November 16, 2007, 7:00 am

4 Easy Tricks To Improve Your Beacon Score

by: The Financial Blogger    Category: Improve your credit score
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credit score
As a banker, I often hear remarks about ones Beacon Score being low because of poor credit management. The Beacon Score (also called Fico Score) is one of the major factor in a credit analysis. Whenever you apply for a credit card, a mortgage, a personal loan or a line of credit, the financial institution will pull out a credit report and look at your score. If it’s not high enough, you could be declined base solely on this information.
Your Credit Score is not only about paying your bills on time. As there are several factors that influence your Fico Score, I am presenting for easy ways to increase this magic number.

#1 Verify what lies in your credit bureau

This may seem stupid at first as what is supposed to be in your credit bureau should be your own debts and nothing else. However, this is not the case for many individuals. The first reasons would be because people think that when they stop using a credit cards or cut them and thrown them in the garbage, the account is closed. Well it’s not until you take the time to call the financial institution and request the account to be closed. The second reasons would be related to the fact that people tend to forget small bills and they could completely ignore a $25 balance on their latest furniture financing bill. The third reasons would be caused by fraud attempts under your name. This can damage your credit score for a long period of time if you do not catch it in a short period of time. For these three reasons, I strongly recommend that you order your credit bureau from Equifax (equifax.ca or equifax.com) once a year.

#2 Apply for a credit card now

As I previously mentioned on this blog, it would not be a bad idea to have three to five credit cards. Credit cards are the easiest way to build a strong credit history. All cards are reported on a monthly basis to the reporting agencies which is not the case for other loans held at the bank. While you benefit from a periodic reporting, you can show financial institutions that you are able to manage revolving credit. The best things to do with credit cards is to use them so their owing balance fluctuates over time.

#3 Use it on a daily basis

Yep, you just read “use your credit cards on a daily basis” on a personal finance blog. Put as much as possible of your recurring expenses on your credit cards. I am talking about groceries, restaurant, transport, utility bills, clothes… basically everything that is already on your monthly budget. It is important to not look at credit cards as a gift from God (it’s not!) but really a tool to build a stronger Beacon Score and get rewards from your regular expenses. At the end of the day, you have to pay for these expenses, why not using them to get something out of it?

#4 Pay your bills in full and on time

While I am telling you to use your credit cards on a daily basis, you must keep in mind that you will have to pay the full balance when your bill will come at the end of the month. This is the perfect trick to improve your Fico Score; use your credit as often as you can while paying the entire balance at the end of the month. If you can not make the full payment, make sure that the one you make is one time. A late payment on a $10 bill has the same impact on your credit bureau than not making a $1000 payment. Credit is based on trust, no matter what is the amount.

If you want to know more about how to improve your credit score, please check-out my archive under the credit score category. I am trying to include as much as revelant stuff there.

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Comments

Another tip, which only works if you’ve already defaulted on an obligation, is to ask the collection agency for the original paperwork. If they can’t find it, mainly because your obligation has probably already passed through several hands, then they can’t report it.

If you’re interested in more details I wrote about it at: http://www.followsteph.com/2008/02/18/a-lesser-known-secret-tip-to-increase-your-credit-score/

Not only is this blog entry incredibly inaccurate and poorly written, but it is offering TERRIBLE advice!!! Suggestions such as “use your cards daily” are the reason that so many individuals in our country are in debt up to their eyeballs and are taking drastic efforts to get out of debt. With the unemployment rate as high as it is, the last thing anyone should do is put their living expenses on their credit card, as if they get laid off their credit cards will be the last thing that their savings go toward.

You are a banker and are telling people how to get into debt. I manage a business that helps individuals become debt free. My tip for using your credit cards responsibly is very simple- Don’t!

One low limit credit card and an auto loan will be sufficient to qualify you for a mortgage a few years after they are opened and paid consistently. One could argue that you will pay so much more with a higher interest rate on your mortgage, but I would take a 7% rate on 200K for 30 years over a 29% interest rate on God only knows how much “daily spending” for the rest of my life any day!

i would definitely suggest that you think further before posting an article such as this, as it could ruin someone’s financial future.

by: The Financial Blogger | June 15th, 2011 (9:06 am)

@Josh,

terrible advice? yeah I completely forgot that if you pay gas & groceries with your credit cards you will definitely EAT MORE and PUT MORE gas in your car. Those are expenses you have anyway. If you can’t control the money that is coming out of your wallet and you can’t keep up with a budget, this is a whole different problem.

The truth is that if you use your credit card for day-to-day expenses and you pay your credit card bill completely at the end of the month, you will improve your beacon score as you will show that you are able to manage your credit as a responsible and intelligent individual.

Tell me again how paying off completely your credit card at the end of the month will get you in debt?

DO NOT use your credit card for everything! The banks look at utilization usage. You want to stay between 0-20%. For an example,
Credit Card limit is $500, you want to spend $100 or LESS(a month) and then pay that off. Do not surpass 20%, if you can help it. The banks want to ensure that you are not using your credit cards for living expenses. I hope this helps.