Is Credit like a Roller Coaster?

You have seen the TV Commercial that describes your credit like being on a Roller coaster. Is that a true picture and does credit work like that?

Actually, it is truer than you realize but often you don’t know what that means. Let’s talk a little bit on how it is true.

If you have high credit debt then your credit score will be low (for you). If you pay the debt off then your credit score will be higher (for you). The reason that it is qualified “for you” is because credit is different for everyone. Your actions will base your credit history and that is what your credit score is based on. If you want the best score possible for you then you want to build your credit. Building your credit is often like building a home. You want a good foundation, solid walls and a roof to protect everything.

The foundation of your credit is paying your Bills on time and in full. By paying your bills on time and in full you protect your credit payment history. This history is 35% of your credit score and is the largest part of your Credit Score.

The Walls of your Credit Score is the Length of Credit history (15% of your Credit Score), the Types of Credit Currently in Use (10% of your Credit Score) and any New Credit (10% of your Credit Score). By building your credit over time and using the proper credit your walls will be the stabilizing force in your “Credit Home”.

Finally, the roof of your “Credit Home” is based on your Outstanding Debt since 30% of your credit score is based on this debt. If you want a stable “home” then you will pay attention to

each of these things. Most people don’t pay attention to the Foundation and the Roof on their credit home so the walls fall down because the foundation is weak or the roof “leaks” and damages the rest of the credit score. The walls of your credit score often are based on things that you don’t have much control over but the two largest portions of your credit score are based specifically on your actions. Paying your bills on time and controlling your outstanding debt make up 65% of your credit score.

If you have poor credit and want to improve it, first review your credit history report and correct any mistakes on the report. 79% of every credit report has inaccuracies on it. Once the report is accurate then start reducing your overall debt. This will help your patch up your credit “roof”. Then make sure your payments are made on time and in full. This will solidify your foundation and make your credit score solid as a rock.

Mel Jensen is a retired Customer Service Manager with Ovation Credit Services.

He has written many articles regarding Credit Repair.

Article Source:http://www.articlesbase.com/credit-articles/is-credit-like-a-roller-coaster-1077380.html

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