Hi, all. This is the first of a new type of post I’ll be doing called Wealthy Joe Basics.
I’ve been writing this blog for over a year now, and have had the opportunity to talk to many people about investing. From my conversations, I’ve come to see that not only did most of us not learn anything about the stock market growing up, but a lot of us don’t know much about other, more basic aspects of personal finance.
You need to invest in order to become financially free. But that’s not enough on its own. You also must be financially healthy. I’m starting Wealthy Joe Basics as a way of helping you get there.
So the first Wealthy Joe Basics topic I’m going to discuss is the FICO score.
Your FICO score is the score creditors use to determine how creditworthy you are as a borrower. The less creditworthy you are, the more interest you will have to pay.
The FICO score considers five areas, weighted as indicated below. You need to pay attention to all five:
- 35% Payment History: You must pay bills on time. Late payments will cause interest rates to skyrocket!
- 30% Amount You Owe: Keep the balance you owe on a line of credit to no more than 1/3 of your credit limit.
- 15% Length of Credit: Establish credit early, and treat your credit history like gold!
- 10% New Credit Openings: Limit the number of credit lines you apply to.
- 10% Types Of Credit You Have: A good credit mix would be two or three credit cards, car note and mortgage.
Here is what your FICO score means to lenders:
800 or Higher: Exceptional
740-799: Very Dependable
670-739: Good Score
580-669: Some Approve
579 and Below: Very Risky
I hope that this information has been helpful! Let me know what other financial concepts you’d like me to cover in Wealthy Joe Basics.
Here’s to your wealth!
My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.
Click here to be taken to its Amazon page.
(Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)