How To Improve Your Credit Rating
Your credit score runs your life, even if you
don’t know it. Anyone you ask for credit
most landlords and even potential bosses have
access to your credit report and can use it against
you if it does not have a positive rating.
The information reported to the credit bureaus
is placed in a system that determines your credit
score. This score is used to determine how likely
you would be to repay a loan. The FICO score,
which is the most common method for determining
your credit score. These scores are used by lenders
of money for credit cards, cars, houses and more
to help them cut their losses with people who
are poor credit risks.
Based somewhat on your credit history but not
directly, your FICO scores can range from 300
to 850. The higher your score, the better you
are viewed as a credit risk. The higher your score
the more likely you are to get credit and the
less you will pay for that credit.
FICO, which stands for Fair Isaac Company has
a complicated method for determining credit scores.
Their method is currently the one used most by
lenders to determine whether you are worthy of
credit. Their method bases your credit score on
the following formula.
- 35 percent of your score is based on your
payment track record
- 30 percent of your score is based on how
much you owe
- 15 percent of your score is based on your
how long you have had established credit
- 10 percent of your score is based on whether
or not you are taking on new credit
- 10 percent of your score is based on the
types of credit accounts you have
Follow Advices Reported As "Score
Your FICO score analysis report will include
up to four "score reason codes" that
explain the top reasons why your score is not
higher. Those specific recommendations are what
steps you need to take to improve your FICO score.
Common score reasons include
- late or missed payments
- bankruptcies, foreclosures, suits, wage attachments
or liens and judgments
- number of late or missed payments
- Number of accounts with late or missed payments
- Amount owed on accounts
- Balances on revolving accounts are too close
to credit limits
- Length of time credit accounts have been
- Too many accounts with balances
What To Do To Improve Your FICO Score
If you can do nothing else to boost your credit
scores do this one thing PAY YOUR BILLS ON TIME!
Here are other factors that can also contribute
significantly to the determination of a credit
- Review your credit report and score.
- Correct errors in your credit report.
- Take action based on reason codes suggested
in your credit score analysis.
- Pay as soon as possible. Pay up past due
- Never let your balance go over seventy percent
of your credit card limit.
- Don’t try and get more credit or loans
||To check your credit score, click here.