Your Credit Score
Know how your credit score is made up.
The Fair Isaac Co., (FICO score),creator of the score, uses a complex formula to make up an individuals score. Basically, it looks like this:
- 35% comes from your past payment history, so pay your bills on time and don't miss a payment!
- 30% comes from how much you owe, so keep your outstanding balances below 30% of your available credit...the lower the better.
- 15% comes from your credit history. Having a few cards for a long time is a plus but dormancy is a minus, so charge and payoff with regularity.
- 10% comes from new credit. Don't open unnecessary cards and keep creditor inquiries to a minimum as multiple inquiries will ding your score.
- 10% comes from your mix of loans. This is usually out of your control. A good mix would consist of a home mortgage(s), an auto loan(s), revolving credit card(s), a student loan, etc.
An individual should look at their own credit score at least annually so that they know where they stand and to be on the lookout for any errors or inaccuracies. If you notice an error or ommission, you will then be able to act on it before too much time goes by. Once a year you can order a credit report for free from one of the three credit reporting agencies, which I have listed for your convenience. Ideally, you would order one report from one of the agencies every third of the year so that you are being updated three times a year, each time by one of the three different firms.
Go here to set that up.
Equifax
Experian
TransUnion
Some More Credit/Debt Notes to Ponder
- Bankruptcy stays on your credit report for 10 years.
- Tax liens could stay on indefinitely.
- Rule of thumb: keep your debt at 30% or less of your available credit, the lower the better. If you stay below 10%, you will garner the most amount of points in this category.
- If your payment due date is inconvenient, call your creditor/lender as very often they will change it for you.
- If you think you are going to fall behind or miss a payment, call your creditor/lender and talk about it as open lines of communication go a long way to keeping your credit from being tainted.
- Avoid damaging your score. One way to do this is by using on-line bill payment programs to help you pay on time each month.
- A common myth is to close old accounts you do not use. This is false as longevity with a creditor is a plus. A better action is to charge and pay off with regularity.
- Avoid applying for in-store finance deals. Instead, use your existing lines and pay off with regularity.
- When you need a loan of any type, try to do all of your "loan shopping" in a 14 day period as all of the inquiries will only count as one inquiry against your score.
- Be very very cautious with credit repair services.
If you do not want to set up an account at the big three agencies mentioned above, you should at least get a Credit Report Card to see how you are doing. This can de done very simply by going to
Credit.com
Finally, if you think you would like to try a debt consolidation service or credit counseling service, or even learning more on your own through some E-Books, I have listed a few reputable ones for you.
Online Debt Settlement
Common Sense Debt Secrets
Ultimate Debt Relief Secrets
Credit Card Debt Relief
If you did not find what you are looking for or simply want to learn more about living Debt Free and your Credit Score, you can try Google Search!
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