Wealth Manager

Is improving your credit score possible?  Improving your credit score is not only possible but a must if you want that loan, or better rate, or insurance or even maybe that job. But the first and most essential trick to improving your credit score is insuring the accuracy of each of your credit reports.   You can get a free copy of your credit report from only one source.  (See how from Free Federal Credit Report)   But Only after you are certain of the accuracy should you begin planning other steps to improving your credit score.

And just so you know when you get your credit score, it will normally cost. But if you can get your credit score from Credit Report.com , you can get your credit score for free if you also get a 3 credit report monitoring program. It could well be worth it for you to do so.

Improving your credit score can be easy and can be maintained at its peak… if you know how to do it.  I recommend reading Credit Score Basics  Part 1 and Part 2 in conjunction with this article.

Scoring models such as FICO (Fair Isaac scoring model) generally evaluate the following types of information in your credit report and are weighted as suggested by the percent shown:

On Time Payment – 35% -Have you paid your bills on time? Payment history typically is a significant factor. Your score will be affected negatively if you have paid bills late, had an account referred to collections, had a repossession, or declared bankruptcy. The age of the positive or negative comment is also important in this factor. For example, a 90 day late payment 3 years ago may be less important than a 30 day late last month. The more current the factor, the greater the weight.

Amount Owed Versus Capacity – 30%- What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score. Authorities suggest 30%-60% is desirable by creditors. Maintaining a low balance on multiple cards is better than high balances on one… but don’t run out for more cards to “even out” balances just before applying for a loan. Recent applications cost you as shown in below. You should note that a few creditors will use highest balance as your credit limit. For example if you have a $10,000 limit and have used only $1000, your limit will show not 10% but 100% utilization.

Length Of Credit History – 15% – How long is your credit history? Generally, models consider the length of your credit track record. A recently opened account will have less weight than an account 3-4 years old. An insufficient credit history may have a negative effect on your score, but that can be offset by other factors, such as timely payments and low balances. If you are going to close an account, try to maintain the oldest accounts as age of account matters.

New Credit Accounts – 10% – Have you applied for new credit recently? Many scoring models consider recency. Similarly, if you have applied for too many new accounts recently or had to many recent inquiries, that may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make “pre-screened” credit offers are not counted.

Types Of Credit In Use – 10% – How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies (rather than a bank) may negatively affect your credit score. There is also a hierarchy of debt beginning with a mortgage. This is followed by a secured debt such as a car, then unsecured debt (credit cards), then revolving charge cards and gasoline cards.

Most Important Issues

It’s likely to take some time to improve your score significantly. However, the most important issues to improved credit score are:

accuracy of report

on time payments

paying down outstanding balances

not taking on new debt.

And don’t forget you can get your free credit score from Credit Report.com

As you read in Credit Scoring Basics Part 1 and In a nutshell, high credit score reports help your request for credit to be approved. It can also mean lower interest on loans or even insurance rates. Low credit score reports can cause higher rates and loan denials… and even that promotion or new job you were seeking. So improving your credit score is critically important.

What’s my credit score?  How can I find my credit score?

Although there is an associated cost, you can view credit score reports from Credit Report.com

Your score is made of data you supply to a potential creditor who utilizes a scoring model supplied by someone like Fair Issac Company and produce what is know as a FICO score (sometimes referred to as Beacon Score).

So what’s a good score?

General US population FICO Scores range throughout the country per the following table.   You will see that the adult population is divided into 5 groups and with the following point spread:

780 to 850 – 20%

740 to 780 – 20%

690 to 740 – 20%

620 to 690 – 20%

Below 620 – 20%

What constitutes good credit score reports is a matter of economics.  Not long ago your pet turtle could have applied for and probably gotten a credit card so a good score could have been 620.  In a very tight economy with minimum lending a good score is considered 740 or better.  It all depends how much credit is being extended.

How Can I Get My Credit Score Reports?

Through Annual Credit Report.com  (See Free Federal Credit Report for more information), a credit REPORT can be obtained for free. ( The forthcoming article  Improving Your credit Score explains this as well.)  However, please understand, credit SCORE reports will all have an associated cost but can be obtained from the same source you received your credit report.  But as mentioned above you can also view credit score reports from   Credit Report.com