Boost Your Credit Score

Bringing up your points pays off

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Ever since subprime mortgages became more “sub” than “prime,” lenders have been tightening up on credit. The days of the nothing-down, no-documentation mortgage are gone.

Now homebuyers need a down payment and proof of income. What’s more, mortgage applicants need a winning credit score.

Credit scores are also weighed when you want to refinance a home loan or buy something on time. Some auto and home insurance companies will accept or reject you based on your credit score. Even if you’re accepted, the price you pay for insurance may vary according to your credit score.

Fair Isaac is the company that developed the FICO scores used by most lenders. On, the company illustrates how a higher score can lead to better deals on a 30-year, $300,000, fixed-rate mortgage:

FICO Score

Monthly Payment













The median FICO score in the U.S. is 723. Even if you’re a cut below that level, with a 660 score, you won’t pay that much more than someone with a superlative 800 score.

However, once your score dips below 660 (about 30% the U.S. population falls into this group), you’re considered more of a credit risk so you’ll pay much higher interest rates. Those with scores under 620 are likely to be quoted rates far above the norm, if they can get credit at all.
The bottom line is that your credit score has become vital to your financial well-being, so bringing up your score pays off. To do so, you should know how your score is compiled. Here’s what goes into a FICO score:

Payment history: 35% of your score. Pay your bills on time, even if you send in only the minimum amount due. Late payments will knock points off your score. Generally, a 90-day delinquency is more serious than a 60-day delinquency, but recency also counts. For example, a 60-day lateness a few months ago will hurt your score more than a 90-day late payment five years ago. This part of your score also takes into account factors such as bankruptcies, foreclosures, and wage attachments. Filing for bankruptcy, for example, can affect your score for seven to 10 years.

Amounts owed: 30%. The key here is your debt-to-credit ratio. Once you go over 35%, your score might drop, according to Steven Katz, director of consumer education for TransUnion’s Suppose, for example, you have $20,000 worth of available credit on your credit cards. If your balance goes over $7,000 (35% of $20,000) your score might drop, even if you pay down the amount you owe by the due date.

That 35% rule may be card-by-card. For example, if you

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  • Shelley Hoyt Anderson

    Black Enteprise article: Boost Your Credit Score, posted by Donald Jay Korn on May 30, 2008 at
    7:35 pm in Credit & Debt.

  • I am looking for bonding information for government contracting.

  • Kisha Vickers

    If I settle on some of my accts such as credit cards, or hospital bills with lets say a 20% settlement amount. Does that show positive on my credit or will this be frowned upon?

  • allan

    Kisha Vickers,

    When you “settle” by paying 20% of your debt and have the other 80% forgiven, here are the things to think about:
    1). The IRS views the forgiven 80% as income and you have to pay tax on it as if you earned it
    2). The chargeoff is a negative item and remains on your report for 7 years

    Generally, you’d be better off paying off the items you can afford to pay off even if its over time. I did one of these “settlements” for a small amount of money (less than $1000) many years ago and realized after the fact that it was a huge mistake. My credit score dropped nearly 100 points and when I went to buy my first home it haunted me. There’s no free lunch out here!

    • Monica

      Thank you for the warning! YIKES!

  • anthony

    one great way to raise your credit score is to use nca which stands for national credit associates. we are the only company that can legally raise your credit score unlike other company’s that temporarly raise your credit score for 30 to 90 days at best. we raise your credit score and it stays up as long as you keep making smart choses with your credit. raising your credit score can get you that car you’ve been wanting and coulden’t buy it due to credit. it also helps with home loans and so much more. it also lower’s your interests rates. so if you are interested please call me at 1-866-800-2408 i’m at extension 759 my name is anthony

  • deebee

    Warning #2:
    Seminar contracts: 1)be cautious, question terms; 2)remember there is a 3-Business Days Cancellation Period by Federal Law and by most U.S. States in which to cancel the contract (so if you sign on Friday eve, return for training following Monday you have until the upcoming Tuesday, 5:00pm to cancel contract); 3)Remember as the customer you have the right to negotiate terms and interest rates on ANY contractual agreement, nothing is ‘bound’ until AFTER you sign written agreement; 4)ALWAYS refuse to sign if terms are not negotiable!!!; 5)ALWAYS inform recipient org./individual that you will take contract to your lawyer for counsel, if they will not allow this, then WALK AWAY!!!! – WALK AWAY!

    May the Good Lord, Bless & Keep Us All as we await the effects of the Stimulus Package to renew the strength of our economy. Meanwhile, stay financially strong!

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  • The topic is quite trendy on the Internet at the moment. What do you pay attention to while choosing what to write about?

  • Very nice. Thanks for this.

  • Such a useful blog

  • Nia

    I seriously need help with my credit card debt. All of my cards have been sent to collections because I was only able to find a retail job with a hourly wage of $8.50/hr. It was either: eat or pay the credit card bills for a few months. I thought after graduation it would be better, but I am working a financial temp job making $14/hr. I’m dreading moving from New Orleans back home to NYC, because I may not be able to find a full-time job. What to do, what to do?

  • Johnny

    Hey I can anwser all your credit questions.

  • GEN

    I need help. I was so afraid of looking at my credit report for years because I was not ready to accept the truth. I have over 18 collection accounts on my credit report, and last time I checked my FICA was 545, and that was around May 09.

    I have a repo on my credit, student loans, which I have managed to pull out of default and get a forebarence, some medical bills, and some other small accounts. I am on CHEX SYSTEMS and no longer have a bank account.

    I am employed, making 15.00/hr. I’m also a single mom. I had to priortize things, pay daycare/tuition for daughter or attempt to pay down my debt. I’m sure you can assume which choice I made.

    I live at home so, Im currently not paying any rent, and I no longer have to pay that 650.00 tutition for my 5yr old since she’s starting at a charter academy.

    I want to gain control of my finances, pull myself out of debt, so that I can position myself to make 2 major purchases, a condo/vehicle, while also beginning a 529 savings plan.

    I did not finish my degree and am actually going back to school and starting this week.

    Where do I start???

  • Monica


    our stories sound so similar. As a single mom, because you are the only income, your total debt amounts can be overwhelming and can cause you to want to give up. It can be done, but you have to be willing to put in the work and discipline to get there. First, know that you are not the only one in your position. Accept responsibility for your debts and make an attempt to contact your creditors. You can ask them what the balances of your accounts are and ask if there is a payment plan option available to pay it off. Let them know what you can pay per month. Even if you are only paying 5.00 per month that is better than nothing. Then make sure that you know that it will be a day by day process. Get plan, develop a strategy, maintain in prayer and execution by faith. Find out what the balances are of some of your smaller bills pay them off and when they are paid off take the money that you would pay them and start with the next bill; and so on and so on. This is called a debt snowball. You can do it. TAKE YOUR TIME!

  • Robert


    How much is your service? Also whats the general tern around for credit score boost. Im at a 516 with all three cra’s.



  • Gabriel

    I paid off all my credit cards, and my credit jumped to 770. Now i’m getting balance increases and waivers of fees on all kinds of stuff. I’m loving this.

  • Hello All,

    I had low credit scores in the 500-600s and had my identity stolen 4 times in a 3 year period.

    I now have excellect credit with each credit bureau.

    I have 931 with TransUnion, 771 with Equifax and 951 with Experian.

    My plan is to share my credit profiles with America, so they can see what types of accounts, duration, etc is needed to obtain high scores.

    Too often, people provide general guidance on what is needed to boost scores (e.g., pay on time), but no one has provided specific details on the account types etc. I CAN DO THIS!

    Visit my Web site at and click the graphic links on the left (Experian, Equifax and TransUnion) to download a copy of the letter I received from each bureau displaying my high scores.

    I further encourage you to purchase my book, which provides the fundamentals used to obtain these scores.

    Contact your local media, let them know about how I can visit your city and help you and others in financial distress.

    I hope to see you soon!


  • Justin Blaze

    having bad credit can effect alot of thing and can put some peoples dreams on halt. When it comes to getting loans for cars or even business your score can be the diffrence on if you get the money or not. So it is important to not bite out more then you can chew.

  • Charles Hopkins

    my wife and I been cleaning up our debt to credit ratio by paying off all credit cards and closing account. We decided to keep two credit cards open each. We had over 17 credit cards combine and down to 7 now. We have our own business and looking to expand it next year. We tried securing a small business loan on our own but banks are not lending out money right now. We are working with WEB to assistance us with expanding our home-base day care business. I completed our business plan since being laid-off in early February.