So you been wondering How to Build a Good Credit ?? No problem we got some best tips and tricks that you can use to build good credit, either from scratch or if you already working on it.
Building credit is totally confusing. We did a ton of research and now i'm going to pass along to you so let's take a look at what goes into building the principal first of all what is the credit score ?? credit scores is like a billboard telling every one and the grandmother out there how financially responsible you are ?? this score is calculated by the FICO which stands for Fair issac corporation, Anyway if fair issac guy calculate the score, they range from three hundred to eighty hundered fifty. 660 to 680 is considered as good credit score. roughly seven twenty or higher is a great credit score. but lets figure out how the heck they actually calculate these scores out ??
1. Payment history : 35% of score calculations first thing to FICO looks at your payment history. Pretty much any build houses with most of the credit card student loans co-payments here's a few things you can do to get a passing grade in this section. (A) pay our bills on time. its not rocket science. Make sure that we pay atleast minimum each of your bills when or before its due. late + payment = bad credit. Make sense ?? (B). Dont close unused credit cards in a short-term strategy to improve your credit this can actually lower your credit score in general it's best to keep the first credit card you ever got even if you never use it gradually increased the credit limit on your first card and instead of taking new cards. (C). Don't always pay off loans right away. yes having at twelve to twenty four month payment history actually goes a long way to boost your new score.
2. Amounts Owed : 30% of score calculation. the amount that you owe. if you owe alot, fair isaac knows the you've got a lot of outstanding debt and lower your score a good way to combat this is the keeping your balance low revolving credit, which means now i have to explain what the revolving credit is ?? revolving credit is like a revolving door, and just like a revolving door, doesn't have a fixed number of time it can turn revolving credit his credit that doesn't have a fix number of payments. The perfect example of this is your credit card, which doesn't have the same fixed payments every month but rather revolves depending on what you use it for. so the bottom line is dont max your card out. the fact is you should only use 30 - 40% of your credit limit each month.
3. Length of credit history: 15% of Score calculation . hey so if i am young, it counts against me ?? because i haven't had time to establish credit what the heck ?? yes, it matters alot if you open the credit line at young age and which makes the credit history can actully help you alot.
4. New credit : 10% of score counts on it. I guess this is pretty much same as the last one, but it does give me a good opportunity to talk about the difference between hard and soft credit inquiries. simply put a credit inquiry is when someone looks at you have to see all the debt you've ever had and what your credit score is. So a soft inquiry is basically a like getting punished by rabbit, and won't affect your credit score at all, Soft Credit checking involved checking your own credit score, businesses checking your credit score to offer a promotion and existing creditor reviewing your credit. Hard credit Inquiry is when a potential lender reviews your credit score. So examples include Auto loan, Mortgage loan and Credit card and blah blah... Hard Credit enquiries are technically bad it's just that having too many of them cant be good . this is not complex and complicated but basically what more you can do is, minimize times you're applying for credit the better it is. So for example if you're planning on buying a new car come to the credit union first and get preapproved. then the car dealer will know how much you can spend and wont compare their rate chart for you and screw up your credit by searching every bank in town.
5. Types of credit used which is 10% of your score calculation. as you can show that you can manage both revolving credit like your credit card and installment credit like student loans will prove that you are not only responsible but versatile. also you should make sure to look for a credit card with no annual fee.
and thats all. thank you so much reading.