DOES THIS MAKE CENTS???

DOES THIS MAKE CENTS?



In order to have a high credit score -- which can mean lower loan rates -- then you'll need to do things that don't sound quite right at first.

You pay your bills by the due date, so you expect a good credit score results, right? If only it were that simple.

In fact, your credit score is dependent upon a number of different things, not merely your payment history. Here's where it gets downright strange: A number of the ways to improve your credit rating don't even make sense financially.

Your score improves when you have a lot of loans. 10% of your score is dependent upon the types of credit used. That means that someone with car loans, education loans, and retail store accounts may possibly possess a better score than somebody who has just one type of loan, and way better than someone with none.

More credit cards often mean an improved score. Another 30% of your credit score is set, in part, by the quantity of credit you utilize. Although it makes sense that using less credit may help your score, it's the other part of the equation -- the amount of credit you have -- that leads to this strange impact.

By opening more than just one or two credit cards, you are able to raise your available credit and lower the percentage of credit used. In the same manner that obtaining more credit cards reduces your overall credit usage rate, asking for a higher limit will also achieve the same effect.

Pay off the Credit Card well before the due date. As someone who always pays his credit card balances promptly, I was astonished to see that my credit report demonstrated that I owed money on each of my cards.


The straightforward reason is that your balance on any given day can be reported to the credit bureaus as a debt. I'll still pay my balance only on the due date, but I might pay earlier or avoid credit cards if I was attempting to raise my score to obtain a home loan.

Don't cancel a credit card. Another 15% of your credit score is determined by the length of your credit history. Among the factors that's included in this calculation is the average age of your open accounts.

Shop fast. It's wise to take your time and research prices for the lowest mortgage, car, or student loan, right? Actually, FICO will count repeated inquiries for new credit as a single inquiry so long as they are all done within 30 days. Take more time to request competitive loan offers and you risk harming your credit score by having lots of inquiries.

While credit scores are determined by mysterious formulas which are never fully disclosed, FICO and others give us many clues about what elements are included. By focusing on how the credit agencies view your finances, you can make the best decisions to increase your credit scores.