Wednesday, January 25, 2012, AM | 1 Comment
If you have bad enough credit score that you cannot easily get loan, then you must 1) restrain spending and 2) start paying down your debt obligations.
These two tasks alone can improve your credit score – slowly but surely. You must take control of your payments and the debt you have.
Reports by the media indicate that U.S. consumers are getting better at paying their credit card bills.
Consumer debt had peaked in 2008. By December 2011, it had come down by 10%, according to Equifax, one of the three consumer information companies that keep credit scores.
Equifax Risk Score
The Equifax Risk Score ranges from 280 to 850. It is used to judge your credit worthiness, with a higher number considered better.
The top 20 percent of the population has an Equifax Risk Score above 780.
In other words, 80% of folks have the risk score less than 780.
The only comfort you can get from the 80% – if you can call it comfort – is that you are not alone.
Well over three-fourth of the U.S. population is in the same boat or what I call in the same quagmire.
You can become a part of the top 20% with the care that a reasonable person exercises to avoid harm to your person or your property.
First of all, you must be determined and have a resolve to not harm yourself and your property by making sure that you spend less and start paying off your existing debt.
Also, make sure you don’t accrue any more debt.
Avoid getting into debt quagmire
To accomplish higher credit score and be in the 20%, you must Get Your Free Annual Credit Report Now so that you know where you stand in terms of your credit score.
If you are not among the top 20%, you must start restraining your spending habits and start repaying your debt with the money you save – by less spending – to improve your credit score.
Those days are gone when credit was so easily available from banks and other lending institutions. Back then, you could have a lousy credit score and still get a loan from lenders.
These days you’ve got to have a good credit score to even apply for a loan, let alone get it. They won’t even think about lending you the money if you have bad credit score.
According to the U.S. Federal Reserve
All three companies base scores on
Timely bill payment (35% on FICO chart)
The amount of outstanding debt (30%)
length of credit history (15%)
Recent credit applications (10%)
The number and type of a borrower’s loans and credit accounts. (10%)
In a Nutshell
Do yourself and your family a favor. If you have bad credit score, start spending less. With the money you save, start repaying your outstanding debt.
Slowly but surely, you would improve your credit score and be considered in top 20% of the population.
Ain’t that a nice and soothing feeling?Facebook.com/doable.finance