Having a good credit score is all about managing your money and paying off your debts. But getting a great credit score is just a matter of knowing a few tricks of the trade. 7s Lynn Martinez has more in tonight’s Money Monday.
WSVN — Lorenzo De Toro never really worried about his credit.
But the small business owner got a rude awakening when he tried to get a loan for a big project.
Lorenzo De Torro: “We asked for an increase in our credit line and they simply said no. Your credit score is average but it needs to be above x number.”
Lorenzo started working with a credit counselor to help him take his credit score from good to great.
The first step is to watch the utilization rate.
Lyna Malloy: “People don’t realize that 30 percent of your FICO score is based off of utilization rates. How much of the balance you’re using vs. the limit.”
That means you should pay down your balance every month to less than 30 percent of your credit limit.
Next, forget your bill’s due date. Instead, pay on the report date.
Lyna Malloy: “The due date is the date but the magic number is the report date.”
That’s when your credit card company reports your balance to the credit reporting agencies.
Lyna Malloy: “Call your credit card companies to see what time of month they report to the bureaus. Pay it down before then so you actually get the maximum amount of points.”
Strengthen your score by blending your credit like having a car loan or a mortgage in addition to credit cards.
Make sure you use your credit. Put a small amount on your cards every month and pay them down to keep your score strong.
Always, look for and dispute errors. Lorenzo found this out the hard way.
Lorenzo De Torro: “I would say about ten percent of the entries were not accurate. Addresses I had not lived in, lines of credit I never had. It’s very scary because so much depends on that number and if the information is inaccurate you’re not getting a good deal.”
Once your credit score is up, do everything you can to protect it. That means no late payments and never co-signing for someone else’s debt.
Lyna Malloy: “A smart consumer is an educated consumer.”
Also, asking for a credit line increase can lower your overall credit utilization ratio and boost your credit score.
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