| Personal finance is becoming more of an obligation | | | | How to Improve Your Credit Score |
| than it used to be. It could be the frugal turn the | | | | The simplest and most obviously lecture-like in nature |
| capitalist masses took once the economy trends went | | | | would be "Be more financially responsible". But I'm here |
| negative. Perhaps it was the hype about identity theft | | | | to give tips and not sermons. Unlike mom, I understand |
| and the ensuing fear that followed. Despite the | | | | that we all lead busy lives and sometimes watching |
| inference you wish to embrace, there is a solitary | | | | the Season Finale of LOST is more of a priority than |
| common denominator: Monitoring and adjusting your | | | | making sure the cable company didn't double charge |
| financial position is just responsible behavior. If more | | | | you and that your car payment got mailed. In the spirit |
| people keep an eye on their credit reports and | | | | of instilling simple positive habits, here are some tips to |
| checked their bank statements online weekly, it would | | | | improving your credit score. |
| be much more difficult for identity theft, credit fraud, or | | | | Tip #1 |
| rogue charges to occur (Protectidentity.com). | | | | Don't try to outsmart the system. Opening up |
| But let's start at the beginning. | | | | unnecessary credit cards to boost available credit or |
| A credit rating is not synonymous with a credit report, | | | | closing unused ones to boost your rating is only going |
| nor are they disjointed. First off, a credit report, for the | | | | to backfire. Keep balances credit cards and other |
| purpose of financial responsibility, should be the focus. | | | | "revolving credit" low. Moving the debt around in a |
| The report is a listing of all transactions giving | | | | Peter to Paul nature will prove to be more hurtful too in |
| information on how much a person has borrowed in | | | | the long run. |
| the past and how well they have done in paying it | | | | Tip #2 |
| back. The report is used by prospective creditors to | | | | Be stingy with new accounts. If you are new to the |
| determine your risk and whether they should "invest". | | | | credit game, take it slow. Opening a lot of new credit |
| This credit history is maintained by credit bureaus, the | | | | lines/accounts in a short time period can reflect poorly |
| most used are respected being Equifax, Experian, and | | | | (it's only logical, doing so makes you look like you are |
| TransUnion. The individual borrower is offered one free | | | | more likely to default). Closing an account doesn't |
| credit report from each credit agency annually. The | | | | make it go anywhere. The history stays. If you |
| problem here is that it's too broad. If there was an | | | | absolutely have to close accounts, do the youngest |
| issue back in May you might not realize it until October. | | | | ones first. Be aware that doing so lowers the ratio of |
| Then there is the issue of actually reviewing an annual | | | | debt to credit (%30 of score) |
| report. Some may feel it too extensive and not review | | | | Tip #3 |
| it in full. The status could be highlighted by your credit | | | | Become a deadbeat. No, not literally. This is a term |
| rating, but it will not enlighten even the savviest creditor | | | | used within the credit card industry to describe people |
| to issues or delinquent entries in the report. Multiple | | | | who don't run a large balance if any on their card. Start |
| reports a year are still a good idea. | | | | paying your debt down. No minimum balance for you. |
| The credit rating or credit score is a derivative of the | | | | Do this for six months time and your "good behavior" |
| metrics comprising your report. It's a number that | | | | will be rewarded. Paying off your installment loans (i.e. |
| indicates your credit risk; what a lender will use to | | | | mortgage, student loans, auto etc.) is good too, but |
| determine your interest rate on your financing. Basically, | | | | typically the credit card balance fluctuate the most. |
| if you want to know kind of financing you can expect | | | | The best strategy? Pay down the cards that are |
| from a lender, look no further. In the US, the rating is | | | | closest to their limits. |
| made up of 5 categories each contributing to a | | | | Tip #4 |
| percentage of your credit score: | | | | Check your Score & Report! This does not affect |
| 35% - Payment History | | | | your numbers in any way. To be safe, you should |
| 30% - Debt To Credit Limit Ratio | | | | always order your credit report directly from the credit |
| 15% - Length Of Credit History | | | | reporting agency or through an organization authorized |
| 10% - Types Of Credit Accounts | | | | to provide credit reports to consumers (i.e. |
| 10% - Inquiries (hard) | | | | FreeCreditScore.com). |
| The score is a three number scale, 300-900. The | | | | If you want to go further, Experian has a Credit |
| higher it is the better. The most common score is | | | | Information Center that will take you back to school so |
| generated by the Fair Isaac Corporation; you may | | | | to speak. Otherwise go grab your credit report today |
| know it as your FICO score. | | | | and find out where you need work. |