In Business / March 2007
Extra Credit
Good credit can help women save money and improve their lives in a variety of ways. A high credit score can mean a big difference in percentage points on interest for her house -and savings of thousands of dollars in interest each year. It also can mean a lower interest rate on car loans for even more savings.
Credit rating affects home and car insurance rates, too. Credit information can make a difference in a variety of employment opportunities, even beyond licensed, state or federally funded positions, as a barometer used by potential employers to judge character and management skills. Plus, good credit means having larger credit limits available should they be needed.
Five categories are used in determining the credit score is obtained from the nation’s three credit bureaus-payment history, amounts owed, length of credit history, new credit and types of credit used. Payment history accounts for about 35% of the score, so women should do whatever it takes to pay bills on time, whether that is keeping stamps on hand or using online automatic payments. How much credit is available and how much is being used together account for about 30% of the credit score. Women who regularly spend up to or near to their credit limit may have be damaging their score. Experts recommend keeping credit balances at no more than a third of the credit limit and lower is better.
Cutting up credit cards can be satisfying, but don’t cancel them. Old credit provides more points than new credit, and about 15% of the credit score is based on the length of time credit has been held. No credit is no help. Just pay each month’s bill in full.
Credit reports are affected by the number of times lenders request a credit report., up to 10% of the score. The 10% discount off the days’ purchase for opening a store account seems thrifty and inviting, but a woman who takes advantage of the offer two or three times may be sabotaging her credit score. Applying for too many credit cards is a red flag for lenders.
Good credit is also affected by the kind of credit women use. Secured loans, like home loans and car loans count for better scores than unsecured loans like credit cards.
Women with average credit can raise their score by paying bills on time, keeping their outstanding debt well below their credit limits and paying more than the minimum due on credit cards. Good credit takes time and work to establish, which make it a valuable tool for buyers and lenders.
Copyright © 2007 A Woman's View. All rights reserved.
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