[Disclosure: I do earn referral for some of the credit cards in this post. Thanks for the support if you ever apply through the site. To find other top deals check out the top credit card offers or you can also check offer at creditcards.com.]
What is a FICO Score?
I have been helping a lot of friends and family in the last few days plan their next travel via credit card sign-up bonuses and it has come to my realization thay lot of people have reservation applying for new credit cards. This reservation is valid if you were to carry a debt and pay high interest on carry forward balances. But, if you are good with finances you can actually use credit card sign-up offers to really travel big while paying pennies.
So, I thought I should write an article of how managing my credit cards and applying for credit cards actually has put my FICO score in top 1% and help me secure other loans (auto and mortgage) at the lowest interest rates while saving us thousands of dollars long-term.
The most widely used credit scores are FICO® Scores, the credit scores created by Fair Isaac Corporation. 90% of top lenders use FICO® Scores to help them make billions of credit-related decisions every year. FICO® Scores are calculated based solely on information in consumer credit reports maintained at the credit reporting agencies.
By comparing this information to the patterns in hundreds of thousands of past credit reports, FICO® Scores estimate your level of future credit risk.
Base FICO® Scores have a 300–850 score range. The higher the score, the lower the risk. But no score says whether a specific individual will be a “good” or “bad” customer. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders use to determine your actual interest rates.
How wisely using credit cards can actually boost FICO score and get you better interest rates ?
In 2014 I applied for a total of six credit cards (and five for my wife) which helped us earn over 700,000 miles, which some may argue is on a high side but honestly I was conservative (compare to other I personally know applied for 10+ and still have an excellent score). We were able to take some fantastic trips in 2014 and 2015 is just about to get better!!!
Below is a snap shot of my credit score and history from the last year. You can find your FICO score for a small fee by visiting myfico.com but is available free of charge if you are holder of either the US Airways Premier World Mastercard or the Barclaycard Arrival Plus World Elite Mastercard
My score in Feb 2014 was 786 and now almost after a year stands at 814 . The maximum score anyone can attain is 850 but in my knowledge a score of 750+ will qualify you for best interest rates for auto and home loans and long term save you thousands of dollars. I always pay off my credit cards in full and keep my utilization ratio less than 20%. Refer to my article on credit 101 for more information.
Applying and smartly utilizing credit cards can actually help you improve your FICO score and benefit you financially long-term if you pay off your credit card in full and keep your credit utilization low. Signing up for credit card can help you earn miles and points and travel the world for pennies.
Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone, not those of the bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities