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10 ways women can build credit

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  • Open new credit cards and credit lines gradually.
  • "I know one woman who had 20-some credit accounts."
  • Share and share alike doesn't work for credit.

When many women think of credit, their first thought is the array of plastic cards in their wallets -- one from nearly every store in the mall. Maybe you're at the other extreme -- so wary of credit that you've paid off your mortgage and your car loan and cut up all your credit cards.

Too much credit or not enough -- both can hurt your credit score and cost you thousands of dollars. And if you're one of those women who lets your husband handle all the bills, investment ignorance will not lead to financial bliss.

Whether you're fresh out of high school or college, just married, long married, just divorced or widowed -- you need your own credit score. Used correctly, credit can be your BFF (best friend forever) as, married or not, you build a strong credit history that will help you reach your goals. Here's how to begin building.

1. Start small

Open new credit cards and credit lines gradually. "If you open too many credit cards in too short a period of time, it looks like you're desperately seeking money," says Manisha Thakor, co-author of "On My Own Two Feet." "A young woman just starting her career goes shopping for a career wardrobe -- it could hurt her credit score when she goes to get her first apartment."

2. Limit yourself

Two or three credit cards are enough. Although many retailers offer a discount on the first purchase when you get a store card, that discount can cost you in higher interest rates and higher penalties than for a traditional card, Thakor says.

That additional card also could be the tipping point that pushes your credit score down a notch. "Someone goes out and gets a Kohl's credit card, saving 10 percent," says Todd Huettner, president of Huettner Capital in Denver. "You think that's good until you realize your credit score just went from 720 to 719 or from 700 to 699 and that cost you one-half point on a loan of $100,000. You saved 10 percent on a $50 purchase, but you just lost $500 on your house."

Plus, if you have too many bills to juggle, you increase the likelihood you'll pay one of them late, dinging your score again. "I know one woman who had 20-some credit accounts," Huettner says. "That's 300 payments in a year. If you have a 99 percent accuracy rate, you're still going to have three late payments a year."


3. Get your own

Share and share alike doesn't work for credit -- get some bills and credit cards in your own name to establish a separate credit history from your husband. "Many married couples tend to share credit cards or loans in a joint account, often under the husband's name. All women need to have their own credit in their own names to establish their own credit history in case of an unfortunate event such as divorce or death of a spouse," says Liza Landsman, executive vice president at Citi Cards.

4. Knowledge is freedom

"When my ex left, I thought I knew everything about my own financial position," says Joan Perry, author of "A Girl Needs Cash." "It surprised me how much digging I had to do to find out my own financial situation." Make sure, Perry says, that you know the interest rates on your mortgage, credit cards and loans, and when those rates will adjust.

5. Separate finances slowly

If you and your husband divorce, closing too many accounts at once can hurt your credit score. "In a divorce, people's first instinct is to go and shut down accounts so the other spouse can't charge stuff," Huettner says. "That's the worst thing you can do from a credit standpoint is close a bunch of accounts."

Instead, close accounts gradually over time. "I had one divorcing couple who closed one account every six months," Huettner says. "It took almost 24 months to close their last card because they wanted to keep their credit score high."


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