Personal Finance News Wednesday 7/3

Phil's Personal Finance Tip of the Day:

Achieve the Optimal — Not Highest — Credit Score

By Dave Johnson | CBS MoneyWatch 

If you're a smart consumer, you probably keep an eye on your credit score. At least one annual peek can tell you if your score is healthy enough to support a new mortgage or car loan, for example.

You might also know that the scale tops out at 850. That begs the question: What do you need to do to achieve the highest score? And what number is actually good enough? After all, getting all the way to 850 is probably impossible, so is there an optimal number, beyond which you don't need to work to improve your score?

That's the question recently answered at personal finance blog LearnVest. Bottom line: 760 is the tipping point; beyond that number, there are diminishing returns. According to Anthony Sprauve, director of PR at FICO, "It's important to understand that if you have a FICO score above 760, you're going to be getting the best rates and opportunities."

How can you reach 760 and beyond? For that, technology blog Lifehacker comes to the rescue, with a breakdown of the factors that go into calculating your score:

Payment history: 35 percent of your total score is calculated based on your diligence in making payments on bills and loans. To maximize your performance in this area, pay your bills on time. It's that simple.

Credit utilization: Another 30 percent of your rating is based not quite on what you owe, but more precisely on the ratio of what you owe to your available credit limit. If all of your credit cards are maxed out all the time, that's a very poor credit utilization score. But if you only use a little of your available credit, that's good. The lesson here is that it can pay to leave credit cards open even if you don't use them; if you cancel all your lines of credit, you'll damage your credit utilization score.

To read the entire article from Dave Johnson | CBS MoneyWatch :
http://finance.yahoo.com/news/achieve-the-optimal-%E2%80%94-not-highest-%E2%80%94-credit-score-171836679.html


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Hi my name is Philip J. Miano and I am the founder of PJM Personal Finance and Productivity Coaching specializing in Budgeting, Debt Reduction, Bank Reconciliations, Goal Setting, Time Management, and Organizational skills. Please visit my website: http://pjmcoaching.com.