Saturday, December 29, 2012

FICO - Fixing Your Credit Score and Maintaining Good Credit

Tips on How to Fix a Credit Score & Maintain Good Credit

1. Payment History Tips

Contributing 35% to your score calculation, this category has the greatest effect on improving your score, but past problems like missed or late payments are not easily fixed.
  • Pay your bills on time.
    Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO score.
  • If you have missed payments, get current and stay current.
    The longer you pay your bills on time after being late, the more your FICO score should increase.  Older credit problems count for less, so poor credit performance won't haunt you forever.  The impact of past credit problems on your FICO score fades as time passes and as recent good payment patterns show up on your credit report.  And good FICO scores weigh any credit problems against the positive information that says you're managing your credit well.
  • Be aware that paying off a collection account will not remove it from your credit report.
    It will stay on your report for seven years.
  • If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
    This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time.  And seeking assistance from a credit counseling service will not hurt your FICO score.

2. Amounts Owed Tips

This category contributes 30% to your score's calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below.
  • Keep balances low on credit cards and other "revolving credit".
    High outstanding debt can affect a credit score.
  • Pay off debt rather than moving it around.
    The most effective way to improve your credit score in this area is by paying down your revolving (credit cards) debt.  In fact, owing the same amount but having fewer open accounts may lower your score.
  • Don't close unused credit cards as a short-term strategy to raise your score.
  • Don't open a number of new credit cards that you don't need, just to increase your available credit.
    This approach could backfire and actually lower your credit score.

3. Length of Credit History Tips

  • If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
    New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information.  Also, rapid account buildup can look risky if you are a new credit user.

4. New Credit Tips

  • Do your rate shopping for a given loan within a focused period of time.
    FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
  • Re-establish your credit history if you have had problems.
    Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
  • Note that it's OK to request and check your own credit report.
    This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

5. Types of Credit Use Tips

  • Apply for and open new credit accounts only as needed.
    Don't open accounts just to have a better credit mix – it probably won't raise your credit score.
  • Have credit cards – but manage them responsibly.
    In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
  • Note that closing an account doesn't make it go away.
    A closed account will still show up on your credit report, and may be considered by the score.
To summarize, "fixing" a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent, good credit history.  Raising your score after a poor mark on your report or building credit for the first time will take patience and discipline.  Log into myFICO for more information.

7 comments:

  1. I Bed your articles guys have it up.
    free credit reportc

    ReplyDelete
  2. I would just like to add that your FICO score won’t drop by much when you apply for new credit. However, if you apply for several new credit cards over a short period, your credit report will reflect the activity.

    ReplyDelete
  3. Thanks for your post. I also like to add that good credit score based upon our good credit report history. You provide a important tips to raise credit score. It will be helpful if we use these regularly just not for one or two months. It must be follow for at least 12/18 month then there will increase in our credit score.

    ReplyDelete
  4. Is it really difficult to rebuild one’s credit history? Not at all! In fact, if you’re equipped with the right information, you can gradually recover your creditworthiness and look forward to receiving excellent credit offers, in the very near future. Rebuilding your credit history is made easy now.

    ReplyDelete
  5. Is it extremely troublesome to construct one’s credit history? Not at all! really, if you’re equipped with the correct info, you'll be able to step by step recover your trustiness and appearance forward to receiving glorious credit offers, within the terribly close to future pay for delete, credit reports

    ReplyDelete
  6. Fantastic learning guys! I’m a die heart fan of your respective blog site.
    free 3 credit report

    ReplyDelete
  7. “As a CPA, I've referred clients to Mr Benjamin lee for many years with great results. I recently had the opportunity to use him for my home loan, and now I know why my clients have always been thrilled!he's thorough, timely, personable and most importantly knowledgeable. I'll certainly be referring him for a long time to come to anyone looking for loan please to contact Mr Benjamin lee, Mr Benjamin lee is a loan officer working with a reputable investors who are ready to fund any kind of project as long as you are willing to make refund as promised.Here is Mr Benjamin lee contact information”   247officedept@gmail.com             WhatsApp +1-989-394-3740.  

    ReplyDelete