... and you’ll encounter lower interest rates with these debts and you will have the opportunity to show your ability to be a reliable borrower over time. “Bad debt” is considered to be something that costs more than you can afford to purchase on a credit card. Understanding the difference between these two things is the first step in formulating a responsible plan to create clear credit. Improving credit scores involves avoiding many things. In the order of importance, they are late payments, high credit card balances, closing credit card accounts and having too many in-store charge cards. Late payments carry 35% of the weight in terms of your credit score, so do not take them lightly, even if it’s just a store charge card, a cell phone bill or a rent payment. Your credit score can drop by as little as 20 points or more than 100 points, depending on how often you are late and how many accounts you’re late on, as well as whether you are 30, 60, 90, or more than 120 days late. Secondly, your credit usage should be no more than 40% of what is offered to you. If your ...
... acronym formed from the initial letters of the Fair Isaac Corporation who created this system of credit scoring and it is a number that is usually betwen 350 and 850 that ranks credit worthiness according to a proprietary algorithm invented by the company, with 350 being the poorest score and 850 being the best. Although the precise details of the algorithms are a tightly held trade secret, over the years many people have be able to word out several of the important factors. For instance, any late payments will reduce your score and the greater the number of late payments you have and the later these payments are the more heavily the score is affected. The total amount of debt carried each month is another factor. Another less important factor is the number of credit cards you hold and the number of credit checks carried out out on your account. Any FICO score of below about 620 is considered marginal and a score under 580 is poor. A score of 720 and above is very good to excellent. A score that comes in between 620 and 720 represents a kind of ...