| We all like to save money. From lowly plebs scrimping | | | | with your money? |
| and saving every bit of loose change they find in | | | | What's in a number? |
| between couch cushions to those Wall Street fat cats | | | | According to FICO, the credit score model almost |
| who like to light their fine Cuban cigars with hundred | | | | universally accepted by lenders and creditors |
| dollar bills (and then hastily put them out when they | | | | everywhere, your credit score is broken down into 5 |
| realize they probably can't really afford to set money | | | | main categories: |
| on fire), the idea of saving a buck or two is something | | | | |
| that appeals to us all. | | | | 1. Payment history - whether you consistently pay on |
| While many people looking to save some of their | | | | time or not, which makes up 35% of your total score. |
| duckets are much more frugal with their spending | | | | 2. Amounts owed - how much you owe on your |
| habits, keeping their charge cards under lock and key | | | | various accounts, which accounts for 30% of your |
| and pledging their undying allegiance to their coupon | | | | score. |
| book, one area of savings sometimes overlooked is | | | | 3. Length of credit history - how long you've had credit, |
| boosting one's credit score. While this is more of a long | | | | adding up to 15% of your overall score. |
| term savings plan than an immediate one, having a | | | | 4. New credit - any new type of credit account, which |
| good credit score can help you save big on any future | | | | totals up to 10% of your score. |
| loans or lines of credit you may open. How does it | | | | 5. Types of credit used - revolving vs. installment |
| work? Read on... | | | | accounts, rounding out the last 10%. |
| It's all a numbers game | | | | As you can see, paying your accounts on time makes |
| Most people have some idea of what their credit | | | | all the difference on your credit score. Lenders see this |
| score is, and know that the higher the number is, the | | | | and determine that you are less of a credit risk and so |
| better. What a lot of people don't understand about | | | | will not only approve your loan, but approve it at a |
| their credit scores is what exactly goes into them and | | | | lower interest rate as well, helping you save big in the |
| how having a good score can save you big time on | | | | long term. So how do you make sure your score is up |
| major loans and purchases. | | | | to par so you can take advantage of better deals? |
| First, let's look at the scores themselves real quickly: | | | | How to make sure your score is up to par |
| - 720 and beyond = Best credit ever | | | | - Keep your credit card balance under control. It's best |
| - 660 to 719 = Really good credit | | | | to keep your balances down to 30% of the available |
| - 620 to 659 = Decent, but won't win Best in Show | | | | credit, so if you have $1000 of available credit, keep |
| - 619 and below = See me after class | | | | your balance down to around $300 to insure the best |
| Okay, now that we've got a handle on where good a | | | | outlook on your credit report. |
| credit score falls on the number scale, let's look at | | | | - Dispute inaccurate information. If you see any |
| what the numbers actually mean from a lender's | | | | accounts reporting false information on your report, or |
| prospective. | | | | notice they got personal information like your name |
| Basically, your credit score is a measuring stick used to | | | | and social security number wrong (it's far more |
| determine your financial risk. Say you're in the market | | | | common than you think), notify the credit bureau and |
| for a new car because your 1976 Ford Pinto just isn't | | | | have them correct the error(s). |
| cutting it these days. When you go to an auto dealer | | | | - Work with your creditors. If you know you're going to |
| to apply for a loan or lease a new car, they use your | | | | be late on upcoming payments due to financial |
| score as a barometer to determine whether or not | | | | hardship, try contacting your creditors to work out a |
| you'll be able to pay back the money they loan you. So | | | | different payment plan. Anything's better than not |
| what exactly goes into your score to make it so high | | | | making any payment at all and your score suffering |
| or low? How do they determine how good you are | | | | for it. |