How To Get A Good Credit Score?
If you want to have a good credit score, there are some things that you can do to improve your credit score ratings.
Keep in mind that credit scores are used by lending companies to see how you pay your debts. So, just by making a habit of paying your debts regularly will help you improve your credit score. Paying on time, every time will make a big difference. You may be late sometimes, but if you make it a habit it will damage credit rating. Nevertheless, there are still hundreds of ways to improve your score.
First, here is a brief explanation of how a credit score, or otherwise known as FICO score, is broken down:
Owed Amounts – 30%
Credit History Length – 15%
History of Payment – 35%
Mix of Credits – 10%
Latest Credit Applications – 10%
As you can see based on the break down, you should really pay attention to your owed amounts and payment history as they comprise of two thirds of your credit score. It is definitely better if your latest payments are paid on time and in full. However, don't worry if you have previously been delinquent on past payments within the last few years. Just do not do it again if you want to improve your credit score.
When you come to think about it, your credit score is really dependent on how you make some negotiations with your creditor. The terms of payment and the modes of payment can actually be settled with good conversations and negotiations. What you need to do is to put them in writing and propose it well to your creditor. You may even be lucky as some creditors remove items from your debts if you give them good propositions. However, you have to remember that it is not magic to remove your debts; some companies take a long time to delete them from their account. For more detailed instruction on negotiating with creditors, check out our book: Get Your Credit Score To 740 under our E books section.
Your primary question must be, with your active credit, how much of the balance owed you should pay in comparison with the total amount of credits charged to you. Capacity is another term for the amounts you have owed. Let us say that you have a loan worth $6,300 on your credit card and your limit is $7,000. You are now at 90 percent of your capacity, which is not good in the eyes of your prospect lender and definitely will create a negative impact on your credit score. It is suggested that you should not be around 30% or less of your credit limit, so paying it down to, $2,100 or less will alleviate you from having a hurting credit score.
What you have to do is analyze the best way to manage your financial transactions. At the end of the day, it is in your own hands to create a good score.
This was very helpful! I had never known how the credit score was broken down. It really helps to see those percentages and know what things to focus on most. It also helps to know that my credit score and how my choices affect it is understandable. Thanks for the great tips and helpful information!
I have used much of the information contained in this post. A credit card company pulled a huge amount of availalbe credit from me last year. My credit score took a huge hit. Using some of this information, I was able to systematically rebuild my credit score and, within a year, it is above where it was when the credit card company made their move. Need to rebuld yoru score, follow the information on this website. It is worth its weight in gold.