The must-know graph for credit scores

The chart from FICO, the company that provides the most widely used credit scores, says it all:

ce_scorebreakdown

That is it, folks. To achieve a high FICO credit score, we only need to improve these 5 components. In order of importance, here are the 5 things we should do to increase our FICO scores:

Continue reading The must-know graph for credit scores

Why is your credit card bill so huge: how credit card interest is calculated and what grace period means

I personally don’t carry a credit card balance unless my credit card is offering a 0% APR promotion because one of my goals in the credit quest is to build a perfect credit history without paying a penny in interest. But from my observation, I’m not the norm. Many people I know carry balances from time to time, and when they come to me for advice, I always tell them to at least pay the minimum to avoid late payment fees, and over time I have helped them save quite a bit of money from that.

Honestly though, paying just the minimum amount is never going to pull you out of debt since credit card interest accumulates everyday at an absurdly high rate. There are many reasons to underestimate interest charges.
Continue reading Why is your credit card bill so huge: how credit card interest is calculated and what grace period means