Credit Cards: What is FICO and why is it important to raise my FICO
score?
Here
are 5 Steps to a Higher FICO Credit Score:
- Be Punctual. Late payments can
lower your credit score. Paying your bills on time for several
months can begin to raise it.
- Get Caught Up. If you're behind on
some accounts, the first step is to get current. Then start paying
on time - the longer you do this, the better.
- Pay Down Your Accounts. If your
balance is more than 50% of your credit limit, paying more than the
minimum amount due on your account can drive your balance down and
your credit score up.
- Give Yourself Time. A long history
of responsible credit use can boost your score significantly. No
matter what might have happened in the past, timeliness and
responsibility can eventually help anyone establish good credit.
- Correct Credit Report Errors. Check
your credit report regularly. If you find any errors - and they do
occur occasionally - contact the credit reporting agencies
immediately.
What Affects Your FICO Credit
Score and What You Can Do About It
Your FICO credit score is a measure of your credit rating —
calculated from data contained in your credit report. Most lenders
base their credit decisions (at least in part) on this score.
Generally, the higher your score, the more likely a lender is to
approve your loan and the more likely you may qualify for a lower
interest rate.
There are five categories of credit data that influence your score in
varying degrees:
1. Payment history — how timely you've been in paying on your
accounts.
2. Amounts owed — the outstanding
balances on your account and the percentage of each credit line
you've used.
3. Length of credit history — how
long your accounts have been open.
4. New credit — the number of
recently opened accounts.
5. Types of credit used — the
different types of credit relationships you have.
Most FICO credit scores range between 350 and 850, with higher scores
representing better credit risk. The higher your score, the more
likely you are to get a lower interest rate on a mortgage or car
loan. Your FICO score changes over time with all of your credit
activity, and your actions can change your score.
Related Article:
What is a Credit Report (and How Do I Get Mine)?
Table of Contents:
-
How to establish
credit
-
Types of Credit Card Accounts
-
Precautions for Choosing or
Using a Credit Card
-
When You Receive Your Card
- Your Rights and Protections
-
What is a Credit Report (and How Do I Get Mine)?
-
How to Dispute Credit Report Errors
-
Unauthorized Use of Your Account: (What to Do if Your Identity
is Stolen)
-
Help and Resources
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