A few weeks ago I was asked to speak at workshop for small business regarding credit repair by the local chamber of commerce. My first thought was, I did this for them a few years ago so I will simply pull out that power point dust it off and go. Needless to say, I was so wrong.
The economy, job and housing markets have changed the face of credit immensely. The days of being proud to have a 680 are gone. At least for now. So much affects your score that I’m not sure what to share with you first.
The old great score of 680 is now a 720! Are you kidding me? Yep it’s true. just do a simple search on yahoo. Yahoo has a section in personal finance that discusses this in detail with testimonies and all. What happened? Basically Fannie Mae and Freddie Mac because of ramp-id foreclosures decided that to reduce risk they would require a higher credit score. From a business perspective, if I were losing money from clients and credit had something to do with it, i would consider the same. The Flaw in this logic is that a lower score may have been an old situation or problem that you have been working to fix for many years. Actually, you may be a great risk right now.
Credit scores are now looked at in terms of brackets. Let’s say that you have a 710 score, you get lumped in with the 680 crowd. Well, there goes your chance for a better insurance rate or interest rate on a home loan.
Other things that affect your score:
- Closing Accounts
- Reducing Credit balances
- Late Payments
- Not using credit cards
- Using too much credit card (Balance is too high)
- Identity Theft
After much consideration, I’ve concluded that the first thing that must be done to improve and protect your score is your attitude. I have long since taken the position that I will do my best and let my score take care of itself. Wrong!!
The New Rules dictate that this credit score situation is warfare. If you are not actively looking to protect your score, you will get what you may not deserve.
Consider the following regular activities:
- Pulling your Report regularly
- Sign Up for a monitoring service (My checking account offers Identity Theft coverage and Credit report access)
- Using at least one credit card 4 times per year.
- Paying off balances every 30 days.