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Freeman's Blog


December 11, 2014

Christmas Shopping Spree - Money Management
Before you whip out those credit cards for this holiday season, you may want to review your knowledge of credit scoring. If you have any big financial purchases planned for 2015, like a home purchase, you’ll want to make sure you do things that will improve or maintain your credit rating.

The most common credit score is based on software developed by Fair Isaac Corporation (FICO)® and expressed as a three-digit number ranging from 300 to 850 (see chart). The score is derived from a formula using five weighted components: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and types of credit in use (10%).1

Here are some tips that could help you maintain or potentially improve your score.

  • Use at least one major credit card regularly and pay your accounts on time. Setting up automatic payments could help avoid missed payments. If you do miss a payment, contact the lender and bring the account up to date as soon as possible.
  • Keep balances low on credit cards and other revolving debt.
  • Use older credit cards occasionally to keep them active. Closing them may actually hurt your score.
  • Don’t open or close multiple accounts within a short period of time. Only open accounts you need.
  • Monitor your credit report regularly.

fico scoreYou can order a free credit report annually from each of the three major consumer reporting agencies at annualcreditreport.com or by calling (877) 322-8228. You’ll usually have to pay to see your credit score. If you are turned down for credit or receive less-than-favorable terms, you have a right to receive your score for free from the lender with an explanation of how the determination was made.

If you find incorrect information on your credit report, contact the reporting agency in writing, provide copies of any corroborating documents, and ask for an investigation.

Sources: 1) Fair Isaac Corporation, 2014

As the holiday season approaches and you find yourself feeling “worried” about money, please make an appointment to meet with me for a FREE retirement strategy consultation. Peace-of-mind regarding money is only achieved when we manage it together.

Contact my office at 1-866-471-7233 | MD, VA & DC.

Freeman Owen, Jr - Host of SAFE MONEY TALK on CBS The Big Talker 1580AM