Being frugal, vigilant and consistent can help you to have a shiny credit score. The scores that we have on our credit reports can be improved if we make it a goal to raise it, and bring our lifestyle in sync with this goal. The perfect credit utilization, proper discriminate between instalment loan and recursive loan etc have to take into consideration for shiny credit score.

1. How FICO Scoring System is
Essentially Linked to Your Lifestyle
None of us is alien to the fact the credit history affects our lives in more ways than
we can imagine. In my previous article, I discussed how one can use his credit card
to improve his credit score.
The problem is, people look at their credit scores in isolation. They shouldn’t. The
scores that we have on our credit reports can be improved if we make it a goal to
raise it, and bring our lifestyle in sync with this goal.
In this article, I’ll lay down some suggestions that can make it happen.
Living condition and credit utilization
Credit utilization is one of the few important metrics that FICO considers when
assigning you a score. I discussed credit utilization in my previous article. In case
you are not very familiar with the idea, you can give it a look.
The perfect credit utilization rate is between 10 and 20%. More than 20% is safe but
not recommended. More than 30% is a risk alert. The less you use your credit card,
the better. But at the same time, your credit limit should be high. Now unless you

2. bring changes in your lifestyle, the credit limit-lower usage combo is difficult to
maintain.
That’s because a high credit limit is tempting. Preventing yourself from spending
freely, when you are at a shopping mall, or in a restaurant is not easy at all. But as I
said, lifestyle changes are necessary for a better credit score.
Student loan
We have the best schools in the world, but the course fees of undergraduate and
graduate programs are often quite high, and getting a scholarship is incredibly
difficult. The question is if you take a loan, would that affect your FICO score.
There’s no definitive answer because the graph below shows it’s perfectly possible
that someone has a student loan of over $50000, and at the same time, getting a
score of 800 on his credit report.
FICO may not treat a student loan any different than it treats a mortgage loan, but
the delinquency rate of student loan has been increasing at a rapid pace. So, live a frugal
life and look for additional earning opportunities, so you pay off the loan as quickly
as you could.
Understand the difference
It’s less of a lifestyle change and more of a perspective change. Most people make a
mistake. They don’t discriminate between instalment loan and recursive loan.

3. Remember, FICO considers your payment history when it assigns you a score. In
fact, your payment history makes up 35% of the overall FICO score.
When FICO checks payment history, it considers both instalment loans as well as
revolving loans such as the credit card debt. However, it takes instalment loans
more seriously. If you don’t promptly pay down the revolving loan, then that’d affect
your credit history, but being a defaulter on an instalment loan such as a mortgage
loan or a student loan might damage your credit score severely.
Hence, if you have a mortgage or student loan to pay, make it your immediate
priority, and shift the focus from your credit card outstanding balances, even though
the latter is important too.
Equal importance
What I am going to advise in this paragraph, might appear to be in contrast with
what I’ve advised in the previous paragraph. My advice is give equal importance to
installment loan and revolving loan. It’s true that an installment debt is different
from a revolving debt. It’s also true that not paying an installment debt can damage
your score seriously.
Nevertheless, if you ignore the revolving debt, you’d score low in the credit mix
category. A person with impressive credit mix is one, who pay down all sorts of
debts, without discriminating. So, acknowledge the difference, but don’t delay
paying off any of these two types of debts.
Account maintenance duration
You need to show FICO that you are consistent. One of the factors, considered by
FICO is the duration of your account. The rule of the thumb is, the longer the better.
This simply means if you are new to credit, in other words, if your account doesn’t
have a long history, then FICO is likely to give you a low score.
Don’t close an account if you have been maintaining it for long. For the same
reason, make sure you don’t have a dormant account. If you do, then activate that
account asap. Change yourself if you are an impulsive and forgetful person.
Otherwise, your credit score will decline.
Author Bio-
Get to Know Me Better. Hi, I'm TINA! I am a financial planner, blogger, and
freelance writer and digital marketing consultant at http://profinanceblog.com. The
idea of starting a finance blog has been hitting me for long; I took it seriously after
falling into a spiral of finance debacles and recovering from it.