Tuesday, 29 January 2019

What Is Known As Good Credit

What Is Known As Good Credit

If you go to fitemyfico.com, FICO is the company that developed the most widely used credit score, terror Isaac is actually the name of the corporation when you go to their website, you can get the following information

Excellent credit is 750 plus, 850 is as high as you can get, so this runs from zero to 850

Your credit score is weighted by how good you are at paying your bills, paying on time every time for long periods of time, that's called your payment history

How much you owe, this is called utilization, what this means is let's say you've got a $10,000 credit limit on your credit card and you've got a $3,000 balance

  • You have utilized 30% of your available credit, therefore you've got a 30% credit utilization ratio. The lower you keep that ratio, the better, now another part of it 15 percent is how long your credit history is. 

I've been borrowing money for many many years, I've never paid a bill late, therefore, my credit history is long and it's good and that was about 15%. 

About 20% is the mix of credit that you have along with applying for new credit, so if you have what they like to see you have different kinds of credit card is called revolving debt, you can have a mortgage loan, you can have a car loan, so different types of debt they like to see too

  • But keep in mind though 60% of this basically almost 70% of your credit score is based on your utilization, how much your credit you're using compared to how much you could get and of course your history of paying bills on time so that's how you maintain and build a credit score

If you're working on your credit score right now, the first thing you do is you pull your credit report from annualcreditreport.com

Annualcreditreport.com gives you one free credit report from each of the big three agencies like Equifax, Transunion, Experian every year, so every few months you can pull one from a different agency to see what your credit report looks like

Why are you pulling your credit report, because you're going to make sure there are no mistakes in it, a lot of credit reports have mistakes and that can reduce your credit score, so you can pull your credit report for free and check for mistakes and if you find any

  • You can dispute them typically right there on the website, so it's the first thing you want to do to clean up your credit

Make sure there are no mistake then basically make sure you pay your bills on time for long periods of time, just do it and you are going to build your credit history that way

Another important note, if you have a 750, you don't need an 850. Once you get over that certain threshold into excellent it doesn't have to be perfect.

750 is what you're aiming for I hope that advice will help you get there.

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