Credit Score ArticlesThe Fastest Route to a Great Credit ScoreTip! Always be aware of the type of credit you hold because credit from financing companies can affect your credit score. Building credit is an essential part of any financial portfolio. It allows you the freedom of using other peoples money and getting it at a low rate of return to the lending party or more commonly known as the interest rate. Your credit scores show your ability to repay your debts and obligations to creditors in a timely fashion. When you have financial difficulties or are just poor at managing your money the bills become late. When this happens on a regular basis many factors start to eat away at your credit or "fico" scores. Most of your creditors who are being paid late will start reporting you to the credit bureaus and it's from this point forward that you see your credit spiral in a downward fashion. Whether it's your fault or not for the delay in payment business is business and creditors want to get paid. The funny thing is that it costs the business to report you. Credit bureaus are big business; they make money in 2 major ways. The first is by having companies report your derogatory accounts so they can make the entries on your credit report. The second is by selling your information to other companies for marketing demographics, so that they can try to get a piece of your hard earned money for their revenue stream. When you experience the power of credit for the 1st time it seems so easy and effortless to spend the dough. The hardest part is parting with your real dollars to pay it back. Card companies make it easy they give you options like minimum payments and they hope you take advantage of them. Because when you do they make huge profits from the interest accrued on your account(s). Imagine paying a nice introductory interest rate of 7% - 10 % and suddenly your interest rate gets raised up to 15% - 24%. Do you see the potential for disaster here? These might all seem like little things at the time but when you take 2, 3, or more years to pay off a $100.00 debt you have paid for it at least 5 to 10 times over the original purchase price, and lowered your credit score to an unsatisfactory level. So how can you beat the system and stay on top, by using some simple yet effective ways to manage your money and credit accounts. Knowing how the scoring model works for your credit score can be a great advantage to you. The variables are listed below. 1st What types of credit accounts you have open. 2nd The length of time you have had them 3rd Your timely payment history 4th The amount of your high credit limit compared to the amount available. 5th The mixture of accounts you have credit cards, auto loans, mortgages, department store charge cards. These are the basic factors that have the most effect on your score. Other factors that can drop your score are the amount credit inquiries you have (trying to open new accounts), public information such as divorce, felony, bankruptcy & foreclosure. Although the divorce and felony may make it difficult to obtain certain credit they have minimal impact on your score. Tip! Obtain a copy of your credit score report from one of the three major credit bureau agencies: Equifax, TransUnion or Experian. Obtaining a new line of credit will most certainly boost your credit scores, also having your rent, cell phone, or utilities added to your credit history is a huge score booster. There are all types of credit for every situation whether your scores are in the excellent category or down in the not so great area of the credit spectrum you can always build on them. Once you have a good understanding of where they are today you know where you can get them to tomorrow.
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