Let’s talk about how you can increase that credit score.
The Basics
A credit score is like your financial report card. Lenders and creditors use it to determine how risky it is to do business with you.
The lowest score is 300 – a perfect score is 850.
Drop ‘O’ Money Honey: Only about 1.5 percent of people have a score of 850 so if you know one…you’ve basically met a unicorn.
I’m not promising unicorn status, but here are the four factors you need to become very familiar with if you want to increase your credit score.
The Money Honey Magic Formula
Tip 1: Super simple – pay your bills on time. Missing one payment may not seem like a big deal, but it takes seven years for a late payment to stop hurting your credit report.
Tip 2: Add up your available credit. Take all your cards, student loans, car loans and bills. Let’s say that’s $50,000.
Here’s the tip – try to get your charges and debt to less than 30 percent of that number – so $15,000.
Lenders like a good credit cushion.
Tip 3: It’s all about timing. Let’s say you want to open a new credit card, move into a new apartment and get a new car.
In all those cases, someone’s going to check your credit history. It’s called a hard inquiry.
If you have several hard inquiries in even a few month period, your credit report will get dinged because it looks like you’re going on a prolonged buying spree.
Here’s the trick…make all of those big purchases within a 14 day period. Doing that will result in one ding to your credit report — not multiple!
Tip 4: Old = good! If you have an old credit card you aren’t using that’s just sitting in your wallet, but you aren’t paying an annual fee – keep it open. It will actually help your credit score. Accounts that have been open 25 years or more are the best for your report, eight years and older is good, and anything under two won’t really hurt or help.
Let me tell you this. It’s a lot harder to improve your credit than it is for send it spiraling down. So read this again or watch the video if that’s the way you learn.
Whatever you do, commit these factors to memory.
Then share the knowledge with a friend so they, too – can protect that money honey!