Since the mortgage meltdown basically killed off all of the easy-to-acquire credit that flourished like so much financial kudzu a few years ago, My followers are even more concerned about how to get and keep a great credit score.

As many of my readers of Crushing The Credit Bureaus are aware of, FICO Credit Scores can go as high as 850, but very few people ever attain that “perfect” credit. You’re not alone if you’re wondering: What is a good credit score, anyway?

Well, for starters, it’s a lot higher than it used to be. Earlier this decade, you could easily get credit with a score of 650 or so, and 720 was top-of-the-line. Today, the “new” 650 is around a 720. For big loans such as a mortgage or car loan, lenders may want to see a score of 750 – a full 100 points higher than the norm that characterized the borrowing spree of the boom years.  You might want to read that last paragraph again…a FICO credit score of 720 is now considered “ok” but not great!!

Now that having a higher credit score is necessary if you want to borrow money at less-than-onerous terms, here are a few tips on how to get – or keep – a gold star-worthy score:

1. Don’t pay your bills late. This seems like a “well, duh,” piece of advice, but this is far and away the biggest component that goes into creating your credit rating – it counts for 35 percent of your entire score. If you blow off a bill, you could get a double-whammy on your credit score: once, when the vendors lists you as late-paying, and a second time if they send your account to a collections agency.

While credit cards and other installment payments (like home, car and student loans) are what people usually have in mind when they think about bills due, don’t think you can waffle on other financial obligations. The bad news is that while you don’t get any credit for paying other bills, such as utilities, on time, failing to pay them could impact your score, especially if the company you owe takes you to collections. Yes, it seems unfair to only have the negative count, but that’s how credit-scoring works.

2. Keep your balances well below your credit limit. In a perfect world, you’d carry balances of no more than 25 percent of your available credit limit on your credit cards or any other lines of credit you keep. Experts call this a “utilization ratio.” In the current economic climate, you might find this difficult; card issuers are cutting the credit limits of customers, even those with good credit scores who always make their payments on time. If one or more of your credit limits has been chopped, it’s not necessarily your fault, but it can impact your score. Basically, lenders want to see that you have credit but don’t use it. Sounds counterintuitive, but that’s the way the system works.

3. Don’t open a lot of new accounts at once. It raises a red flag when you open a lot of accounts, because the conventional wisdom is that you’re going to use all of those new cards to borrow a lot of money, which makes you a statistically higher risk. Whether or not you do borrow to the hilt or manage to pay it off doesn’t matter; it’s going to lower your credit score either way.

4. Limit balance transfers to once annually, and don’t open more than three cards (retail-branded ones count, too) in a one-month period. If you’re planning a big buying spree – say you’re moving from a teeny apartment to a spacious house with little more than a futon and a mini-fridge – secure that all important mortgage first before signing up for credit cards at the furniture outlet, the electronics superstore, etc.

5. Don’t have too many credit cards – or too few. This one always confuses folks when I make presentations at credit seminars. Credit ratings agencies frown upon anyone with too many credit cards, but only having one for emergencies – or non at all – can also lower your score.
If you only have a few credit cards, closing even one could lower your score. Hang onto it and just use it occasionally, or set up an automatic payment for one monthly service (such as your car insurance or your TV service) and pay it off in full every month.

Stay tuned for more tips, tactics, and techniques on how to get and keep GREAT credit scores.

Mark

One of the quickest ways to improve credit score that I preach about is getting out of debt as much as possible.

Yes, you must maintain small amounts of certain debt to keep your FICO credit scores high. We must take personal responsibility for our debts and then force the government to do the same. Here is a snapshot of our current national debt

Click Here For The Debt Clock Live

Think about this next time elections come up and candidates are asking for your support and vote.

Until next time,

Mark

     One of my reader’s recently sent in a question about wanting to know the difference between the Fair Issac Corporation’s FICO Score and the Vantage Score from Trans Union and Experian.

I have covered this in previous articles and posts before, but I found a terrific explaination from a great credit blog we have just started to follow.

Click Here  to get the full scoop.

Coming up, a new technique to stop Debt Collectors and Attorney Debt Collectors dead in their tracks!