Guides you need to know about Credit

Facebook
Twitter
Pinterest
LinkedIn
Reddit
Telegram
WhatsApp
Skype

There are many tips and tricks to prove your credit score – and we’ll get to those in a moment – but nothing will raise your credit score faster or more effectively active than paying bills on time and using your credit cards judiciously.

“If you are trying to give people advice for improving their score, pointing them toward those two relatively easy components to change is a perfect start,” said Tatiana Homonoff, an assistant professor of Economics and Public Policy at New York University. She did a two-year study on credit scores and published a paper in April 2018.

Homonoff, who is affiliated with the Robert F. Wagner Graduate School of Public Service at NYU, added: “There are some parts of the credit score algorithm that are very hard to effect, but paying bills on time and being aware of credit utilization are things people can do with some ease, even if they’re in a tough financial position.”

Americans are paying more attention. In July 2020, the average FICO score hit a record high of 711, an 11-point increase from 2018. That has put millions of consumers in a better position to get low-interest, affordable credit opportunities.

Below, we’ll go over how credit scores work and offer tips on raising yours.

What Is a Credit Score?

A credit score is a numerical summary of your credit history, a commonly used method for lenders to predict the likelihood that you will repay any loans they make. The higher the score, the better a borrower looks to potential lenders. 

Credit scores range from 300 (poor) to 850 (excellent). Higher scores illustrate good credit histories, including on-time payments, low credit use, and extended credit history. Lower scores indicate borrowers may be risky investments because of late payments or overextended use of Credit.

There are no exact cutoffs for good or bad scores, but there are guidelines for each. Most lenders view scores above 720 as ideal and scores below 630 as problematic.

Consumers are becoming more aware of how raising their credit score improves their financial outlook, and Homonoff’s study has evidence of it. She found consumer behavior improved when people were aware of their credit scores.

“Many people thought they had a great score but then overestimated it,” she said. “They realized they had to start changing credit behaviors, stop making late payments, pay off cards with a balance, and improve their scores.”

The FICO credit score is used by 90% of the businesses in the U.S. to determine how much Credit to offer a consumer and what interest rate to charge them for that Credit.

FICO uses five significant components in the equation that produces your credit score. Those five include:

  1. Payment history (35% of score): Do you pay on time? Do you pay the total balance, the minimum?
  2. Amounts owed (30%): How much of the Credit you’re allowed do you use? You are seen as high risk and penalized if you exceed the limit. If you use less than 30% of permitted Credit, you’re considered a safe borrower and get a positive rating.
  3. Length of credit history (15%): The longer you have an account, the better the scorekeepers like it.
  4. Credit mix (10%): FICO likes to see a blend between credit cards, mortgages, and auto loans … as long as you can afford them! Please don’t take out another loan in hopes it will improve your score. This category doesn’t count enough in the overall equation.
  5. New Credit (10%): It’s OK to open a new account occasionally, but if you apply for several versions in a short period, you are a risk, and your score will reflect that.

As you go through life, your credit score will fluctuate. It fluctuates depending on how reliable you are at repaying debt on time, especially credit cards and installment loans, when you use credit more often, whether it’s by taking on more credit cards, getting a mortgage, taking out a student loan, or auto loan, your credit score changes to reflect how you deal with the responsibility of more debt.

Allow us to help you understand how you can manage your accounts and be able to sustain your credit. If you or someone you know has questions about their credit history and how to correct inaccurate, unverifiable, or incomplete items on their credit report. Or, if you would like to learn more about credit improvement and repair services, Real Credit Deal is here to help you.

Facebook
Twitter
Pinterest
LinkedIn
Reddit
Telegram
WhatsApp
Skype

Leave a comment

About Us

Real Credit Deal is a credit repair company. We help people rebuild their credit, so they can buy the things they need and want in life. Our mission is to educate people about credit, help them understand their credit reports, and provide them with the tools they need to improve their credit scores. We believe everyone deserves a second chance and are here to help people get started on their journey to better credit.

Follow Us

Subscribe To Our Channel

Play Video

Recent Posts

Download Our Free E-book

Discover The "5 Hacks To Grow Your Credit Score By 100 Points"

Helping Good People With Bad Credit

Subscribe Now

Don’t miss our future updates & promos! Get Subscribed Today!

©2022. Real Credit Deal. All Rights Reserved.

Untitled design (6)

Need Help With Your Credit Score?

Click the calendar below to
schedule Your free credit consultation Today

Untitled design (6)

Need help with your credit Score?

Click the calendar below to schedule Your free credit consultation Today