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Managing Your Credit Card Utilization

As a highly successful Real Estate Investor for the last eighteen years, Chayo Briggs was born in Compton, California, Briggs's inner drive for success was set in motion early on by his parents. He is the President of Briggs & Lay Pro Incorporated. Besides the multitude of real estate services Briggs is an effective motivation speaker and published author. He has experienced various levels of human culture elevating him to expert status and skill to help people overcome their credit issues.

Your Credit Defines Your Creditability is designed as a pathway to understanding an excellent credit rating. We know such issues are daunting, but you may need to borrow money from a lender. We need to understand and learn the concept of good credit defines our creditability, and good credit is our genetic makeup so we must learn to delete toxic accounts, such as collections, inquiries, charge-offs and public records. Therefore, a good credit score will make the process easier. Your credit score determines two things that can affect your loan approval. First, lending money entails risk; lenders need to know you are reliable. Second, your credit score determines the terms of your loan.

Briggs understands the key to success come through life experience; for that reason, he assists clients in procuring their prosperous future; breaking the chains of financial distress.

The basics concepts of credit stability are simple, but most people look at these topics like taboo, when in fact they are essential to becoming successful. In today’s society, having just an average credit rating may not be enough. Employers are beginning to check credit history to make sure an employee is a good fit. Think of your credit score as a resume, your life history. It paints a clear example of what type of person you are in real life. I have over seventeen years’ experience in real estate entrepreneurism and life coaching. One of the first topics discussed is a client’s credit rating because it will determine your next course of action. Something as simple as getting a place to live requires a credit history report. Therefore, I am committed to assisting people in understanding the importance of credit credibility.

Many people may not have heard of credit utilization, so I decided to start with explaining the basics and then provide some tips.

Your credit utilization ratio is the amount of revolving credit you’re currently using divided by the total amount of revolving credit you have available. In other words, it’s how much you currently owe divided by your credit limit. It is generally expressed as a percent. For example, if you have a total of $10,000 in credit available on two credit cards, and a balance of $5,000 on one, your credit utilization rate is 50% — you’re using half of the total credit you have available. You can calculate an overall credit utilization rate as well as a rate for each of your credit accounts (called your per-card ratio).

There are five major factors that influence your credit score: payment history (35%), level of debt/credit utilization (30%), age of credit (15%), mix of credit (10%), and credit inquiries (10%). Credit utilization has a big influence on your credit score, but what is it and how can you manage it to get the best credit score?

In the U.S., there are three national credit bureaus (Equifax, Experian, and TransUnion) that compete to capture, update and store credit histories on most U.S. consumers. While most of the information collected on consumers by the three credit bureaus is similar, there are differences. For example, one credit bureau may have unique information captured on a consumer that is not being captured by the other two, or the same data element may be stored or displayed differently by the credit bureaus.

Credit scores are meant to help predict the risk of lending to you. They are generated when a company like FICO runs data from your creditors through a mathematical formula.

You can see that data, too, in the form of a credit report.

Three national credit reporting agencies — Equifax, Experian, and TransUnion — collect data to produce credit reports. Federal law requires them to give consumers one free copy of their credit reports every 12 months.

You should request your report from all three companies, as your credit report compiled by Experian may differ from the one compiled by TransUnion.

It’s smart to keep an eye on credit reports, too, since they reveal what merchants and lenders are telling each other about you. Monitoring your credit reports also lets you keep an eye out for errors and signs of identity theft.

Tip: Credit reports don’t include your credit score. You have to get that separately. Typical FICO scores range from 300 to a perfect 850. The higher the score, the better your creditworthiness.

Some fluctuation in a score is to be expected. It may move around in response to how you manage your credit, pay your bills and take on new debt.

Getting a free FICO score takes a little finesse, as it’s available from a limited but growing number of sources. If you go through FICO for your score, it will cost you.

Plenty of other sites offer free credit scores, just not FICO scores. If you can’t get access through any of the methods above, consider alternative scores such as VantageScore credit scores. You’ll at least get a reading on your credit that you can monitor and compare over time.

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