FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO (xiv) score. FICO score's range between 300 and 850. In general, a FICO score above 650 indicates that the individual has a very good credit history. People with scores below 620 will often find it substantially more difficult to obtain financing at a favorable rate. The FICO score takes into account various factors in five (5) key areas to determine credit risk:
current level of indebtedness
types of credit used
length of credit history
Lenders (banks and credit card companies) use FICO (ix) SCORE aka CREDIT SCORE to evaluate the potential risk posed by lending money to consumers. Widespread use of credit scores has made credit more widely available and relatively cheaper . Some individuals have a misguided perception of credit and I would like to debunk some common credit myths (x) and impart upon you techniques which shall aid in improving your FICO SCORE aka CREDIT SCORE. Since it is an absolute fact that a higher credit score means better interest rates for car loans, mortgages, and other debts, these tips can translate into a few extra dollars in your wallet each month. What is your FICO SCORE aka CREDIT SCORE (xiv) made of?:
35% Payment history † Late payments can cause a FICO (xv) SCORE aka CREDIT SCORE to drop. Paying bills on time will improve your FICO score.
30% Credit utilization † The ratio of current revolving debt (such as credit card balances) to the total available revolving credit or credit limit.
15% Length of credit history † As your credit history ages you should realize a positive impact on their FICO score.
10% Types of credit used (installment, revolving, consumer finance, mortgage)
10% Recent search for credit – Credit inquiries can potentially hurt your score.
Improve Your FICO (Fair Isaac Corporation) (ix) Score
Pay on time, no magic secret here. If you can’t pay on time, notify your lender that you need to work something out.
Get current on past due accounts
Keep low balances relative to your credit limit – 35% or lower is best.
Don’t open new accounts just to lower your used credit capacity – having too much capacity is a risk too
Consider keeping old accounts open if you’ve been a good borrower
Start building credit as soon as possible
When shopping for new credit, keep it all within a short time frame such as 14 days or less
Borrowers with a bad history can improve credit scores by opening a new account and managing it responsibly
Installment debt (where you pay fixed monthly installments to eliminate the debt) is “better” than revolving debt (open-ended credit card debt)
Certain finance company debts (like buying a product with retailer financing) can lower your score
A variety of loan types is helpful. They'll know you're a seasoned borrower if you have a mortgage, an auto loan, a few credit cards, and a student loan.
Do keep in mind that your FICO SCORE aka CREDIT SCORE does NOT take into account race, color, religion, national origin, sex or marital status, age, salary, occupation, title, employer, date employed or employment history, residence, any interest rate being charged on a particular credit card or other account, certain types of inquiries like promotion account review, insurance or employment related inquires, credit counseling, any information found in your credit report, any information that is NOT proven to be predictive of future credit performance. Please click HERE or HERE FREE FICO SCORE aka CREDIT SCORE estimator. Using these tool you can attain an estimation of your actual FICO SCORE aka CREDIT SCORE.