It’s that time of year where you are considering giving your credit cards a real beating. Now would be a good moment to review your credit score and focus on limiting the damage you are going to inflict during this holiday season.
FICO- The fair Isaac Corporation is the most widely known credit score system.
So lets discuss the impact your credit use could have on your credit score. FICO Scores range from 350 to 900 and anything over 750 is considered very good by most lenders standards.
350 – you and Fido are probably living in a cardboard box.
900– you probably have a gold gilded bathtub like MC Hammer
You can get your score from any of the three major credit bureaus and it’s about 20 bucks or check to see if your financial institution or credit card lender offers a credit score. Check out my prior post on Credit Reports.
So what makes up your credit score?
35% is based on your payment history. Are you late on your bills? How often? How late?
30% is based on how much money you owe on your credit card or obligations. You could pay off your credit card every month, but this still can be a factor. So obviously having a high balance comparable to your credit limit affects your score.
Your score is negatively affected if you have more than 30% balance of credit limit on any card.
15% is the Length of credit history; so how long have you had the account or card?
I guess Length really does matter!
Have you had that American Express for 1 year or 10 years. How often do you use it? Typically having had a longer credit history increases your score
10% is how many new accounts do you have? When did you open them up? Have you had a lot of inquiries into your credit history?
10% is the type of credit used. Do you have a mixture of credit? how many accounts in total do you have?
Remember having a good credit score can affect you when applying for a job, insurance, renting or buying home!!!!!!
Know your score.