Payment histories are like gold in your financial pocket when you come to realize just how valuable they are and can be. The longer you can keep a good account in good standing will indicate to the credit bureaus that you are a good risk and should get a much better score than those who only have short histories or no histories at all. Get a good National Bank credit card and keep it in good standing. We understand that to get an 850 credit score you would have to have a National Bank credit card for 49 years in good standing… among other things. So, some of us are going to have to live a nice long life to get our 850 credit score.

35% of your score is attributed your bill payment history, this includes paying your bills “on-time”

Be punctual – Pay all your bills on time. Late payments, collections, and bankruptcies have the greatest negative effect on your credit score. But let’s talk about “Late Payments” for this week.

Late payments cost you in points, big time, because of what they mean in increased credit risk to the credit bureaus. Higher credit risk means loss of points and lowered credit score.

OK, so you make your payments on time and your scores are still low. What is causing this to happen? Let’s look at what is happening with your payments. Let’s say you have a credit card that is over the 45% debt to credit ratio. You make your payment on the due date but when you pull your credit report, your points have dropped. What is happening is that the credit card is getting your payment “on time” but the recording date when they determine your interest charged can actually to before the due date. This creates more revenue for them as well as causing your balance to be recorded higher to the credit bureaus thus causing your scores to drop. When you think your payment has lowered your balance to less than 50% by the due date, they have already charged you interest and already your scores have dropped. Surprising, but true.

So, the solution is to look over your credit card statement and find when the interest is entered onto your statement. Then make your payment be sure to arrive before the interest is applied to your statement.

Lower balance, lower interest, lower risk, and higher credit score! Ahhhh…

There are 5 areas of importance in the scoring modules of the credit bureaus.
They are:

1 – Bill payment history – 35% of your score is attributed to this section.
2 – Account Balances – 30% of your score is attributed to this section.
3 – Length of time opened – 15% of your score is attributed to this section.
4 – New Accounts – 10% of your score is attributed to this section.
5 – Types of credit used – 10% of your score is attributed to this section.

Come back and you will learn more about each area.

Credit is a tricky subject because we don’t have the secret key that unlocks the proprietary information or formula of the credit bureaus and Fair Isaac Corporation. They created the scoring modules that are in use today to create credit scores on the information in your credit file. However, through exhaustive research and intensive study, we have come to see the secrets and tricks the credit bureaus use and understand how it works… almost. Because there are hundreds of factors involved in creating a scoring module and how it affects the information in your credit file, it is difficult to ascribe a perfect number of points to what a tip or strategy will do to increase or decrease your credit score. However, this much we absolutely do know… that if you do follow the tips and strategies in this book then you will see a rise or fall in credit points depending on if the action is a good action or a bad action on your part. Take heed to read the tips and strategies and relate them to your own credit file and the information contained in it. Read it, get to know it and then read the strategies to use to get your scores going up instead of down. This will help you get the highest scores possible and create an opportunity for a great financial future . Now, go and get start and remember, that Every Point Counts!