Once you have checked your credit bureau and paid the twenty-something bucks to get your credit score (Fico score) here is how it works. Scores range from 300 (worst) to 900 (best) and everything over 680 is considered AAA. With a few Lenders more options become available with a score over 700. If your score is of the 700 plus variety you have probably done most things correctly. If your score is between 650 –700 you haven’t had many difficulties but need coaching. 600-650 you have encountered more than a couple of credit mishaps and anything lower than 600 is re-occurring credit nightmare that needs help fast because you can’t repair this overnight. Some think all you have to do is pay down your balance owing and everything will work itself out. As much as this is true it isn’t just about paying down your debt. What I can show you is the difference between months and years of credit rehab.
- Tip #1) Always make at least the minimum monthly payment EVEN if it is only $3.00. Credit is reported digitally and a computer only recognizes whether you made your payment or didn’t make it. It doesn’t care if you have been a loyal customer for 10 years.
- Tip #2) Pay off your outstanding balance as quickly as possible and try to avoid going over ½ of your credit limit. The newer the credit line is and the closer you get to the limit, the more points off your score it will cost you.
- Tip #3) Try to maintain a minimum of two credit lines. Three is good, (in case you eventually get rid of one); Visa, M/C, American Express, a line of credit, car loan, or bank loan, not that you want a loan but they do report to Equifax. Minimum high credit limits need to be $2,000.00 or higher and the Lender will want to see those credit lines with at least a two year history. That basically means that acquiring credit alone won’t satisfy the Lender because in order to establish a credit rating you need to have a track record of use. Your credit score will go up or down depending how responsible you have been with your available credit. With this scenario and proper maintenance of your credit you will build a stronger score and achieve it sooner.
- Tip #4) If you happen to have a prepaid credit card, a credit card where you send the Lender money and you have credit up to that amount. THIS IS VERY IMPORTANT – Equifax treats this credit card the same as all other credit cards so if you use up almost all of the money before you recharge it, you will lose credit score. Yes, even when it’s your money. The reason is that Equifax has no way to differentiate a prepaid credit card from a regular credit card and therefore scores the balances the same.Learn more with: How To Win At The Credit Game