16 Feb Credit Score comments for blog post request
Your credit score is a crazy beast. Many variables can affect your score positively
and negatively. Awareness and understanding of how these variables work for and
against you will greatly increase your chances of optimizing your credit score.
Having the optimal credit score is important because many companies and service
providers use your credit score to judge you as a person, not just your ability to pay
your obligations. Right or wrong, they do this for one reason…to charge you the
maximum on interest rates or the services they provide.
Here’s one example, the auto-insurance industry switched to analyzing your credit
score, rather than how many fender-benders you’ve been in, to determine your
auto-insurance rates. Is that fair? What does your credit score have to do with your
driving habits? From their perspective, a less than optimal credit score is a
predictor of the likelihood you will get in an accident and make a claim. Huh? Well,
isn’t that a crafty way for them to increase your rates…your credit score.
Unfortunately, the list goes on and on.
Let’s talk about some strategies that you want to be aware of to optimize your credit
1) Keep your balances under the 50% allowable credit limit. If you want an
even higher score to keep your balances under 30% of the credit line available
to you. Isn’t it interesting that number has been recently lowered from 50%
to 30%? The chips are stacked against the unknowing.
2) Pay your utility bills on time and in full if you can. Many property managers
will report your payment history.
3) Pay your obligations on time. Even one late payment will remain on your
credit history for up to 7 years. Yes, 7 years! It’s not in the credit card
industries interest to forgive late payments because they get to charge you
higher rates. Be careful.
4) Know and analyze your credit report. Obtain a credit report from all of the
credit reporting agencies.
5) Find inaccuracies. If you find inaccuracies in your credit report, file a dispute
with all reporting agencies immediately.
6) Use your credit when you don’t need it. This is counterintuitive. When you
have a reserve of cash, you can use your credit card to pay for small items. At
the end of the month, pay the balance in full and demonstrate your ability to
pay at the end of each month.
7) Don’t close old credit cards. When you close or cancel past cards it does not
allow the creditors to see your history. They want to see an established
history of your credit.
This is a short list of what you may be able to do to optimize your credit score.
Be a disciplined user of the credit and know what is on your credit report. Protect
yourself by being as careful with your credit score as you are with your most
personal items. After all, it is a reflection of you.