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Do you want to increase your credit score? Doing so is easier than you think. The key is to understand how it's calculated and then work backwards.
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How to CONQUER yourCREDIT SCORE
A credit score is a nasty, brutish beast.
But not only can it be beat…
You can MAKE IT WORK for you.
The key is to understand how credit scores are calculated.
And that’s exactly what I’m about to explain…
But before doing so, let’s cover a fewPRELIMINARY MATTERS
Your credit score is a number between 300 and 850.
Its purpose is to gauge how likely it is that you’ll repay your debts.
The higher the number, the more likely it is that you’ll do so.
800-850
750-799
700-749
650-699
600-649
550-599
500-549
300-499
1%2%5%15%
31%
51%
71%
87%DELINQUENCY RATE
CREDIT SCORE
Data source: FinanceandCareer.com
So, what’s a GOOD SCORE?
This is how it breaks down…
Range Quality720-850 Excellent680-719 Good620-679 Average580-619 Poor500-579 Bad300-499 Miserable
www.FreeScore.com
Simple enough, right?
So here’s the question:
So here’s the question: What specific things can you do to increase your credit score?
And the answer is:
And the answer is: You have to fight fire with fire.
You have to understand how your score is calculated in order to determine the best way to improve it.
Take a look at this chart: Payment His-tory35%
Amount of Money Owed30%
Length of
Credit History15%
New Lines
of Credit10%
Types of Credit Used10%
Data source: FreeScore.com
Take a look at this chart: It shows the FIVE VARIABLES that credit agencies use to generate your score.
Payment His-tory35%
Amount of Money Owed30%
Length of
Credit History15%
New Lines
of Credit10%
Types of Credit Used10%
Data source: FreeScore.com
Your payment history is the most important, with a weighting of:
Payment History
35%35%
Data source: FreeScore.com
This makes sense when you consider this chart from earlier.
800-850
750-799
700-749
650-699
600-649
550-599
500-549
300-499
1%2%5%15%
31%
51%
71%
87%DELINQUENCY RATE
CREDIT SCORE
Data source: FinanceandCareer.com
Second is the amount of money you currently owe:
Amount of Money Owed30%
30%
Data source: FreeScore.com
This is why maxed out credit cards are so bad.
The next most important is the length of your credit history: Len
gth of
Credit History
15%
15%
Data source: FreeScore.com
This is why older people generally have better credit scores than younger people.
18-24 25-34 35-44 45-54 55+
630 629 630
647
670
AGE
AVERAGE CREDIT SCORE
Data source: CreditKarma.com
In fourth place are any new lines of credit or recent inquires:
New Lines of
Credit
10%
10%
Data source: FreeScore.com
Finally, are the types of credit you have experience with:
Types of Credit Used10%
10%
Data source: FreeScore.com
The two main types include:
The two main types include:
1.Revolving accounts• Like credit cards…
The two main types include:
1.Revolving accounts• Like credit cards…
2.Installment lines of credit• Like mortgages and car loans…
So, to tie everything back together into a pretty little package…
If you want to improve your credit score…
FIRST Identify which of the five variables are wanting in your case.
SECONDPrioritize their importance based on the weighting.
THIRDAnd then attack them one by one.
While the process takes discipline and patience, it’ll be well worth it to conquer your credit score.
For more valuable advice, click here to download a free report detailing Warren Buffett’s best-kept secrets.
