The World of Credit

So I’ve discovered that the interesting world of Credit is shrouded in quite a bit of mystery. How does someone monitor one’s credit? What is your credit score? How do you improve your score? How do you repair your credit? I will keep a good update on this post as I am still learning how all of these works.

My credit started about 15 years ago by opening a checking account. As I am learning, the sooner a person can open an account (and stay in good standing) the better. Credit bureau’s take into account the age of your account. The older it is, the better your credit score will be.

Setting your credit cards to auto pay (at least paying the minimum balance) is the best defense to ensure you stay in good standing with credit bureaus. A late payment will quickly tarnish a good record of payment. A minimum payment will ensure a good payment history is being built or maintained.

I have been using for a good few years (I am not affiliated with this company). They are a free service for you to keep a monitor on your credit, credit history and will alert you of any activity on your accounts. The free account only shows the credit score from one bureau. The subscription they offer shows your score from all three bureau’s. So far they have been a good source to track my credit score. I have seen a few fraudulent incidences that show up on the account. I simply called the company listed under the reported incident and cleared up the issue.

To simplify credit, your credit score is broken down into 5 parts: payment history, credit utilization, length of credit history, revolving credit & installment loans, and recent activity & inquiries.

Payment History equals 35% of your credit score. Simply put: the longer you make payments on time the better your credit score will be. Set your payments on AutoPay (minimum payment) and this will ensure you never miss a payment.

Credit Utilization equals 30% of your credit score. This is your credit card balance vs how much you have available. Keep your balance below 30% of your total credit card limit.

Length of Credit History equals 15% of your credit score. The longer you have a credit card account, the more valuable the account becomes to the credit bureaus. By doing this you are establishing good credit history.

Revolving Credit & Installment Loans equals 10% of your credit score. A car loan or mortgage are two good examples of this. They are loans that are the same payment every month until the loan is payed in full. This shows good credit history and boost a credit score.

Recent activities & inquires equals 10% of your credit score. An inquiry happens when you buy a cellphone, buy a car, buy a house, apply for certain jobs or even apply for an apartment.

So my curiosity in this world of Credit Repair and increasing Credit Score is getting stronger. I have been reading on on the entire concept of Piggy Backing Credit. Superior Trade Lines has been an excellent resource of a deep knowledge base on laws as well as how Piggy Backing Credit works. I emailed them on my goal of trying to help people in improving credit earlier tonight.

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