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February 24,2009

  • Dust Your FICO, Pt.4
      When dusting is done (Moral of the story)...

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    • Get healthy, stay healthy:
      1) Don't ever allow credit card minimums to be more than half what you could pay monthly.
      2) Always pay over the minimum. It doesn't have to be double (but should be at least 4%).
      3) Do not allow your credit card balance to exceed 30% of your credit limit beyond a payment period. Make sure your payment brings your balance down to this level. If you need to charge more then this 30%, then request your lender to raise your credit limit to three times the amount that you need to owe. If they say "No", then reconsider owing that amount or else, open a second credit card account so you never continually owe over 30% of what you're allowed. Owing over this ‘30% utilization ratio' is so serious to the industry that they may whack your FICO Score by, as much as, 100 points for doing so.
      4) If you're already above the ‘30% utilization ratio', this should become your priority. Strive to bring the balance down ASAP or request a credit limit increase. You're already prime to have your credit card finance charges doubled or tripled.
      5) Don't close unused credit card accounts, but keep them active. Make a small charge within every six month period. New FICO rules place much emphasis on ‘credit history', ‘payment history', ‘utilization ratio' and ‘types of credit'. One 10-year old card, used once every six months, gives you all four of these advantages. Don't close it...preserve it.
      6) Don't open more than one credit card account every 6 months. Don't make repeated attempts more than three times in six months. Every attempt can whack of 10 FICO points. These will be over-ridden by one new account in good standing over six months. So, don't go backwards.
      7) Watch out for scammer agencies who want payment up front to fix your credit rating. You can tell when they're scamming...if they ask for payment up front, they're scamming.

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