Keeping your credit score in top shape

Web posted May 23, 1999

 Scores used to decide credit

By Damon Cline
Staff Writer

Credit scores are risk-based ratings calculated by the three credit reporting bureaus using a complex model developed by California-based Fair, Isaac & Co. Inc.

The model calculates your risk by comparing your habits to statistical data pulled from large pools of consumers with loan defaults.

The higher your score, the better chance you'll get credit on favorable terms. Here's how to keep your score high:

Fix credit report errors: Your report will likely contain an error, especially if you're a junior or senior.

Fixing inaccuracies several weeks before applying for a large loan, such as a mortgage, can greatly boost your score. Don't rely on companies claiming they can ``repair'' your credit for a fee.

Georgia residents can get two free credit report copies per year. South Carolina residents can get one copy per year for $8. Obtain reports from each of the three bureaus: Experian Inc., (800) 682-7654; Equifax Credit Information Services, (800) 685-1111; and Trans Union Corp., (800) 916-8800.

Pay bills on time: Credit scores are most heavily weighed down by late payments (especially over 30 days) and bankruptcies, collections, liens and wage garnishings. Recent positive behavior lessens the impact of past blemishes.

Don't ``max out'' credit cards: High balances count against you. It's better to have low balances on several cards than to be near your limit on a few.

Use only the credit you need: Applying for, or opening, several new credit accounts drops your score, especially if it's done in a short period of time. However, ``shopping around'' for mortgages and car loans within a 30-day period doesn't count against you.

Avoid consumer finance companies: Opening accounts with businesses offering payday advances, car title loans and other high-interest services, indicate you could be in financial trouble.

Damon Cline covers business for The Augusta Chronicle. He can be reached at (706) 823-3486.