Category: Money Making Ideas

Have you ever wondered what really makes your score rise or fall?

And not just the myths put out by big banks. Like the idea that you should keep a small credit card balance.

This doesn’t actually help your score or prove you can manage debt. But it does result in you paying a lot more interest.

These industry-fueled lies make us mad. So we hand-selected a credit expert to shine a light into the shadows and clear some things up.

Once you have knowledge of the credit score game, your score can start climbing rapidly.

But it won’t budge an inch if you don’t first find out what’s on your credit report.

The good news is, you can get your credit report absolutely free 3 times a year.

All 3 credit reporting bureaus are required to give you one free report every 12 months.

You get them from AnnualCreditReport.com. Some people confuse this withFreeCreditReport.com which isn’t always free, so be careful.

The smart thing to do is get 1 free report from 1 bureau every 4 months. After a year you’ll have gotten all 3 credit reports for free. And because you spaced it out, you can keep a better eye on your credit as events change.

It’s time to see what’s on it and what we can do to fix it.

Your credit report will give you facts about the last 7-10 years of your credit history. This includes late payments, debt defaults, collections and even who has checked your credit recently.

But what does it all mean? And how much does each item affect your credit score?

It’s hard to know because the credit bureaus aren’t always open about it.

Roughly, your credit score is weighted like this…

* 35% – Payment History: Late payments and delinquent accounts hurt, even if your account is currently all caught up. If you’ve been 30, 60, 90 or more days late paying anytime in the past 7 years, then it’s going to lower your credit score. The more recent the mark, the worse it is. Debt defaults, collections and bankruptcies also hurt you here.

* 30% – Debt to Credit Limit: Each open credit account should report to the bureaus once a month. The bureaus then look at your total debt from all accounts and divide it by the total credit available to you. This gives you a percentage called the Debt-To-Limit ratio, and if it’s over 33% you’re going to see your score lowered.

* 15% by Length of Credit History: If you open a credit card account, plan to keep it active for 4-10 years. Accounts that are quickly shut down will lower your score, while older accounts will give it a boost.

* 10% by Recent Credit Approval: Believe it or not, getting approved to borrow more money can actually raise your score… and make it easier for you to borrow even more! But only up to a point – too much credit available will eventually lower your score.

* 10% by Types of Credit Used: You can raise your score by using multiple types of credit. If you just stick with a credit card, your score will be lower than it could be.

Just knowing what helps or hurts your score most will help you prioritize what needs to be done to raise your score.