing your limits is sound advice, but sometimes your body and finances need to be pushed a little.

Just like beefy abs, a healthy credit score can then become a powerful tool.

A credit score is an assessment of how you are managing your debt, and just like you, this changes over time. It’s likely the most honest reflection on your financial situation you can get, and with an assortment of variables and metrics, it shows what type of risk you are to any potential lender. See it as the lie-detector to some’s “I’m good for it”.

Living debt-free sounds like the answer, but if you ever need more money than your piggy bank holds, you’re going to need to use someone else’s cash, and that is where a credit score can be your secret weapon. Having debt can help you get credit, and building up a positive payment history on your existing debts will allow you to have access to more products, and be able to negotiate for better terms.

Now this doesn’t mean that you have to go ape on the clothing accounts. Having more than your healthy share of store cards is also not good, even if you maintain them responsibly. Every time you use credit, your profile makes a little wave in the finance ether, and too much disturbance is also not good.

Having a store card is one of the easiest ways to enter the world of credit. Accessible to anyone over the age of 18, these accounts are a valuable way for younger people to begin building up a healthy credit score. Never use the full amount available to you, and always pay your instalments on time. Simple. It even teaches you to work within the limits of your budget.

Ultimately, potential lenders want to know that users who have available credit are prudent enough not to ‘max out’ their limit by living beyond their means.

In addition to paying on time, every time, pay back more than the minimum instalments whenever you can. Topping up your debt with those little freebies like a bonus, tax rebates, or even a monetary gift from a generous relative. This becomes a good indicator of your creditworthiness. Better creditworthiness = better terms and more products.

But of course, your financial situation changes over time, and as you manage your finances things will become more complex than managing your card at the shoe store. Reaching a sustainable level of financial freedom needs to be managed in collaboration with people who understand the magical kingdom of finance.

Galbraith Rushby is just the group to help you not only manage your finances but grow your personal and business portfolios. Formed in 2006 by Jeneen Galbraith and Michael Rushby, the firm has grown organically through word of mouth by maintaining high standards, personal service, and the professional touch their clients have come to know.

[source:moneyweb]