Improving your Credit Score: with Todd Ossenfort
Todd Ossenfort: Credit scores are now being used by more than potential creditors to determine your credit worthiness. Your employer, your landlord, and even your insurance company may be using your credit score to decide how much to charge you, whether to hire you, promote you, or even if you would be a good candidate for a lease.
The most commonly used credit score is the FICO score by Fair Issac. A fairly new score was introduced by three credit reporting bureaus called the VantageScore. The formulas are somewhat different but the general components are basically the same.
To improve your credit score, you will want to make payments on time. If you have any accounts that are past due, catching up on all past due payments will improve your score. Another way to improve you score is to assure that you are utilizing 50 percent or less of your available credit. For a credit card with a $10,000 credit limit, you will want your balance owed to be $5000 or less.
Closing accounts is something that many people do that unintentionally lowers their credit scores because the account is one of their oldest accounts. Try to keep at least one or two of your oldest accounts active.
A mixture of installment and revolving accounts as well as some accounts that were opened within the last year will improve your credit score. Installment accounts would be: your mortgage payment, or a car loan. An example of a revolving account would be your credit card.
I’m Todd Ossenfort; I’m the Credit Guy. Take care of your credit.
CreditCards.com’s The Credit Guy, Todd Ossenfort of Pioneer Credit Counseling, explains the basics of a credit score and how to improve it.