How to give your credit score a boost
>>> WE ARE BACK WITH OUR CONSUMER CONFIDENTIAL, FOCUSING ON OUR ALL-IMPORTANT CREDIT SCORE. CHRISTINE ROMANS IS HERE TO WALK US THROUGH WHY IT'S SO IMPORTANT AND HOW TO GIVE THAT NUMBER A BOOST. >> IT'S LIKE A NUMBER TATTOOED ON YOUR FOREHEAD OR YOUR BACK, IT FOLLOWS YOU AROUND EVERYWHERE. >> IT REALLY DOES. WHAT IS A GOOD CREDIT SCORE. AND IF YOU HAVE A GOOD CREDIT SCORE, CAN IT ACTUALLY SAVE YOU SOME MONEY? >> ABSOLUTELY. THE HIGHER THE CREDIT SCORE, THE MORE MONEY YOU SAVE WHEN YOU BORROW MONEY. YOU WANT THIS NUMBER TO BE HIGH. THERE'S A REALLY BIG RANGE, 300 TO ABOVE 800. ANYTHING ABOVE 670 IS CONSIDERED GOOD. AND IF YOU HAVE AN AVERAGE CREDIT SCORE AND YOU CAN RAISE IT BY 40 POINTS, YOU CAN SAVE UP TO $3,000 IN INTEREST ON A TYPICAL CAR LOAN OR UP TO $20,000 INTEREST OVER THE COURSE OF A MORTGAGE FOR A $300,000 HOUSE.
THE HIGHER THE NUMBER, THE MORE MONEY YOU SAVE WHEN YOU'RE BORROWING MONEY. THIS IS THE RANGE. YOU CAN SEE YOUR NUMBER AT ANNUALCREDITREPORT.COM. THAT'S FREE. CONGRESS PASSED A LAW TO MAKE SURE. THERE ARE TWO KINDS OF PEOPLE, TWO PEOPLE WHO KNOW EXACTLY WHAT IT IS. >> I KNOW. >> SO NOW THAT YOU KNOW WHAT THE GOOD NUMBERS ARE, HOW DO YOU WORK AT GETTING THOSE NUMBERS UP? >> THE MOST IMPORTANT THING IS TO PAY YOUR CREDIT CARD, AT LEAST YOUR MINIMUM, BUT IF YOU CAN, WHAT YOU OWE THAT MONTH EVERY TIME ON TIME. SET AN AUTOMATIC PAYMENT. THOSE ARE THE PEOPLE WHO HAVE THE REALLY HIGH CREDIT SCORES, WHO ARE AUTOMATICALLY PAYING THEIR BILLS ON TIME. YOU LOOK BORING AND CONSISTENT AND PREDICTABLE. THAT IS WHAT GIVES YOU A HIGH SCORE. ALSO, DON'T MAX OUT YOUR CREDIT CARD. THIS IS KIND OF A LITTLE BIT OF A MYTH. THERE ARE PEOPLE WHO ARE SAY, I HAVE $15,000 CREDIT LIMIT AND MAX IT OUT EVERY MONTH AND PAY IT ALL OUT.
ACTUALLY, YOU LOOK KIND OF RISKY. YOU LOOK LIKE YOU'RE GOING RIGHT TO THE EDGE. IF YOU NEED TO, REQUEST A HIGHER LIMB AND USE 30% OF YOUR AVAILABLE CREDIT. THAT 30% NUMBER WILL GIVE YOU A HIGH CREDIT SCORE. YOU LOOK LIKE YOU'RE NOT USING ALL OF YOUR CREDIT AVAILABLE TO YOU, YOU'RE PAYING IT OFF EVERY MONTH, YOU LOOK STRONG, BORING, AND CONSISTENT. THAT'S WHAT GIVES YOU THE BEST NUMBER. >> IS THAT HOW YOU KEEP IT IN GOOD STANDING? >> YOU WANT TO KEEP IT UP, SETTING THAT AUTOMATIC BILL PAY.
IF YOU HAVE A CREDIT CARD THAT'S GO A BALANCE ON IT, START CHIPPING AWAY ON THAT BALANCE. PAY MORE THAN THE MINIMUM. AS YOU START PAYING OFF THE CREDIT CARD, YOUR SCORE WILL START RISING. ALSO, BE CAREFUL OF OPENING THOSE STORE CREDIT CARDS. A LOT OF DIFFERENT CREDIT CARDS MAKE YOU LOOK A LITTLE BIT FLAKEY IN THE EYES OF CREDIT RATING AGENCIES. AGAIN, THEY WANT BORING. BORING IS BETTER. MAKE ONE CARD YOUR PRIMARY, FIND THE ONE — I USE THE ONE, IT'S THE ONE I HAD SINCE I WENT TO COLLEGE.
I GET THE BEST POINTS FOR THAT ONE, I PAY IT OFF EVERY MONTH, USE THAT ONE CONSISTENTLY. I'VE USED THIS AS MY PRIMARY FINANCIAL TOOL. AGAIN, YOU DON'T WANT A BUNCH OF DIFFERENT LINES OF CREDIT. THAT MAKES YOU LOOK A LITTLE BIT UNRELIABLE. >> THERE ARE FOLKS OUT THERE WHO HAVE HAD A MEDICAL EMERGENCY OR SOMETHING TERRIBLE HAS HAPPENED AND THEIR CREDIT SCORE HAS SUFFERED AS A RESULT OF THAT. LET'S SAY IT'S REALLY, REALLY BAD. ARE THERE THINGS THAT YOU CAN DO TO RAISE THAT? >> SO LOOK FOR A SECURED CARD. THIS COULD BE SOMETHING WHERE YOU PUT $200, GIVE THEM $200, THEY GIVE YOU A $200 LINE OF CREDIT, AND THAT INFORMATION GETS REPORTED TO THE CREDIT AGENCY. WHEN YOU USE THAT CREDIT AND PAY IT OFF ON TIME, IT SHOWS YOU ARING BEING RESPONSIBLE WITH THAT MONEY. MAKE ALL THE PAYMENTS ON TIME. AND IF YOU HAVE A CARD, GO TO ANNUALCREDITREPORT.COM, YOU MIGHT ACTUALLY SEE ON YOUR CREDIT REPORT, THERE'S SOMETHING THERE YOU DIDN'T REALIZE.
THERE'S A STORE CARD SITTING THERE WITH A $700 BALANCE AND THAT'S HURTING YOU. PAY THAT OFF RIGHT AWAY IF YOU CAN, AND THAT WILL POP YOUR SCORE. >> SO LET'S SAY YOU'RE RIGHT TO IMPROVE YOUR CREDIT SCORE. HOW SOON WILL YOU SEE IT? >> YOU CAN START SEEING RESULTS IN A MONTH OR TWO MONTHS. BUT DON'T STRESS OUT. IT COULD TAKE A LONG TIME OF EXCEPTIONAL CREDIT. IT'S ABOUT THE BEHAVIOR AND THE PATTERN OF THE BEHAVIOR AND HOW LONG YOU'RE DOING IT. CREDIT REPORTS UPDATE MONTHLY. YOU STAR PAYING OFF ONE OF THOSE CREDIT CARDS WITH SOME BALANCE ON IT, THAT WILL HELP RAISE YOUR SCORE RIGHT AWAY TO GET BACK UP TO THAT ABOVE 670, IT COULD TAKE A YEAR. BUT IF YOU KEEP DOING IT, THE NEXT CAR YOU'RE BUYING, YOU'LL SAVE MONEY. >> CAN THERE BE MISTAKES? >> THERE CAN BE MISTAKES AND I HAVE FOUND THEM BEFORE. A LOT OF PEOPLE WHEN THEY'RE GOING TO GET A HOUSE, ALL OF A SUDDEN, HOW CAN I HAVE A 620? I KNOW I DON'T HAVE A 620. GO TO ANNUALCREDITREPORT.COM, YOU CAN FIND THE MISTAKES AND TELL THE CREDIT AGENCY, THIS IS NOT RIGHT, AND THEY CAN TAKE IT OFF.
>> SO THERE ARE NO SURPRISES WHEN YOU NEED IT..
