These days most of us have loans to buy a house, set up a business, or buy a car. Many students take loans to further their education. How soon the loan is approved, the rate of interest, and the amount you’re approved for will all depend on your credit score which is based on your credit report(s).
People with scores of 700 and higher are the beneficiaries of lower interest rates and quick approvals. Imagine if your score is greater than 700 and another person has a score of 698 then the person with score 698 will have to pay interest that is higher by one-half percentage point. Doesn’t sound like much but, this means over a year a person with a lower score will pay about $19,000 or more as interest on a loan of let’s say hypothetical $165,000.
A credit score takes into consideration: payment history, current earnings, current debt, length of credit history, types of credit utilized, and your new credit. But all factors are not weighed equally. Meaning, applying for a new credit card won’t lower your score as much as having a late payment in your credit history.
For most…this may come as common sense but you would be surprised of the mistakes made by simply not knowing the FICO score formula!!!
You can take a few simple steps and ensure that your credit score is higher than 700.
1- Maintain a long healthy credit history. Keep alive your oldest credit card and be sure to pay all bills in time. Never keep bills pending over a 30 day period. If in a crunch at least pay the minimum charges due.
2- Do not have too many credit cards. Learn to say “NO,” to offers of free credit cards.
3- Maintain a good credit limit. Avoid using all the available credit on the cards.
4- Ensure that the credit report you have is accurate and that there are no errors clerical. Find out about our exclusive Bonuses (as part of our BCB 30-Day Challenge)… CREDIT REPAIR SECRETS and learn how to challenge any and all negative items on your credit reports.
5- Plan your finances in advance and not spur of the moment. Most bonehead mistakes occur by making emotional financial decisions.
6- Never suddenly close or open accounts. This leads to suspicion that you are trying to manipulate your credit report.
7- If you are having problems speak to your creditors well in advance and work out a payment plan. Request the creditor to refrain from reporting the late payment. They are humans on the other side of the phone lines. Be respectful and professional! It will go a long way in getting the help you need.
8- Late or delayed payments drive your score down so get in the habit of always paying bills before they are due (I like to pay at least 1 week in advance). Keep a tab on due dates and ensure that all bills are paid!
9- Learn all you can about credit reports and FICO scores and keep the criteria in mind while managing your finances. Sometimes it simply a mater of rearranging your account balances to help increase your scores.
10- Maintain the debt-to-credit limit ratio below 30%… if you can.
A useful source to learn about managing credit is www.consumerfinance.gov.They are the Consumer Financial Protection Bureau and provide in depth education on loans, credit scores, credit management, credit report reviews and how to file complaints.
Even if advised refrain from filing for bankruptcy. All you need to do is to sit down and curtail expenses, plan you income-expenditure , and avoid spending what you have not earned!
If you have any questions you can always contact us at: [email protected]