Editor’s Note: This guest article is from Paul of mycreditrepairtips.comIf you’ve been wondering about credit scoring and how it all works, then you’re not alone. Many people have thought they had high credit scores only to find out they have been part of a “stereotyping” that often happens when it comes to matters of credit.
Yes it’s unfair, but unfortunately when it comes to credit you need to know how to play the game so that you can have the highest score possible.
There are many different types of stereotypes which can actually affect your credit score and cause your numbers – and benefits – to drop considerably.
• Credit scoring models actually like the fact that you might carry a small balance on your credit cards. Sure, it needs to be at or below the 30% of available credit line, but carrying a small balance shows that you are able to make monthly payments on your cards.
For those of us who are more frugal, this can be frustrating because that means paying interest on your purchases which you might not have to pay otherwise, but keep in mind that the “credit bureaus” are for-profit businesses and they want your business to go to creditors who will actually make some money off of you.Therefore, small balance, small interest payments, on-time payments equals higher credit score.• Where you choose to use your credit cards and what you choose to use them on might not affect the credit scoring model directly, but you might find that over time, using your credit cards for things like bill payments and necessities can “pigeonhole” you and even encourage creditors to drop your available credit because they can “foresee” a problem coming.Yes, the “credit bureaus” are becoming psychic among their many other talents, so you need to be careful about where you choose to use your credit cards.• If you don’t have any debt to speak of, then you will be a major victim of credit scoring stereotyping. You would think that if you didn’t have debt and worked hard to pay off your loans early it would look good, right?Well, it does save you money, but it can also ensure that your score is low because you don’t really have that much credit, which can hurt you.
Now, you should know that most people don’t have enough cash on hand to live without some kind of credit and this is why it’s so important to keep your credit score up. Even if you don’t need to use the credit you have, by keeping your good to average credit score, you will be able to ensure that you can buy the things you want and need when you want or need to.
In order to ensure that you’re not hit with some of the credit scoring stereotypes, however, you have to know what they are and how you can avoid having it happen to you.
There is a lot of information out there and some of it is incorrect. Misinformation can be your worst enemy. For insider secrets and sound advice on how to quickly increase your credit score and remove the negatives on your credit report, visit mycreditrepairtips.com
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