Whether you are buying a house, a car, or refinancing student loans, lenders look at your credit scores (from 3 national credit bureaus: Equifax, Experian and TransUnion) to evaluate the risks they take on by lending you money.
Understanding, safe-guarding, and maxing your credit score is important because a higher credit score means lower interest rates, better terms on financing and getting a better value/overall price for your big ticket item purchases.

How a FICO Score breaks down


Based on how your credit score break down, a few tips are helpful to boost/maintain your credit score.

  • New credit: only apply to credit that really benefits you whether it’s cash rewards or mileage. Multiple mortgage or auto loan applications done in a short time don’t ding your credit score repeatedly because it is understood that you will shop around for major financing as such. But if there are a few credit cards you want, apply for them all in a day or two so that they will be based off of your highest score.
  • Length of history: that card you have not used in eons. Don’t close it! It may be what’s lengthening your credit history (averages of the ages of your credit cards.) Just put it away safely somewhere. If you want to close accounts, close the new ones that you are not using!
  • Credit mix: department store credit cards are considered relatively low quality credit. Mortgage and car loan are high quality credit (difficult to obtain, shows financial maturity and responsibility.) Bank credit cards are somewhere in between. So don’t get a card from each department store, or if you absolutely can’t resist the card opening teaser rewards or discounts, close the department store cards after you got the sweet opening deals.
  • Payment history: pay all your bills on time. This really pays off. As you can see it is worth 35% of your credit score. Pay more minimum payments. I always pay minimum payment + $1 or dollar when paying 0% interest credit card debt.
  • Amounts owed: this is usually evaluated in terms of credit card revolving balance / credit card available limit. The lower the ratio, the better you score in this section.
  • Last but not least, monitor your credit score/ history. We used to PAY a monthly fee to monitor our credit. But now it’s free with many major credit card company and it is very convenient. When you log in online to your Capitol One, Chase, or Discover credit card, there’s a link to see your FICO score and some additional information such as open/closed accounts with monthly updated balances. This makes monitoring your credit quick, effortless, and FREE.



  • Do you know your credit scores (lender usually use the middle of the 3 scores for determining your financing options)?
  • What helps or hurts your credit score in your experience?
  • Are you enjoying the benefits of having high credit score such as getting the lowest car loan/mortgage/student loan refi interest rate? Also getting credit cards with generous rewards?


Acing Your Credit Score
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