| In college I became fascinated with ways to improve | | | | In other words, your credit worthiness rests solely on |
| credit scores. I was eager to learn everything I could | | | | the amount and types of borrowing you do, the |
| about the credit reporting industry. While my | | | | number of open accounts you have, and any new |
| classmates focused on learning enough to choose | | | | applications for credit in addition to how close your |
| credit card offers, I listened for ideas I could put to use | | | | outstanding balances are to available limits. |
| immediately. One topic that caught my interest was | | | | On a regular basis you want to be engaged in |
| the FICO credit-scoring model. I was surprised to see | | | | activities that will help improve your credit score. As |
| how much emphasis lenders and creditors placed on | | | | luck would have it, good credit is as good as gold. So if |
| FICO scores as a way of determining if you are | | | | you have bad credit, you have to spend your time |
| worthy of receiving credit. | | | | repairing your credit score, and proving to lenders you |
| And make note of this: 50 percent of this FICO credit | | | | are credit worthy. |
| score calculation falls into three categories: | | | | Even when you are not able to see the fruits of your |
| 1. Amounts owed (30 percent). | | | | labor, simply keep pressing forward. Pay your bills as |
| 2. Types of credit used (10 percent). | | | | they come in. Eliminate any opportunity to send in late |
| 3. New credit (10 percent). | | | | payments. Cut you credit balances down to the bare |
| In short, FICO argued that in order to improve credit | | | | minimum. The higher your outstanding balance, the |
| scores, these three categories must be kept in tiptop | | | | worse your credit scores. |
| shape before you can expect to see an increase in | | | | And keep in mind that new credit accounts can do a |
| your credit score. | | | | heck of a lot more harm than good. The idea is to be |
| This idea fascinated me, and understanding it had a | | | | mindful of your spending in order to improve credit |
| huge impact on my ability to improve credit scores of | | | | scores. You don't have to stop spending all together; |
| my own. While many people feel they don't have the | | | | you just have to be smart about it. This is the true |
| time or the skills required to apply it to their credit | | | | secret to credit repair. And this is true power. Use it |
| score. In fact, it is so easy to grasp that any layperson | | | | wisely. |
| can put it to practical use. | | | | |