Clean Your Credit

Find out how to shine up your credit score.

Think of your credit report as a report card … and your credit score as the grade that indicates how you’ve handled your bills in the past. Getting high marks is important. Learn more about why your score is important, and ways to keep it spic and span.

After all, lenders use your credit (or “FICO”) score to set rates for loans and credit cards. Landlords use it to decide whether to rent to you. And some employers even check it when screening employees.

What’s “Good”? FICO scores range from 300 to 850. A score below 620 leads to the toughest terms (or even the denial of a credit application), while one above 800 may get you first-class treatment. Here’s how your score is formulated:

35% payment history + 30% amounts owed + 15% length of credit history + 10% new credit + 10% types of credit used = FICO score

Get the Facts Under the Fair Credit Reporting Act, you can order a free credit report every year from each of the three national credit-reporting bureaus: TransUnion, Equifax and Experian. This document tracks how much credit you have, how much you’ve used and whether you pay your bills on time. If you’re ever denied credit, you can get a free credit report from the agency whose report was used to deny your application.

Be aware, though, that your credit score does not appear on your credit report. However, you can pay a fee and receive your score at any time. To order, visit

Pay up—on time. Late payments reduce your score. If you have a hard time meeting due dates, consider automatic bill payment. Also, pay down what you can’t pay off. When reviewing credit and loan applications, lenders consider how much you already owe.

Correct errors. Check your credit report for accuracy and ask the bureau to correct erroneous information, such as credit limits and account opening dates. More than 70 percent of credit reports contain errors, according to the U.S. Public Interest Research Group.

Keep accounts open. To improve the ratio of the amount you’ve borrowed to the amount you’re approved to borrow, don’t use your cards, but keep the accounts open, especially the ones you’ve had the longest. As you gradually close accounts, keep the MasterCard or VISA, which are more important to your score than store cards.

Avoid bankruptcy. This can stay on your credit report for up to 10 years, so do whatever you can to pay your bills, even if it takes a second job and a steady diet of macaroni and cheese.

Ask for help. A nonprofit consumer credit agency may be able to give you advice or help you negotiate a lower interest debt-repayment plan.

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