Get Out of Debt 101 Blog

Your credit score is one of the most important things you need to take care of if you want to improve your financial situation. It is highly recommended that you start working on improving your score as soon as possible so you get out of debt faster. When you have a great FICO score it’s a whole lot easier to get your credit card company to say yes when you ask them to lower your rate. Getting lower rates means that you can become debt free a lot faster.

To improve your score you need to understand how the Big Three companies (Experian, Equifax and Transunion) calculate your score. When a credit company runs your credit, it means that it requests a copy of your credit report to these companies. Along with your credit history they receive a “credit score”, a magic number that will determine what interest rate the credit company will charge you. If your score is in the 500’s, then you ABSOLUTELY MUST do something about it as soon as possible. The rates they give you are going to be very, very high (which means, more money wasted on finance charges/interest paid). If it’s in the 600’s, it’s still bad. You need to me above 720 in order to get the best possible rates.

So keep it as your goal to raise your credit score to 720 or better. Write it on a piece of paper and put it in your mirror, where you can see it every day.

Your credit score is made up of the following considerations:
35% Payment History
30% Amounts Owed
15% Length of Credit History
10% New Credit
10% Types of Credit Used

So what can you do to improve your credit score? We will discuss the 5 most important things you can do, starting today, to raise it above 720. It will take time to get there but if you keep at it, your finances will improve dramatically.

Today we are going to discuss method #1. Then every day for the rest of the week we’ll focus on one specific method until we cover all five. So be sure to visit us every day, take notes and share this blog with your friends so they too can benefit with these tips.

Method #1 is to ALWAYS pay all your bills on time. Since a whopping 35% of your score (the highest of all) is made up of your credit history, then you must understand the importance of paying your bills on time. Delinquent payments can have a tremendous negative impact in your score, so be careful here. The best way to make sure you are always on time is to set up your bills to be paid automatically a couple of days before their due date.

If you are behind on your bills, make sure you get current as soon as possible, and remain current from now on. Check your statement for instructions on how to set up an automatic payment, and start doing it this month. It will have a huge impact on your credit score.

Tomorrow we will discuss method #2, so come back to read this valuable information that can help you improve your finances in a very positive way. See you tomorrow!