Brian Asks… I have no debt or late payments; this means I should have a great credit score, right?

This is actually one of the most common credit myths out there. Just because you are financially responsible does not mean that you have good credit. Your FICO score (credit score) is a measure of your credibility when it comes to the likelihood of paying your debts. A FICO score is measured by several different components; Payment history, credit utilization, length of credit history, types of credit used and past credit applications. Bills paid on time, paying off debt, the aging of your credit history, managing different types of credit and making a minimal number of credit inquiries.

Therefore, by having no debt or late payments on your record, you do not have good credit, you simply have no credit. In order to receive a top score from FICO you must have some credit and try to keep them at a balance that is 30 percent of the credit limit, have  a variety of credit as well. For example – a department store card, a gas card and a major visa or master card is a good mix for a favorable credit score. A secured credit card is a good idea too – you prepay it like a debit card – so you’ll never be late!

Credit scores will decrease if you utilize the credit to the maximum limit, apply for credit regularly and  pay your bills in an untimely manner.

I hope this answers your question Brian and gives you a little more insight on what makes a good credit score.

Meet Cheryl!

About Cheryl

As a successful business owner and community leader, Cheryl Braunschweiger is known and respected for getting things done with a degree of skill and enthusiasm that bring out the best in those around her - colleagues, clients and friends. The name of her business, ALMC Mortgage, reflects Cheryl's philosophy and personality. She says it stands for All Loans Must Close –a reflection of her determination to do whatever it takes to serve her clients. Cheryl has been in the mortgage lending business for 20 years. Read More About Cheryl
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