Come on down! You’re the next contestant on the Game of Good Credit!

Achieving good credit is a game of strategy. You have to play tactically if you want to win.

Let’s begin with the basic gameplay of how to go from the starting point to winning the game of good credit so you can maximize your credit score. The overall goal in the game is to move forward from the starting point, taking the right steps to reach your credit goal.

Each step you take can have a positive, negative or neutral effect. You want to make smart moves that boost your score, while avoiding traps that set you back. Positive actions like making payments on time and keeping your credit utilization low help move you forward. And doing things like paying off a credit card in full can give you a big jump up the board. But actions like paying late or allowing an account to go into collections can set you back and put you farther away from your credit score goal.

As you play the Game of Good Credit, keep in mind that even if you have to make a really bad move it doesn’t mean you’ll have bad credit forever. You may just have to start again to begin moving forward toward the score you want. Most negative actions set you back for 7 years. Although some things like Chapter 7 bankruptcy can set you back longer. But if you have a setback, you can start to move forward immediately!

The BEST move you can make is to pay your bills on time – this is the biggest factor in calculating your score. Each time you pay a credit card or loan on time it’s a positive action that lets you move forward. If you’ve had setbacks, start making payments on time to move forward again. But keep in mind that the amount of credit you use affects how quickly you can move up the board.

Credit utilization is the second biggest factor in calculating credit scores – that’s the amount of debt you have relative to your total available credit. The less debt you have, the faster you can advance towards better credit. So by keeping your debt low and making payments on time you can forward to get closer to your credit goal.

Length of credit history is the third biggest factor in your score – creditors believe people who have been playing the game longer are better at it. So don’t close your oldest accounts or let creditors close them due to inactivity, because this can actually set you back. Keep accounts in good standing and you’ll get an extra boost on your way to a winning credit score.

The number of times you apply for new credit within a six month period is a factor in your credit score. If you try to take too many new credit moves at once, you can actually get set back. Only draw a new loan or credit card when you really need it, and don’t apply for credit cards in quick succession. That way getting new credit will be a neutral action that doesn’t set you back.

The type of credit and number of accounts you have also has an impact on your ability to win the game. If you pick up a diverse variety of debts along the way like a mortgage and other loans along with a credit card or two, you’ll have an easier time reaching your goal.

We have a few tips that can help put the big win within reach. Be aware that you can be penalized paying late as well as for moves that you didn’t actually take. This happens when negative items appear in your credit report by mistake – the credit bureaus think you made a bad move when you really didn’t. If this occurs, you have the right to dispute the item to have it removed. If you’re successful with a dispute, you’ll move up the board.

Additionally, players often think asking for help will set them back from reaching a winning credit score. But using services like credit counseling if you’re having trouble can actually help you move forward faster instead of setting you back. Completing a debt management program helps you eliminate credit card debt and may aid in helping you build a positive payment history. It can also help you avoid major setbacks on the board like debt settlement and bankruptcy. So you can get the help you need and still reach your ultimate credit goal, allowing you to win at the game of good credit to improve your financial standing overall.

Make the move to Consolidated Credit and let us help you develop a winning strategy to help you eliminate debt so you can achieve your credit goals.

The Game of Good Credit

How to win big and achieve the credit score you really want!

Your credit can be significantly affected by the moves you make everyday, so it’s important to understand how your credit score is calculated and how creditors and lenders use your profile to assess your risk as a borrower. The more you understand the game, the more likely you are to win consistently to achieve and maintain the credit you really want and need.

The five factors that affect your score

As mentioned in the video, there are 5 factors that affect your credit score and some are more important than others. Basically, each factor has a “weight” in how much it impacts you score. Factors with more weight need to be focused on closely, while you keep the others in mind so you can avoid making moves that hurt you.

  1. Credit history, 35%
  2. Credit utilization, 30%
  3. Length of credit history, 15%
  4. New credit applications, 10%
  5. Types of credit in use, 10%

This is why it’s so important to keep your credit history positive by always making payments on time, while taking steps to keep your unsecured debt minimized because these two factors have the most impact on your score, by far.

How to calculate credit utilization

“Credit utilization” and “credit utilization ratio” are two terms that simply refer to the amount of unsecured debt you currently have relative to your total available credit line.

Creditors consider this an important factor because if you’re maxed out on all of your credit cards, that usually means you’re a high risk borrower – even if you’ve never actually missed a payment to affect your credit history.   The rationale is that a borrower who’s charged up to their limit is essentially one financial speedbump away from financial distress.

Even though that borrower may be keeping up at the moment, if they lose their job or have a serious medical emergency, they don’t have any breathing room on their bills or credit. So those borrowers are more likely to miss payment and eventually default if they’re in debt right up to the limit of the total credit they can afford.

Your credit utilization ratio isn’t difficult to calculate:

Current total credit card balances / total available credit limit x 100

So if you have three credit cards each with a $1,000 credit line, then your total available credit limit would be $3,000. If you owe $800 on one credit card, $400 on another and $300 on the last then you total current balance would be $1,500. Using the calculation above, your credit utilization is 50%.

While $1,500 may not seem like an overly large amount of debt, it IS a significantly large when you consider it’s 50% of the credit that borrower has available. This level of debt would likely have a negative impact on that borrower’s credit score. In fact, you ideally need to have less than 10% utilization to maximize your score.

Debt relief solutions can be good or bad

If you’re in debt – particularly credit card debt – there are moves that you can take for debt relief that can be good for your credit like credit counseling and enrollment in a debt management program. However, there are also relief options that are automatically bad for your credit. This includes debt settlement, where you settle up with a creditor for less than the full amount owed.

That’s why it’s so important to avoid procrastinating when you’re facing challenges with debt. The earlier you start looking for relief, the less likely it is that the solution you use will impact your credit negatively. Catching a debt problem early helps assure you have the widest range of solutions available, including all of those options that have a neutral or even positive affect on your score. The longer you wait, you may limit the number of solutions you can use and you’ll have a longer game to play to get back to a good credit score.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

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Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

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