Whenever you put purchases on a credit card or take out a loan, you are affecting your credit score. When you see people using credit cards all the time, you may assume that they are rich and must have a good credit score, but that may or may not be true. A high income is no guarantee of a good credit score. Anyone, regardless of income level, who lives within their means and manages their debt can develop a good credit score.
Your credit score has nothing to do with how much income you make or whether your job is secure. According to Fair Isaac Corporation (FICO), the company that set up the credit scoring system, several factors are used to determine your credit score.
FICO® reveals several of those factors and how much each is weighted. The biggest factor is how well you make payments – this counts for 35 percent of the calculation. Making late payments often will put a big dent in your credit score.
The amount of income you have cannot improve your credit score. In fact, if you have extra money and like to put things on credit cards and keep a running balance, that practice could lower your credit score.
This is because another factor in the credit score calculation is the ratio of credit you are using compared to your line of credit. As an example, it means that if you have a $10,000 limit to your credit and you have charged $6,000 to it, that you will have a lower credit score than if you only had charged $3,000. FICO® likes to see a ratio of 30 percent or less. This percentage is based on the total amount of credit and not just the balance on one card.
Improving your credit score starts with controlling how much you charge, making sure that your payments are always on time and paying at least the minimum amount. Ideally, you want to pay off your debt. Then, use your credit card sparingly and pay it off completely when you get the bill for it.
Remember that it is always cheaper to pay no interest each month than to have to pay a bill with lots of interest added to it. By getting an excellent credit score (above 740), you can get lower interest rates and bigger loans. A credit score higher than 800 will give you the best rates.
If your credit score is low and you want to purchase of a car or house, you may want to wait and raise your credit score first to get better loan terms.
One quick way to boost your credit score fast is to take advantage of credit tradelines from BoostMyScore. This company has helped many thousands of people boost their credit score through their services – and it works quickly. Check out the credit tradelines simulator designed to help you select the right tradelines for your sitaution. Or contact a credit expert at BoostMyScore today at 1-800-531-1472 to learn more about piggybacking credit and see how the best tradeline supply company can help you.