Some Insight on Protecting Your Credit Score...

I’ve been very concerned with credit and how the credit system operates for a while now. I feel like I don’t know as much as I should, and I’m sure that I’m not alone in feeling this way.

I went to the library a few weeks back and I picked up this self-help book, Your Credit Score, by Liz Pulliam Weston. Now I must admit that I respect books that dumb down the language for prospective inexperienced folks. I’ve clung to this book more than Pilla’s book (The IRS: Problem Solver) because it considers the possibility that a youngster might pick it up and read it. In a nutshell, I feel accommodated and I enthusiastically recommend the read to anyone. =D

Now I live by the proverb, “Information is not for free,” but I feel terrible not sharing what I’ve learn with my peers—I’d even be defying the entire purpose of creating this blog.

So, listen up!

1) The reason why so many stress building good credit is solely because (in my opinion) of interest rates. So basically, your score will determine the direction of your financial life.

Let me explain with an analogy:

Come summer, those who have saved responsibly will have the opportunity to enjoy a vacation. Whereas, the bonafide spender will have to recuperate wasted money—he/she will not likely reward themselves with a vacation—unless they’re reckless spenders that is!
In the same way, with a good credit score, you will save more over a lifetime and will have a good quality of life. You will be rewarded with low interest rates (on...practically all auto loans, student loans, credit cards, insurances, mortgages…etc.) for as long as you maintain your good credit. For those reckless spenders out there, you will either be (1) declined or (2) given a higher interest rate because simply…the creditor/lender is AFRAID OF YOU! You can’t blame them because honestly, nobody wants the risk of losing money!
In the grand scheme of things, responsible spenders will pay a significant amount less than reckless spenders over a period of a lifetime. (So, what makes people different? …They’re credit score!)
FYI:
**FICO Credit Score Range (Most prevalent, important)
300-850
(Vantage Score Scale)
901-990= A credit
801-900= B credit
701-800= C credit

You never want to fall below 701…usually 720 is the cut off for most lenders. With anything below, you’re considered “Sub-prime,” and that’s like someone calling you a liability or rotten apple.

2) DO apply for a college credit card and once you do, do not cancel the account because that will decrease your score. In your search, be sure the perks are a
• Low interest rate and APR
• No yearly financing/maintenance fee
• Low late fee cost (go for one ≤ 35)
• Free online banking
• Grace Period
• “First 6-12 months” deals!
• Point system redeemable for cash and cool stuff

3) Try to AVOID NEARING YOUR CREDIT LIMIT (so if you have 300, please, keep your balance to a minimum of at least 200). This actually hurts your score. At any random period, your creditor must report your CURRENT BALANCE to the credit bureau. The emphasis is on …RANDOM! Therefore, even if you planned to pay your bill off by the end of the month, the standing balance still will be reported—not to penalty you, but as a part of the creditors job protocol. If your balance is way up there on the edge of the cliff each month, that can be very damaging.

4) ALWAYS PAY BILLS IN ADVANCE, ON TIME IS LATE! (My rational =D …It’s a great way to limit the likelihood of a large balance being reported to the credit bureau) Although you’re avoiding the late payment, a behavior is still being reflected.
5) As consumers, we are allotted 1 free credit report each year. Visit this website: www.annualcreditreport.com or call the Annual Credit Report Request Service (877-322-8228). You should consistently check your credit report for the accuracy of information.

Lastly, shop wisely guys and make the effort to learn what you’re getting yourself into. Remember, the difference between you and I, and our quality of life is… our credit score.

WOP