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How To Boost Your Credit ScoreJames H. Dimmitt Years ago your credit score was a big secret, known only to a select few such as your mortgage and credit card companies. In 2000, Fair, Isaac Co., the major supplier of credit scoring software, announced they would begin sharing credit scores, also known as FICO scores, with consumers. What is a credit score A credit score is a tool used by credit grantors to determine your ability to repay your debts. The information in your credit report is compared and evaluated against tens of millions of other consumer credit reports which gives you a credit score or number ranging from 350 highest credit risk up to 800 lowest credit risk. A higher score means you are less likely to make late payments or default on the credit extended to you. Your credit score will change as the information in your credit report changes over time. Following is a short overview of the five major categories of credit information that are used in determining your credit score and guidelines for scoring higher. PAYMENT HISTORY 35 percent Paying your current bills on time is the single most important factor in obtaining a high credit score. This category includes credit cards like Visa and MasterCard, retail accounts, installment loans such as those for a car or education, loans from finance companies, and home mortgages. Also included in this category are matters of public record such as bankruptcies, liens, wage garnishments, and collection accounts. The key to a higher score: Pay your bills on time! HOW MUCH DEBT YOU CARRY 30 percent This category considers the amount of debt you owe on your various credit accounts. If you’ve “maxed out” your available credit, this could indicate that you are overextended financially and won’t be able to make your payments on time or repay your debts completely. This category also examines how many of your accounts carry balances and how much money you’ve already repaid. Closing accounts with a zero balance does not generally improve your score in this area. The key to a higher score: Keep your credit card balances low. LENGTH OF ESTABLISHED CREDIT 15 percent The longer you’ve had credit accounts the higher you will score in this area. The age of your oldest account and the average age of all your accounts are used in determining your score. Old accounts that have gone unused are also considered. The key to a higher score: Establish good credit and keep accounts active. APPLICATIONS FOR NEW CREDIT 10 percent Opening multiple credit accounts within a short period of time represents a greater risk of becoming overextended. Each time you apply for credit an inquiry is made into your credit history and these inquiries show up in your credit report. A high number of credit inquiries will lower your score. Some inquiries are not considered in your score. These include: requests by you for your credit report, inquiries from companies for pre-approved offers or companies that already do business with you, along with inquiries from potential employers. Some requests for credit are treated as a single inquiry especially when you are shopping for the best loan rate. The key to a higher score: Only apply for and open new credit accounts when you need them. YOUR CREDIT MIX 10 percent This category examines the types of credit accounts you have and how many of each. Can a person have too many accounts Yes and no. It really depends on whether you have an established credit history or no credit history at all. The key to a higher score: Open credit accounts only if you intend to use them. Don’t despair if you have a low score or are just beginning to establish credit. Your credit score will change for better or worse depending on how well you understand and use these five keys to your advantage in planning your financial future.
| ![]() | ![]() | ![]() | RELATED ARTICLES Uncle Sam is Ready...Are You Organizing Tips for Tax Time Anyone who is closely related to an accountant knows that there are not four, but five seasons in a year: Spring, Summer, Fall, Winter, and Tax Season. During the other seasons, we accumulate leaves, snow, and mosquito bites. During Tax Season we accumulate paper. And more paper. And if you have a small business or investments--even more paper. How I Became a Hard Money Lender Unlike other investors, my venture into real estate was a natural extension of my secondary business as the IP Ware software developer. However, opportunity and perseverance beget wealth, or at least a decent side income. How Much House Can You Afford Your mortgage calculator says: probably a lot less than your mortgage banker says you can. 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Need funds to startup or expand your business Follow these steps: Reduce Your 30 Year Mortgage To 10 Years Using Mortgage Cycling With all the talk lately about Mortgage Cycling versus Bi-Weekly Mortgages which one is really right for you Choosing the correct one could literally save you thousands of dollars and shave off approximately 20 years on the life of your 30 year mortgage. Does Your School Teach You How to Achieve Financial Freedom Study hard, get good grades and you will have a bright future! I am pretty sure many of you have been brainwashed by your teachers with this statement when you were students. And your perception of a bright future is most likely to become a lawyer, doctor, engineer, businessman. whatever that promises a high salary. Searching The Internet Without Search Engines The World Wide Web contains more than ten million websites with thousands more being added daily from all over the world, and search engines are tasked with presenting the most relevant pages based on the search criteria entered.Finding a large and popular site like www.irs.gov is easy because it is related to a large agency, but a small site like mine www.consumermortgagereduction.com would be impossible without the use of search engines.The task of finding a website that relates to a specific subject would be almost without the use of the search engine, yet they perform this task with relative ease using tools that may be unknown to most users of search engines. Mortgage Consumer Bill of Rights This bill of rights was laid out by Franklin Raines, president of Fannie Mae on January 15, 2000. The Mortgage Consumer Bill of Rights is a pledge fof $2 trillion over 10 years to help consumers gain access to home ownership.It also includes an “Open Book” approach to underwriting where customers can see all of the factors that go into evaluating their creditworthiness and the process of applying for a home loan. How To Save Money On Your Mortgage Obtaining a home loan is arguably the most expensive transaction you’ll experience in your lifetime.Therefore, getting the best home at the greatest value is an endeavor worth pursuing.Whether you’re trying to squeeze in to a higher priced home or just trying to shave a couple bucks off of the closing costs, this article will help you explore your options. Setting Financial Goals, The First Step In Turning Your Dreams Into Reality Part II I decided to resurrect this article with some changes due to events that have happened this year from my website because of the time of year it is.With New Year’s Day being less than a week away, this is the time of year where many of us reflect on the past year, re-examine our dreams, desires and goals and make resolutions for the upcoming year. Why Choose a Remortgage You would choose a remortgage because it allows you to change your mortgage without moving your home. Remortgaging is the process of switching your mortgage to another lender that is offering a better deal than your current lender thereby saving money. A remortgage can also be used to raise additional finances by releasing equity in your property. Tax Assessment/Appraisal: How Do I Know What My Home is Worth If you are in the home buying or selling market, it’s important to understand the difference between tax assessment and appraisal value. Concentrate on the appraisal value because this determines your asking price. To Buy or Rent For Your College Student September always means Back To School, and for thousands of families it also signals Off To College. In addition, more and more young people are opting to continue their education with post-graduate studies. Business or Hobby...What Would the IRS Call YOUR Business One thing we know for sure… direct sellers start their businesses for a wide variety of reasons. Some want to build a dynasty, some want the tax benefits, some do it to buy and share a product they believe in, while others are simply looking for a way to have fun and make a little money on the side. Get Your Credit Score To Soar In The Twinkling of An Eye. Ever wonder how a creditor decides whether to grant you credit For years, creditors have been using credit scoring systems to determine if youd be a good risk for credit cards and auto loans. More recently, credit scoring has been used to help creditors evaluate your ability to repay home mortgage loans. Heres how credit scoring works in helping decide who gets credit -- and why. What is a Secured Loan A secured loan is simply a loan that uses your home as security against the loan.Secured loans are suitable for when you are trying to raise a large amount; are having difficulty getting an unsecured loan; or, have a poor credit history. Lenders can be more flexible when it comes to secured loans, making a secured loan possible when you may have been turned down for an unsecured loan. Secured loans are also worth considering if you need a new car, or need to make home improvements, or take that luxury holiday of a lifetime. ![]() |
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