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Your Credit (A Powerful Purchasing Force or Kryptonite), Money-Guy Podcast 6-29-2006

June 30, 2006

Your Credit (A Powerful Purchasing Force if used correctly or the Kryptonite of American consumers if used unwisely)

Superman Returns came out this week and I felt it was appropriate to incorporate the comic book feel to my title.

 

Being Serious Credit is truly powerful:

If used correctly it can help make your life much easier including

  • Buying or refinancing real estate
  • Earn you rewards for everyday purchased through credit cards
  • Lower your Insurance Rates (in case you did not know most insurers are now using your credit rating to help them evaluate you as a property and casualty insurance client

If used poorly it can lead to years of dark days including:

Trouble setting up utilities, mobile phone service, and insurance

Higher rates on your home mortgage and auto loans

Evil rates and fees associated with your credit cards with limited rewards and benefits.

Let’s talk about the Average American and Average Credit Statistics from FairIssaac

Your credit behavior directly impacts your credit score aka FICO score. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax

· The median FICO score is 723

· A top tier FICO score is between 760-850

· 700-759 is the next level of FICO scores

· Below 700 and you need to get serious about your credit

What makes up your FICO score?

How Does Rate Shopping Impact your score?

Improving your FICO score

Payment History: 35%

Amounts Owed: 30%

Length of Credit History: 15%

New Credit: 10%

Types of Credit in Use: 10%

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