Improve Your Credit Score

What Is A Credit Score?

Your FICO score, which is better known as your credit score is a present day predictor of your future ability to pay back money that you want to borrow from a lender. The higher your FICO score the lower the interest rate you will pay. The lower your FICO score the more you’ll pay. It is that simple. FICO scores range from a low of 300 to a high of 850. But if you have a score of anything below 500 you are considered a financial nightmare and are thrown into the “substandard” interest rate category.

Your FICO score is going to play a part in any car loan, or the interest rate on your credit card, or whether you deserve a boost in your credit card limit. It’s also used by insurance companies in setting premiums. Landlords also use it to decide if they want to rent to you. Now some employers are checking your credit record during the hiring process. So if you want to rent an apartment, get a job, or even qualify for that zero percent interest rate offer on your new car loan, you need to have a good FICO score.

How Is Your Credit Score Calculated?

There are five categories that go into the calculation of your credit score (FICO) as follows:

  1. Payment history 35%
  2. Amounts you owe 30%
  3. Length of credit history 15%
  4. New credit 10%
  5. Type of credit use 10%
Our Master Class on Credit management explains the components of each of these 5 section of your FICO Score and the details of how these percentages work together to affect your score. 
 

How To Improve Your Credit Score

  • Make sure you make your payments on time
  • Apply for a secured credit card
  • Get an installment loan
  • Increase your credit limit but don’t use the increased credit
  • Keep older accounts open, if you plan to close some accounts
  • Check your credit report for errors and request for corrections
 

Some FAQ On Building Your Credit

  1. Can you build your credit without having a credit card?  – Yes
  2. Can you improve your credit instantly? – Yes
  3. Is it good to cancel all your credit cards? – No
  4. Does shopping around for credit hurt your credit score?  – Yes and No
  5. Does an installment loan improve your credit better than a credit card? – Yes
  6. Will the credit agency give personalized advice on how to improve your score?  – Yes
  7. Does checking your credit negatively affect your credit score? – No
  8. Will marriage to a person with bad credit affect your credit? – No and Yes
  9. Can you contact the credit reporting agencies to correct errors in your credit report? – Yes
For detailed answers to these questions and detailed explanations of the issues covered in the 5 sections of of your Credit Score, get our Master Class on Credit Management
 
The Master Class also covers danger signs of credit problems, how to negotiate with your creditors to reduce your  debt, issues related to bankrupcy, etc.
 

Prof Obi Keeps ISimple & Short (KISS)