What is Your FICO Score

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For those of you who may NOT know what FICO is, it stands for Fair Isaacs Co. It is an analytical service provider which calculates a score between 300 and 850, which enables the three major credit bureaus to determine your credit worthiness when applying for credit.

The closer your score is to 850, the better your rate will be when applying for a loan. A good credit score is usually between 700 and 750, where a great credit score is anything above this, and will insure you the best possible rates.

Now for the twenty four thousand dollar question, how can I obtain a credit score of this magnitude? If you said, I will just click my heels together three times while saying “Give me an 850 FICO score”, chances are, those heels will be worn out long before that score ever comes.

So what’s the best way to earn that elusive 700 score or better? Here are a few steadfast ways you can use to improve your credit score.

  • · The absolute best way to insure your credit scores will be good, is by paying your debts on time. This may sound simplistic, but, even missing your payment due date by one day, could reflect a thirty day delinquency on your credit report. Each degree of delinquency reported, whether it’s a thirty day, sixty day, or ninety day delinquency will greatly reduce your overall score.
  • · Don’t apply for too many credit cards, goods or services, or bank loans within a six month period. The more inquiries reported, the lower the FICO score will be on the three major credit bureaus.
  • · The longer you have credit established, the more points are generated in your favor. That is why it is ill advised to cancel your credit cards once you have them paid off. Unless you are paying a high annual fee, or the interest rate on the card is extremely high, merely leave the balance as zero.
  • · Don’t carry too much debt. Ideally, your debt load should be no more than thirty five percent of your gross income. For every five percent above that, your FICO score is lowered. On the other hand, don’t carry too little debt either, usually carrying five or six credit accounts on your report is perfect as long as your debt ratio is thirty five percent or under.

Certainly there are other items on your report, which also help you, these include longevity in your job, home ownership, or if you rent, how long you have lived at your current address. These items show stability, and with an excellent payment history to boot, you will ultimately get closer and closer to that brass ring FICO score you deserve.

As a consumer, you should check your credit history approximately four times per year to insure accurate reporting. Each year, you receive one free credit report by going to annualcreditreport.com. Make sure that the information provided is correct, if inaccurate, report the discrepancy immediately to the proper reporting agency.

Good credit history is something that follows you all of your life, make sure that you know your FICO score.

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