How To Improve Your Credit Score

Okay. So now you've seen your credit score. Please... stop crying. Seriously now, you have the information now what you do. Depending on how good or bad it is you can either sit back and smile or go to work to improve and repair. Let's assume since you're reading this that you're in the latter group.

The biggest thing you can do to improve your credit score is to pay all of your bills on time. Any payment more than 30 days past due is a real no-no.(technical term) Another important thing is credit card balances. Anything over 50% starts to count against you. Then it starts to get tricky. Old accounts are good. The older the better. A mortgage or charge account in good standing that you've held for 10 years or more is gold. The shows you are stable and consistent over a long period of time. By the same token new accounts can hurt because you haven't held them long enough to show anything. The number of open accounts you have can be a problem, but conversely if you don't have any that can really hurt you. High limits on credit cards can be helpful.

One thing you don't want to do is to close a lot of unused credit card accounts. I think in the credit score business closing an existing account hurt you worse than opening a new one. In these days of tightening credit, I know of a lot of people who have had their high limits on their credit cards cut. This could present several problems. First of all, it reduces their available credit and that's bad. Second, it reduces their high limit and that's that. And third it can take a card with a 50% balance and move it to a 100% balance. That's really bad.

This is just a rough sketch. I continued to dig looking for more information and I will present it here.

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What Is A Credit Score?

What is a credit score? It's a three digit number that has more control of your life than most people realize. It's based on your credit report and is basically a numeric representation of your willingness and ability to repay debt. It can decide whether you qualify for a loan and the amount and interest rate of the loan. It could also play a role in your employment and the price you pay for insurance. Interestingly enough, income is not a consideration.

Although there are many credit scores out there, the granddaddy of them all is FICO from Fair Isaac Corporation. It ranges from a low of 300 to a high of 850. The lower you are on this scale the less likely is your ability to get good cheap credit. I think today anything below 600 is considered deadbeat status and a lot of us are headed that way.

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You And Your Credit Score

Everybody's heard of a Credit Score. But a lot of people don't understand how important your credit score is in today's financial environment. Your credit score can have an effect on many things in your life including your job, your ability to get good interest rates, even your ability to rent an apartment.

With so much depending on this three digit number, you'd think we would have easy access to what it is, how to get it, how to improve it, and how to protect it.

A big part of your debt and credit journey will revolve around this number. In the next few posts I'll show you what I've discovered in my search for answers and solutions.