THINGS YOU SHOULD KNOW | HOW TO TURBO CHARGE

Things You Should Know

If you’re searching online to find ways to repair your credit, whatever your current financial situation is right now, you need to take the first step and clear your mind, and start using a common sense approach to your financial issues! Here are some things you need to know about your credit.

What Doesn’t Matter
• Age
• Race
• Length of Employment
• Marital Status

What factors determine your credit score?
The exact formula of FICO and other scoring models is a trade secret. However, Fair Isaac Corporation, the industry leader in credit analytics and owner of FICO, has identified five factors and the relative weight given to each factor. Other scoring models include most of the same factors. However, the weight given to individual factors may vary.

The five factors are:
• Payment history – 35%
• Amounts owed – 30%
• Length of credit history – 15%
• New credit – 10%
• Types of credit used – 10%

It's clear that the single most important factor is your record of paying your bills on time. The number of delinquent accounts and the length of time the account went unpaid also factor into the calculation. Your payment history may also include financial problems that have ended up in court such as bankruptcy or judgments entered against you. For a more detailed explanation of how FICO scores work, see www.fico.org.

FICO scores range from 300 to 850, with any score under 620 considered high risk, often called “subprime.” The higher your score, the more likely you are to be seen by creditors as a good risk. This quick risk analysis translates into dollars in your pocket. The difference in interest rates and finance charges can be dramatic. A report issued by the Consumer Federation of America jointly with Providian estimates that consumers nationwide could save $16 billion a year in lower credit card finance charges by improving credit scores by an average of only 30 points.

Did you know that having a good credit score before you buy a home could save you between $50 and $129,000 dollars?

You Have to Play to Score
For various reasons, some people shun credit, choosing instead to live on a cash-only basis. Perhaps self-discipline, a bad experience with credit, or even family tradition have steered you away from credit cards or installment loans. Other people, especially recent graduates just starting out, have not had a chance to establish a credit history.

A traditional credit score calculation is nearly impossible without a credit file. Having just a few notations in the file can result in a “thin” file, equally impossible to conform to the standard scoring models.

This is why you need GCF.  Because without the financing we offer, it is impossible to improve your credit because you need to have financing in order to get a credit score.

Tips for Improving Your Score

• Monitor your credit report and dispute errors. Errors in your report will usually translate into a low score.  You will learn how to do this through our Free report “Turbo Charging Your Credit in Just 91 Days”
• Pay your bills on time even if it means you can only pay the minimum amount due.
• Low balances are a positive factor in scoring models. Don't use all your available credit.

Remember: acceptance of our Revolving Charge Agreement is not considered an application because we never run a credit check.  The only contact we have with the credit bureaus is after you’ve received our RCA and your merchandise.

• Old accounts (even those you have not used for a long time) can help your score.  Scoring models look at not just how you use credit today but also how long you have used credit.
• Consolidating balances or moving debt around may make for one easy payment, but this can have an adverse effect on your score.  Shuffling of balances could be especially harmful to your score if you close established accounts and open new accounts to consolidate your debt.
• Ask your lender what scoring model it uses. With new scoring models like the credit bureaus' VantageScore, it is easy to get confused. A number score alone will not tell you where you stand or how you are rated.
• Know the going interest rates. Current rates for mortgages, car loans, and other consumer credit are published in daily newspapers or can be found online at such sites as www.bankrate.com. If you have a good credit score but are not offered a good interest rate, ask questions, negotiate, or shop elsewhere.

Want to learn more?