Having excellent credit allows you to have the best rate possible as well as make sure that you’re in the best position to negotiate and acquire the specific things you want in life. Typically having excellent credit means you can purchase or lease items or products you want and desire at the very best rate possible assuming that you know how to negotiate way to the best possible rate and terms. The credit industry experts like Suze Orman and Dave Ramsey may balk at the notion of trying to build credit fast. They do not like to advise anyone about shortcuts to increase score quickly. However, in our everyday lives, things happen and we find ourselves short of our goals or where we desire to be. Credit is one area things do happen and I mean things that will adversely affect your credit and you only find out when you really need your credit. I mean it can be financially costly. There is nothing wrong with trying to find ways to improve your credit in a short time span except that sometimes, those action can and do backfire on you if not managed properly with greatest attention to details.
If you know you will make a major purchase soon, it will be wise to take a look at your credit to find out areas where there may be problems. Knowing the problem areas will allow to find ways to rectify them in order to help increase your credit score quickly so that you can get better rate than you would otherwise receive if you do nothing. The cost of borrowing gets higher with higher rates especially when you are making a large purchase like a house that will stretch into years of payments. They do add up. Of course the benefit of time will allow you to refinance down the road but why wait if you can do something about it right now no matter how little it may be. It will be a step in the right direction towards rebuilding your credit towards a better score.
What is Credit Score or FICO Score?
A person’s credit score or what is also called and known as your FICO score is a score that is created or generated by an organization called FICO. They use five criteria to calculate your score. There are three main credit bureaus that calculate a FICO score for you. They each look at FICO scores using differing weighting criteria that are slightly different for the five components that comprise your FICO score. Your credit score is akin to the cumulative level of trust placed in you about extending credit to you. In essence the level of trust they have in your ability and responsibility to pay your debt. Inversely, it is your level of financial risk if credit is extended to you. the lower your score, the higher the risk to lend to you. It reflects your ability to repay your debt obligation over time in their view.
The three main credit bureaus are Experian, Transunion, and Equifax. The Contact Information For the Three Credit Bureaus are shown below:
Equifax – www.equifax.com. P.O. Box 740241. Atlanta, GA 30374-0241. 1-800-685-1111.
Experian – www.experian.com. P.O. Box 2104. Allen, TX 75013-0949. 1-888-EXPERIAN (397-3742)
TransUnion – www.transunion.com. P.O. Box 1000. Chester, PA 19022. 1-800-916-8800.
Leveraging the five criteria correctly can really help you take control of your credit. Now you have to understand your credit is almost like you know how people think about whether or not they can trust you. If you’ve shown in your credit that you’re not trustworthy then companies are not going to want to lend you money and not going to want to take that risk or if they do they’re going to charge you an arm and a leg to do so. So it’s very important to really take control of your credit score and make sure that you’re maximizing your own potential.
One of the five criteria that comprise your credit score is the length of your credit history. The next is the type of credit that you have. Also your credit history or payments being on time or not. The next item the amount owed and lastly, new credit.
They actually break these out into percentages namely:
thirty percent is for the amount owed;
thirty-five percent is the payment history;
ten percent is new credit;
fifteen percent is the length of your credit history and;
ten percent is the type of credit that you have in use.
The biggest thing to think about is what area of your credit can you impact on a short-term when you’re trying to work towards a particular goal like buying a home, car or whatever the case may be. It is important to develop a strategy that will allow you improve your credit position. Let’s look at certain strategies to take in order to help your credit picture.
Different people have employed differing strategies at one time or the other to help their situation. These strategies should be incorporated the some best practices to adhere to in order to protect yourself and your credit.
I will give you some strategies that I’ve used that have worked for me and hopefully they work for you as well. But then I’m also going to share with you some best practices that I think every person should definitely incorporate just to protect yourself and to make sure that you know you’re really taking a hold of your FICO score the best that you can. So first I’m just going to give you the best practices because I think that’s the easy stuff. You should always know about where your credit score is. I highly recommend that people pull their credit score, at least once a year. Another best practice besides pulling your credit report at least once a year is, if you get your credit report look through every single line item. There are times when you may actually see something that is not attributed to you or sometimes things that are reported incorrectly. So it is very important that you check out your credit report and get familiar with what’s on there because there are definitely times where people find incorrect information being reported on their credit scoring. Oh my gosh you’re trying to get credit what would be the worst thing ever than have somebody else’s information on your report or some company reported incorrectly on your score? So I think it is super very very wise to pull your credit report and understand what’s there and dispute anything that you think is incorrect. But in terms of trying to increase your score and work towards the goals that you have, whether it be getting a new car, a new house or whatever that is, you know there are some tricks that you can use. And Susie and Dave Ramsey, I’m so sorry that i’m going to give some information out but if, you know something that you can use that I know I’ve done in the past um you know when you’ve got new credit length of history types of credit and use payment history about old so for new credit you know that’s something you can control right you can control whether or not you’re making applications or applying for new credit and just kind of doing you know every time you go to a store and they ask you hey you want that discount you want to get a new credit line stop doing that that is like the worst thing you can do and I never never never ever get credit lines unless it’s something that I know is going to be a long term line that i need and honestly if it’s not helping me towards my credit strategy that I have for my life then I’m not going to take it. I don’t care what any sales person says because it’s probably going to benefit them more than it will me anyway so do not do those applications at the stores that’s the worst thing you can do when you’re trying to build your credit the next thing is the length of credit history so this is something that you really can’t you know impact on a short-term you just kind of have to continue to use your credit like having your house and your car and just being consistent with, you know having lines of credit open and i’m not saying have a bunch of line but again being strategic with how you do it right. So that’s something that’s important and at the end of the day you can’t really extend it past what it is it just kinda is what it is right so you know just be consistent and also i think another tip that kind of goes right along with that one is don’t just go shutting down credit lines that you’ve had long-term history on. Sometimes you need to leave stuff open and just kind of use it every once in a while make sure you pay it off when you do that but when you close down credit lines you actually negatively impact your score and that it doesn’t always happen that way but it does often because that’s history, right? So if you’re closing down history that they’re using to leverage in this calculation if it’s not there they can’t use it so be careful when you just go and shut down a bunch of stuff because at the end of the day you might actually be negatively impacting you.
Now another thing to think about is the type of credit that you have in use not all credit is created equally so things like credit cards vs a mortgage or car payment. They are not the same and they’re not looked at the same by the Bureau when they’re making the the calculations around your FICO score. So credit card bad, mortgage ok, student loans good. So these, you know, different types of credit impact you in different ways and you have to be very cautious around how you are using these things. So with that being said, what that make that payment history now this is totally in your control, totally. You cannot be lazy about payment history. You cannot pay your bills wait and just say all whatever you know I’ll take care of that later or it’s not that big of a deal because every time you miss a payment that’s seven years you have to wait before your credit report refreshes and that drops off. So I am someone where I’ve never had a late payment and I don’t plan on having a late payment and that is for that very reason once you get that Nick on your credit it takes a really long time for that to drop off and you can do things to try to impact the score or sway things one way or another but if you have those late they just hurt you and especially if you get more than one and it starts to multiply it’s just bad bad bad so don’t do it is thirty-five percent of your credit score and you definitely don’t want to have that on there if you can help it. Last tips that I’m going to give you is something that i would only use if I was really trying to do a short term maneuver to increase my credit and I would do this but I wouldn’t use it. So again you have to be very careful with this tip because you can really slide and slip and end up in a very bad situation.
But the last tip is you can actually call your credit card company and if you have had good history with them you can ask them to increase your credit limit. When you increase your credit limit it’s an instant positive because at the end of the day the computer is calculating your credit score based off of, you know, a computer calculation. So when they see that you’ve had an increase that impact the amount of available credit that you have which thus gives you a better score. So that’s something I’ve done on a few occasions and it’s come in handy, it’s worked out really well again you have to be careful though that you don’t turn around and use that money that you just made available because now you’re going to screw yourself even worse. You have more debt and then your score is going to go down even further. So you don’t want to do that but you can definitely be strategic and bring your score up by kind of playing the game just a little bit. And again you got to be careful but it’s definitely something that you can do.
So with that being said you know I just wanted to share with you a couple tricks that I’ve used in the past of different things to do to really work on my credit score but the biggest thing is paying your bills on time making sure you have a plan to move your money towards your credit and not towards you know buying things clothes, whatever the case may be. If you can get a handle on your credit score, you’re really positioning yourself to be in control. But the best thing to do is to get in a place where you don’t owe anybody and you’re purchasing everything with cash that’s the ultimate goal. You know that’s my long-term goal but at the end of the day I understand that for me there are times where I need credit and when I want to use it i want to make sure my score is good so that I’m paying the least amount of money to get the money that I need.
So I hope that helps somebody out there. Make sure it’s this information was useful to you, like or share this with anyone you know it would be applicable for. I amt going to be bringing you more information like this that I think may be beneficial and i would love to connect with you but I’m with that being said thanks for watching and have a great day.
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