Surprising Facts About Your Credit Score

…Did you know?

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Today, your FICO Credit Score is used for more than determining your eligibility to get a bank loan or mortgage. Having a low score can mean a security deposit is required to purchase a cell phone plan or set up utility services. Insurance premiums can also be affected by your credit score. Insurance companies correlate a low score with higher claims and a higher score with lower claims. In 2010, a survey by the Society for Human Resource Management indicated that 60% of employers evaluate an applicant’s credit.

Some people know they have less than stellar credit, but don’t know how to improve their score. Other than paying your bills on time, what else can you do? As in many instances, knowledge is power, so the first thing to do is arm yourself with an understanding of how your credit score is calculated.

Below are five ways to improve your score now:

  1. Since payment history makes up the biggest portion of your credit score, you may want to insure your bills get paid on time by having automatic deductions from bank accounts.
  2. Be aware that closing credit cards too quickly can negatively impact your credit by increasing your “credit utilization ratio”. Suppose you have 3 credit cards with a $5,000 credit line on each card and outstanding balances of $3,000. This gives you a utilization ratio of 20% ($3,000/$15,000). If you close one of the unused cards with a $5,000 credit line, you will now have a utilization ratio of 30% ($3,000/$10,000).
  3. Avoid opening too much new credit too soon. Don’t be tempted to open all of those new store credit cards for discounts during the Christmas shopping season.
  4. Expand the types of credit you incur. By acquiring various types of credit, such as Automobile Loans, Mortgages, Credit Cards, Lines of Credit, and Installment Loans, you can actually improve your credit score.
  5. Always make sure you check your Credit Report to dispute any errors. To obtain a free credit report, go to

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Rodgers & Associates answers questions like these every day.

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