I’ve been interviewing a lot of potential home buyers and renters lately. I see a lot of credit reports and I wanted to give everyone some info that will help YOUR credit.
Do you remember getting your report card when you were in school? I do. Think of your credit score as your ‘report card’ as an adult. The lower the grade, the more you pay. Do you like paying more for stuff and having less options? Probably not.
Fortunately, credit is not rocket science. Having a great credit score is not hard or difficult, but it takes a little effort and some basic understanding. You can have a great credit score easily if you understand the five factors below.
Five Factors That Affect Your Score:
1. Payment History = 35%
2. Amounts Owed = 30%
3. Length of Credit History = 15%
4. New Credit = 10%
5. Types of Credit in Use = 10%
Sam’s “Super-Easy Good Credit Formula”:
1. Pay your bills on time. EVERY time. No matter what.
2. Don’t borrow more than you can pay back. (Don’t max out your cards.)
3. Keep credit accounts open. (You want a long history of on-time payments)
4. Open new credit accounts, but only occasionally.
5. Have a mix of credit accounts. (Car loan, credit card, mortgage, student loan, etc)
Having great credit is not hard. No genies or magic wands required! Having great credit is a choice. CHOOSE to have good credit. I guarantee it will be an enormous asset to your future and it’s easy to do.
There are no silver bullets to fixing bad credit. That’s the bad news. The good news is even if you made bad choices in the past, understand that BAD CREDIT IS NOT PERMANENT, but they will take time to recover from.
How do you fix bad credit? You need to handle the items negatively affecting your score. How do you do that?
- Obtain a copy of your credit report.
- Identify which items on your credit report are causing the problem.
- Solve the problem by negotiating, disputing and/or paying the debts.
- Establish and maintain good credit moving forward.
“Credit Measures Willingness to Pay,
Not Ability to Pay.”
The first step is to educate yourself. Who better to learn from than the people who created the credit score? Download “Understanding Your Credit Score“. It’s easy to understand and will get you moving in the right direction today. No charge, no gimmick. I’m not asking anything in return.
I want to see people get better educated about things that will improve their lives.
Have a great day!