It is important to know that when you go to get a loan, whether it is an installment loan or a revolving loan, 10% of your credit score will be determined by the types of credit you have in your credit portfolio. Having a mortgage in your portfolio is a great boost to your credit score and having some revolving loans are great to have but… they need to be in balance and with good banks or loan companies.

There are good creditors and bad creditors depending upon who they are and what they require when applying for a loan. If you have bad credit, then you obviously will search for a creditor that requires less than perfect credit or a lender that says they will help you “repair” your credit or legally repair bad credit. A warning… some do and some don’t. There are so many scams and crooks out there that it is important to understand what is going on.

A high debt to credit limit ratio is not a good thing to do on a new loan because it will impact your business credit scores many different ways. By now you should be able to guess at most of them and understand why but let’s go over them just to be sure.

You have an inquiry, at least one and perhaps more and depending on how many and what your credit score is at the time will determine how much it affects your credit scores.

1) You have a new loan.
2) You have no history on this new loan.
3) It has a high balance.
4) It has a high debt to credit limit ratio. These reasons alone can cause your credit scores to drop significantly that you should be concerned about doing so.

The solution is to get a high enough credit limit on revolving accounts that you won’t need to use more than 45% of available credit on your account. If it is an installment loan, then the impact will be less felt but still have a significant impact on your credit scores. The solution here would be to pay down the loan to less than 80% debt to credit limit as soon as possible. I have one friend who will borrow more than is needed on his loan so that when the loan closes, he pays down the loan 20% to have his debt to credit limit at 80% as soon as possible. This will minimize the impact on his credit scores and keep his scores higher than someone who doesn’t do this. For those who need to keep their credit scores as high as possible for business reasons or for investing, this is a great strategy to use. It takes some money management and if your credit scores are high to begin with, then you stand a great chance of being able to qualify for the higher credit limit to use this plan. To your success…

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!

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.

Terms:

Creditor = the company that extended the credit to you.

Payee = the company that you make the payments to.

Payer = this is you, the person that makes the payment to the company (Payee) that you owe.

How many times, when you look over your credit report… hmmm, have you ever looked over your equifax credit report preventing? Well, it’s time to look over your credit report, regularly and learn what it is saying to you so you can be a smart money handler. Ok, we’re talking about Incorrect Balances here, so when looking over your credit reports, look over your account balances. If you find that they are incorrect, there are several things going on here and several ways to correct them. Remember, it is important to have low account balances so your debt to credit ratios can remain low. (Refer to # 17, 18, 19, 20, and 21)

Incorrect balances will increase your debt to credit limit, overall debt to credit limit and cost you points in both cases.

There is a remedy but it takes calling the creditor and haggling over whether they will enter the correct balance or get it removed if it was paid off or pay your bills “on time”. (Refer to # 1) This is where you pay your bills before the reporting date to the credit bureaus. Sound advice, but you have to “do” something before it will get done. Don’t procrastinate, just do it!