Before we give out how to raise credit score raiting advice let us begin with what a credit score is. A credit score a.k.a. FICO score is a summary if you will of the data contained in your credit report but instead of word descriptions they used a numeric value. They come up with this value by looking at your financial information, mostly your financial behavior when it comes to paying your bills as well as your borrowing. The time frame from which they base these calculations would be the last 24 months and that is why you can gradually raise your credit score rating by enacting the proper behaviors. The breakdown of a
credit score’s calculations
is 35% from how responsibly you pay your bills, 30% is how much credit you presently have and what is the percentage that you have used up. Another 15% is how old your credit associations are, for example how long you have had your credit cards. The last 20% is split between how recent you have asked about or opened a new account and what your file consists of such as what percent is installment debt and what’s bankcard debt.
Let us begin our strategy. I’m sure every time you do your monthly accounting one of the first things you do as a knee jerk reaction is to pay as much as your
bills as you can because the interest rates are so high. Although our intentions are in the right place when we do this, it might not be the most effective way to
raise credit score raiting
. Remember that the score is a summary and concentrating on just one area is still just one area. You have to improve more areas if you want your score to increase. Now when the “credit raters” look at your credit data they see two types of debt, secure debt which are the ones that have collateral behind it that can be repossessed like a home or car and unsecured debt. Unsecured debt is debt that has no backing or item that can be repossessed like credit card debt. Now in this light you have to free your secured debts first as much as possible. Why? If you have property that can be repossessed it is of no use to you in the long run if that does happen, but if it cannot be repossessed then it becomes valuable to you and your financial portfolio. Next, the debts wherein your salary can be taken or garnished like child support or student loans must be paid regularly. If you have debts to relatives and friends ask if they can extend it a bit so you can prioritize other debts. After all they don’t charge interest and it’s not as if you’ll be running from them. After accomplishing the game plan for the first three points then start paying more money to your credit cards as fast as possible. And I’m sure you already know the don’t incur more credit card debt by buying things you don’t need rule.
If you are thinking that it is just too much effort to try and raise credit score raiting the fact is doing so can cut your interest rates with regard to your creditors like the credit card company, auto lenders and so on. So it does save you a lot of money in the long run not to mention the other opportunities that will be made available to you with a higher