Getting It Up (Viagra For Your Credit Score)

Credit Scores…
Viagra for your credit isn’t something to be ashamed of, especially if you have trouble keeping it up. Unfortunately, your credit score impacts common loans that you may likely apply for throughout your life – think mortgages and auto loans. How would you like to save $50,000?

Using myFICO’s loan savings calculator and a $200,000 loan, it turns out 50 points on your credit score could easily be $50,000+ that you lose because of extra interest paid… and it only gets worse if you’re borrowing more money!

What makes up my credit score?

  • 35% – payment history (paying bills on time)
  • 30% – credit usage/$ owed (20% usage ex: using $2,000 of your $10,000 credit limit)
  • 15% – credit history (length of time accounts have been opened)
  • 10% – types of credit: auto loan, mortgage, credit cards
  • 10% – new lines of credit (avoid opening many cards in a short period of time, may display financial trouble)

Building Credit:

  • Easy and early: building credit takes time
    • No Credit? Consider using a no-fee student or starter credit card
    • Bad with credit? Hide your credit cards: keep your credit “active” by using a credit card once every 3 months for gas/groceries…or monthly for something simple like your phone bill or Netflix
  • 100% on time payments: consider automating
  • Maintain low credit utilization: if you can’t pay in full, balances should not exceed 30%
    • Hot tip: when is the last time you asked for a credit line increase? If used appropriately, this will help you maintain lower credit utilization
  • Avoid closing accounts: keeping an account open helps with your (1) length of time and (2) credit utilization. Consider closing accounts that have fees (ie: annual fees)!!
  • Check credit reports for errors: every 6-12 months is ideal
  • Don’t open several new accounts at the same time… 6+ months in between is ideal
  • More info: NerdWallet, CreditSesame, Experian

*Remember, if your credit score stays up for 24+ hours… you DON’T need to see a doctor.

Leave a Reply

Your email address will not be published. Required fields are marked *

four + six =

21 + = 28