OR
Premarital/Marital
Lesson 9
Improve Your Score
Your credit can either be:
The benefits of being prime include:
Perks of 800 Club
700 SCORE
- Solid and good.
800 SCORE
- Move you to the front of line for:
- Attractive rental properties.
- Attractive homes for sale.
- Dramatically lower the cost of:
- Mortgages (save $100K+ in interest).
- Any other type of loan.
- Allow you to get credit cards with the best reward programs
- Earn cash back and airline miles at a faster rate (e.g., 1.5 miles vs. 1 mile per dollar).
- May qualify you for perks such as access to airport lounges and free breakfast in hotels.
Having a strong credit score also shows off that you have dealt wisely when handling worldly wealth. This is a truly good endeavor. Consider the words of Jesus:
“So, if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?” Luke 16:11, NIV
How do we improve our score to get in the 800s?
How Scores are Determined
Payment History
- Have you paid your bills?
Amounts Owed
- Primarily a measure of credit utilization (credit used/credit line) : good to keep below 30%; top FICO scores of 800 tend to be 7%, on average.
Length of Credit History
- Longer credit histories increase the FICO score (people with short credit histories can still have higher FICO scores)
Credit Mix
- Your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans; very small factor.
New Credit
- Do not open up lots of new credit all-at-once; lots of credit inquiries also can lower FICO score; if you are shopping for a loan and multiple inquiries are made, all of the inquiries will be dropped if you decide on a loan within 30 days of the first inquiry.
How to Improve Score
DEFENSE
Monitor credit report monthly/quarterly.
- Make sure no one steals your identity and destroys your credit.
Pay every bill on time
- Including: utility, dentist, cell phone, rent, credit card, student loan, etc.
Do not open more than 1 credit account at a time.
- If you do open a new credit card account, wait at least a few months before you open another credit card account
OFFENSE
Keep credit balance low.
- Your credit balance should always be lower than 30% of your available credit. Keep it lower than 8% if you want to get into the 800s.
Increase available credit.
- Call your credit card company once-a-year and ask them to increase your available credit. Only do this if your score is already considered good (670+).
Lengthen credit history.
- If you do not have a credit card, open one and keep its balance at $0 so that you can begin to lengthen your credit history.
Credit Score Video
Check Score
- Lots of options (just Google it).
- A sampling:
- If you are not “credit visible,” consider opening up a credit card so that you can start building your score.
- If you cannot get accepted for a credit card, consider opening a ‘secured card’ that will allow you to build credit.
- Each month, you’ll need to pay your secured credit card bill on time and the payments should be reported to the major credit bureaus to improve your score.
- Requires a deposit to get started (e.g., $49 for a $200 initial credit line).
- Very high interest rates (always pay full balance each month).
- If you cannot get accepted for a credit card, consider opening a ‘secured card’ that will allow you to build credit.
Shop for secured cards:
https://www.cardrates.com/advice/prepaid-cards-that-build-credit/
Credit Utilization
- If you have a credit card, download latest credit card statement and look at your credit card balance divided by your available credit.
- Keep this number below 30% at all times.
- Keep it below 8% if you want to get in 800 club.
Credit Limit
- Call your credit card company (or check online) and ask for an increase in your credit limit.
- Only do this if you have good credit already! (670+ score).
- If you have bad credit, asking for more credit will likely lower your credit score!
Transition
While it’s good to have a good credit score, is credit itself good? Or does borrowing violate our God-given freedom as we become enslaved (i.e., indebted) to another person?
More Resources
- Investopedia: The Five Biggest Factors that Affect Your Credit.
- Getting Into the 800 Credit Score Club Is Tough—Staying in Is Tougher.
- Pay to receive your official FICO score here.