The Credit Game: Are You Playing It or Is It Playing You?
In the AMA Weekly Strategy with Q+A Sessions in May, we will be focusing on “Playing The Game.” It is all a game, as I’ve said many times before and once you KNOW that, as well as KNOW the rules of the game, you can decide how to play it on your terms.
One element of the game that confuses most people is the credit game. Honestly, this is the simplest game to play once you know the rules. YOU CAN WIN THIS GAME. The credit reporting agencies are completely transparent about how your credit is reported so this does not have to be a mystery. I’ve seen incredible improvements in credit scores amongst my clients (one had a 60 point jump in only three months!) after adjusting her habits according to the “rules” of how her credit score is calculated. She is in the process of refinancing her home so this increase in her score will save her thousands of dollars in interest over the long run.
Before we get into the rules, you need to know your starting point. Get a free copy of your credit report (there are several reputable sources online, creditkarma being one of them) and review it. Know your score and the other information on the report to make sure it is accurate. Dispute any errors if applicable. Having a very good credit score (740 and above) can save you thousands as well.
How Your Credit Score is Calculated (most to least impact)
PAYMENT HISTORY (35%): Are you paying your bills on time? If not, how many times have you been 30 days or more late?
AMOUNT YOU OWE (30%): How much do you owe on each credit account and how much of your credit limit have you used?
LENGTH OF CREDIT HISTORY (15%): How long have you had each credit account? Make sure to have older accounts in good standing, and think twice before closing them!
NEW CREDIT OPENED (10%): How many credit requests (inquiries) have been pulled on you? The more you have, the more negatively it affects your credit score.
TYPE OF CREDIT (10%): What kind of debts do you have (if applicable)? Lenders prefer to see a mix of debts that are paid responsibly.
Remember, having poor credit keeps your poor! It can result in an endless cycle of predatory lending, interest and fees that can be totally avoided if you know how to play this game. It’s never too late, just like it’s never too late to improve your health by starting a new diet and exercise routine. Your credit is exactly the same. It’s just a numbers game and you WILL see results if you are CONSISTENT and PATIENT.
This is just a brief overview which I hope you’ve found helpful. Please share! We go into much more details, including “insider strategies and tips” on winning the business and personal credit game in the Passion to Profit Business Master Course and the AMA Weekly Strategy with Q+A. Join us for more!