When I really started paying attention to my credit score I noticed we really must know how to “play the credit game”. There are fine details you must know in order to improve and/or maintain a high credit score. You will never know these things unless you become a student of credit scoring like I did or someone like me tells you 😊.
The first detail I want to share with you is that you have to,
not only pay off your credit cards each month, but you have to know on which days to pay them off. The payoff date is different for each credit card. Let’s say you have a Discover card and suppose Discover reports your credit card balance to the credit bureaus on the 15th of the month. This means the amount you charged will need to be paid off a few days before the 15th of the month to allow time for the payment to process and a $0 balance to reflect on your credit report. Your credit card due date may be a later date such as the 18th of the month, but you want to pay your card off before the credit reporting date which is the 15th in this scenario.
If your credit report reflects a balance that results in a “high usage” indicator on your credit report this means that if you go out and request credit you could get denied. However, if you had known this part of the “credit game” and you paid your balance sooner you may have gotten approved for that same credit request.
The next detail I’d like to share is sometimes having too many retail (store) credit cards can hurt your credit score. Try increasing your limit on general credit cards and closing some of your store credit cards. This generally results in an improved score.
The next detail is that sometimes paying off everything can adversely impact your score. I had one credit card with a small balance at 0% interest. When I ran the credit score simulation within the Experian credit scoring app to find out the impact to my credit score if I paid the full balance; the result was a drop in my score! The logic behind this is that the credit scoring models want to see consistent payments being made on time over a long period of time.
The last detail I want to share is that having a good mix of account types is helpful. Account types are real estate, loans and revolving credit to name a few.
Well, I think this has been a healthy dose of financial information. Remember that I’m here to coach you through simple money management to get you set up for financial success. If you’d like to learn more or sign up for a simple money coaching session get on my calendar using the following link.
In summary, you cannot improve one area of your credit and neglect the others. There is a lot to know about credit scoring especially when your credit is not in great shape so I can provide more information on that and overall simple money management. Just use the link above to contact me.
Sameatria Okam (a.k.a, A Frantic Mom) MBA & Certified Life & Health Coach
Until next time…