Your credit score is one number you can’t afford to ignore. We all know we have one, but what you may not know is that your credit score affects not only how much you will pay for your house and car, but how high your insurance premiums are for that car and home. Get help to Fix your credit score! You can use something like Scott Hilton’s Smart Money Secret book or go about it on your own. Learn more about the important ways credit scoring affects your life:
- The amount you will pay in your monthly home mortgage payments
- The interest rate on your credit cards and car loan
- The amount you’ll be charged for Insurance Premiums
WHAT IS YOUR CREDIT SCORE?
Based upon the information in your credit report, the Fair Isaac Company (FICO, as it’s more commonly known) generates your credit score. Credit Scoring depends upon a number of factors, including: how long you have had credit, how much credit you are currently using, and your history of late payments. Your FICO score usually ranges between 620-850, and is used nearly every time you apply for credit.
Here’s a rough guideline of what kind of credit risk you would be considered by your creditors, based upon your credit score:
- If your credit score is XXX, your credit could be described as EXCELLENT credit
- If your credit score is XXX, your credit could be described as VERY GOOD credit
- If your credit score is XXX, your credit could be described as FAIR credit
- If your credit score is XXX, your credit could be described as POOR credit
GET HELP CALCULATING YOUR CREDIT SCORE
Fixing your credit score means fixing your credit report. Learn how your credit report is used to determine your credit score.
“Late Payments” – Don’t Make them.
Your history of paying your bills on time figures prominently in any calculation of your credit score. There are generally three ways that a late payment is marked on your credit report by “30 Days Late,” “60 Days Late,” and by “90 Days Late.” The damage you do to your credit increases depending on how late the payment was. For example, 30 days late is better than 90 days late, even if you know you are going to be late with a payment, get it to the creditor as soon as possible, it will be better for your credit if you do.
“Length of Credit History” – Longer is better.
Generally, the longer you have had open credit lines, the better your credit score. A person with a longer history will usually have a higher score than the person with a shorter history (late payments and other negatives not being considered). While it’s all well and good to want to get rid of all your credit cards, especially the ones you don’t use, keeping your older credit lines open (and using them wisely) is one way to help increase your credit scores.
“Amount of Credit Used” – Follow the 30% Rule
If you have a $1,000 credit line and you have charged $500, then you are using 50% of your available credit and probably too much. Your credit score will go down if you begin using too much of your available credit, because creditors look at your available credit and debts, and wonder why you don’t have enough money to pay them down. But you can help raise your credit score if you’re willing to start paying your credit cards down.
Generally, if you help reduce your amount of debt to 30% of your available credit, then you generally should see a raise in your credit score. So try not to use more than $300 for every $1,000 of your available credit. For example, if you’re credit line is $2,000, try to keep your balance below $600. (Just multiply $300 for each thousand of available credit, and you’ll get a good guideline).
“Number of Inquiries” – Applying for too much credit will negatively affect your score.
Strangely enough, sometimes applying for any credit at all will negatively impact your score (although usually the effect should be lessened after 6 months to a year). Every time you apply for a line of credit, a creditor checks your credit report, when they do, it is recorded on your report. That’s why you should never let anyone check your credit, unless you need to.
WARNING: Don’t ever let any company repairing your credit run a credit report ON you. Always get your credit report yourself. There is nothing to worry about when checking your own credit report, your credit score will NOT suffer (and only a “soft inquiry” will result). When you check your own report, it is completely different from someone else requesting a copy of your report (it will generate a “hard inquiry” and will look like you are applying for credit). We will give you all the instructions you need to get your credit report without getting hit by negative marks. We want to give you better credit score help. When you’re ready to get your credit reports and get started repairing your credit score, click here for our Smart Money Secret Review.