Guide to Good Credit
“If you don't take good care of your credit, then your credit won't take good care of you.”
― Tyler Gregory
I like this quote because you can switch the word credit for many things – health, attitude, spouse, kids, 401K, etc. But since I spend my day analyzing rates and risks, I see first-hand how a credit score impacts our members personally.
Taking care of your credit in a nutshell equates to a credit score that allows you to pay the best rate for loans and insurance. It allows you to obtain an affordable mortgage without fear of exorbitant fees. You’ll be approved quicker for big ticket items like an auto loan and you can avoid security deposits for everyday services like utilities and cell phone. You could be turned down for a job or renting an apartment if you have poor credit.
How does one take good care of their credit? Well, how does one take good care of anything that is important to them, they pay attention to it and understand what can damage it. Arrive late every day and your job probably won’t be there to take care of you.
First, let’s define the score: anything below 620 ranks as poor, 620 – 699 is fair, 700 – 749 is good and anything over 750 is excellent. Next let’s see how the score is calculated: an algorithm using the following financial data makes up your score: payment history, amounts owed, length of credit history, new activity, and types of credit.
Finally, let me share a few strategies that can help improve your score. One, if you are overspending on your credit cards, don’t just cut the one you’ve had the longest, as the longer you’ve had a card opened, the more that helps your score. Two, set up automatic payments. Since payment history accounts for 35% of your overall score, you’ll want to make payments on time. And my last bit of advice, know your score. Work at getting it to and keeping it in the 700’s.
Have more questions or need help getting started on your path to a good credit score, give us a call or stop by, we’d love to chat and see how we can help.
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