You thought just making good grades was important, but now your credit score is just as important. Unfortunately there is not much taught about your credit score in the classroom. Since I am a 9 year veteran banker, I will give you the FACTS on how to keep your credit score high.
1. Don’t ever be late on any payments that report to the credit bureaus. If you are late, you can kiss your credit score good bye…. Typically a late payment will drop your credit score 100 points or more.
2. Don’t charge more than 10 to 15% of your approved credit card limit. So if you have a Chase Credit Card and your credit limit is 10,000, don’t charge more than $1500 on that card at any giving time. If you find you’re balanced owed is higher than this, your credit score could suffer. The Fair Isaac model will consider you a credit risk which results in your score dropping.
3. Don’t let anything go to collection. If you find that there is a bill you cannot pay, arrange payment options with that company. A collection will destroy your credit as well. A collection stays on your credit report for 7 years.
4. Have a good mix of credit.
a. Car loan
b. Credit Card
c. Mortgage
The loans listed above are a good example of proper credit mix. The Fair Isaac model looks at your mix of credit to determine your score as well.
5. Don’t ever co-sign for anyone, not even a family member. This is a major problem in the world of credit. If you co-sign for someone and they are late on that obligation, there goes your credit score. If you have a family member that needs credit, have them apply for a couple of secured credit cards like everyone else does. Allowing someone to ride your credit for loans is a horrible idea, and could ruin your credit rating.
If you follow these basic credit rating principles, your credit score should stay above the fold.
Author: Mike Clover
