Improve Your Credit Score

July 29, 2009 by  
Filed under Episodes, Top Posts

Let me tell you why most sites shouldn’t promise to help improve your credit score.  One interpretation of the Credit Repair Organizations Act (CROA), is that when you offer to improve someone’s credit score via a product or service, you are to be designated as a credit repair organization.  According to the Credit Repair Organizations Act (CROA), once you are deemed a credit repair organization, you can’t take an upfront fee until your services are rendered.

Improve Your Credit Score

This act was written before the internet was really created, so no one knew how this would handled later on. No one thought about how companies selling services online would handle selling credit score improvement.

Outcome:

Most legit companies steer away from using terms like “improve your credit score” or “credit score improvement”.  These companies include most non-profit credit counseling organizations and other legitimate educational sites.  They call themselves “credit counselors” instead of “credit repair specialists.”

So, who uses this language “improve your credit score”?  It’s not always the good guys.   Search engines do a pretty good job of returning quality sites on this search, but occasionally some shady looking websites can get a high ranking for this term.

What are the magical tips to get credit score improvement?  There’s no magic, but there are things you can do, by yourself, without a high priced online company to help you.  The basic steps to improve your credit score:

  • Pay your bills on time.  In fact, pay them ahead of time. You want credit score improvement?  Then, start by paying your bills when you get paid – every two weeks.
  • Pay off your maxed out cards first.
  • Keep your balances low.  People with great credit scores are only using 5% of their available credit. Paying your bills every two weeks helps keep your balances lower and that improves your FICO credit scores.
  • Don’t apply for new credit cards, especially if you are about to try to get any loans or refinancing for your home/auto.
  • Dispute errors on your credit report.  25% of us have score impacting errors on our credit reports.
  • Don’t close down unused credit cards – those available balances help your score
  • Let time be your friend.  The credit score system cares about recent behavior more than the past.  In 7 years most bad items will fall off your credit report.
  • Build new credit
  • Check your credit score via a monitoring service like myFICO Score watch or check it from time to time using the FICO Standard.

Credit score improvement isn’t hard, but it can take time.  Don’t fall prey to ads that say “200 points in 30 days” or  “You need a professional to help you”.   In most cases, you can improve your credit all by yourself. There is a lot of free information on how to improve your credit score, including the 100+ free videos on VideoCreditScore.com.

Credit Score Chart – Episode #88

December 2, 2008 by  
Filed under Episodes, Top Posts

Consumers need to see how their credit score charts against other people and against what the lenders are saying the matching interest rates are.

The population of the U.S. is split when it comes to FICO scores.  About 40% of us have a 750 or above, but 55% have a 700 or above.
FICO Score Range

Population statistics are meaningless though.  You shouldn’t care if you are keeping up withe the Jones and the Smiths, especially if there scores are lower.    The key relationship is between FICO scores and interest rates.  Now, credit scores are not the only factor in determining interest rates.  I just met a woman with a thin file, but she was well off and willing to put down 50% on a home loan. She got a great rate.  But back to the more typical scenario, the one for the rest of us.

FICO Score Range

Note, that the chart from myFICO shows that the best interest rates go to 760 FICO scores and above.  This chart back in May 2005 used to have a top range of 720+, but was changed to 760 and above and has been this way ever since.

Next Page »