Why do you need a good credit score?

Your credit score is a single number that reflects your financial history, and it can affect the prices you pay for everything from a mortgage to car insurance.

For example, if you have excellent credit, lenders may give you a lower interest rate on loans than someone with poor or limited credit history. Conversely, if you have lousy credit, you might not be able to get certain types of loans at all. Your FICO score is among the most important numbers in personal finance because it's used by lenders as an indicator of how well-qualified, they believe you are to take on debt. That means your credit score can impact your financial plans, whether that's purchasing a home, determining how much you can borrow, or predicting how much you'll pay for insurance.

How are credit scores created?

The Fair Isaac Corporation (FICO), a company that develops and supplies widely used consumer credit reports and models, created the first version of the score in 1989. It was originally called the "Vantage" model because it was intended largely for businesses to gauge their employees' creditworthiness. The first major consumer credit reporting agencies rolled out scores in 1989 as well. Fair Isaac began working on a new scoring model in 1997 that would provide lenders with a more holistic view of consumers' credit histories, which it dubbed the "FICO Score."

Although most credit scores use FICO's proprietary mathematical algorithm, other companies have been able to create their own versions, all pegged to the same general scale and using names like "VantageScore" or "TransRisk Score."

So, how to have a good credit score?

This book covers:

✓ What is a Credit Score and Credit Report?

✓ How to Calculate Your Credit Score?

✓ Nine Steps to Repair Credit Score

✓ FICO Score

✓ Nine Secrets that Harm Your Credit Score that You Should Know

✓ The Correct Mindset for Credit Management

✓ Seven Secrets that will Build Your Credit Score

✓ Six Secrets to Pay Debts

✓ Section 609

✓ 609 Letter Templates

And much more...

To give you a glimpse, here are rules of thumb to get your credit score up:

① Credit utilization ratio - Shopping for a new apartment or refinancing your mortgage? Use your credit cards and other loan accounts only 10% at any given time. Pay down the balance.

② Credit inquiry - If a new credit card or loan account shows up on your credit report, you likely won't be approved, especially if you've never used those types of accounts before. Request a copy of your report from the three major credit agencies (Equifax, Experian and TransUnion) so you can see what is in it. Scores are weighted by age, so recent inquiries are more important. Remember that credit scores consider both the number of inquiries and their dates.

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