What is a Beacon or Credit Score? A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus such as equifax.
Step1: Find out what’s in your credit report
Before doing anything else first identify what is it you need to improved on. You can do this by acquiring a snapshot of your current credit history from equifax.
Things you are looking for are outstanding debts and existing credits you may have on your file. It is recommended to do this yearly as part our yearly finance maintenance check to find anomalies that can hinder a good score. Most of the time we tend to forget about old expired credit cards that we don’t use and think that it is automatically closed. It is not! In order to fully discharged a credit against your credit history and so that it doesn’t damage your score it must be manually requested to be closed from the financial institution end in order to closed it off entirely and have the financial institution update it with equifax. Only then it will be discharged against your credit history!
You are also checking for anomalies such forgotten small bills such as $25.00 that you may have forgotten to pay. Believe it or not this can bring a significant damage on your credit worthiness. This have the same repercussion as having a late payment of a loan worth of $1000. Other things to pay attention to is other people using your credit without you knowing it.
Step 2. Build your credit report
Now that you found out what’s in your credit whats next and how to improve it?
The easiest way to improved a credit worthiness is to have one or two credit cards open. Credit cards are not bad to have and is a good tool to use to improve credit worthiness by paying your bills on time. They are the easiest credit to acquire and provide significant benefits. All credit cards are reported on a monthly basis to the reporting agencies such as equifax which is not the case for other revolving credit such as line of credits.
How to improve your score? Use the credit card instead of using cash and use them regularly such as paying for gas, grocery, eating out and for all your daily errands and most importantly for large purchases. The trick that I learned from a banker and I am not suggesting you do it but it is available is to purchase a large expensive item such as TV’s to max out your credit card and return it after two days for a full credit refund. When the financial institution sends out a monthly report of your credit history to the reporting agency it will show that you are in capable of managing and paying your bills on time.
Step 3. Maintain a good credit report
While I am telling you to use your credit cards on a daily basis, you must keep in mind that you will have to pay the full balance when your bill comes at the end of the month. This is the TRICK to improve your FICO Score; use your credit as often as you can while paying the entire balance at the end of the month. A late payment on a $10 bill has the same impact on your credit bureau as making a late payment on $1000 credit. By paying it on time the credit score will drastically improve.