Could you post some tips about how I can improve my FICO score?
Tim from NY
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Paying ALL of your bills on time helps your credit score. This includes phone, cable, water, electric etc...
Even unpaid hospital bills can lower your credit score.
Paying off your credit cards every month will boost your score too. Don't ever pay just the "minimum amout" It would take years to pay off the card if you just pay $10 or $20 a month. It makes your credit look better if you are never late on a payment also.
And it costs you more in late charges if your payment is late.
There are a number of ways. Here's a few big things to pay attention to and do. 1. make all payments on time!!! this is huge. 2. # of inquires, don't shop around for loans of any type if each place is pulling your credit, these inquiries add up. 3. Don't have too many credit cards. 2-5 is a good number. 4. Close credit cards you don't use, but leave your oldest one or two open. Part of your score is how long you've had credit available. 5. Try to no exceed 50% of your total available credit on each card. Balances around 30% is ok (less is better). If you want more advice or have further questions feel free to contact me. I am a mortgage consultant located in Minnesota. james AT laportegroup.net
You need to keep an eye on what percentage of the credit cards you have used. The larger percentage you use, you lower your credit score. Try to keep below a 50% level all the time. Don't max them out. Also, contrary to James (sorry James) Suze Orman states:'DO NOT CLOSE UNUSED ACCOUNTS WHEN YOU OPEN NEW ONES. THAT WILL LOWER YOUR FICO SCORE" and they don't come any more savy than Suze Orman. I have heard her say this over and over on her show every weekend. I watch her religiously, and she gives quite an education of what and what not to do. In CT she is on CNN. Also, if you can, contact the credit card company and have them add your checking account information and the withdrawal can be made automatically every month on the same date by the credit card companies. And you never have any late payments. I also go into my accounts I keep on line and add more every month depending on my state of finances. I also have certain monthly bills withdrawn from my charge acct.
When you apply for credit - whether for a credit card, a car loan, or a mortgage - lenders want to know what risk they'd take by loaning money to you. FICO® scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scores can help you qualify for better rates from lenders.
For your three FICO scores to be calculated, each of your three credit reports must contain at least one account which has been open for at least six months. In addition, each report must contain at least one account that has been updated in the past six months. This ensures that there is enough information - and enough recent information - in your report on which to base a FICO® score on each report.
About FICO® scores
Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the U.S. are produced from software developed by Fair Isaac and Company. FICO scores are provided to lenders by the major credit reporting agencies.
FICO scores provide the best guide to future risk based solely on credit report data. The higher the score, the lower the risk. But no score says whether a specific individual will be a "good" or "bad" customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single "cutoff score" used by all lenders and there are many additional factors that lenders use to determine your actual interest rates. However you can now see what interest rates lenders typically offer consumers based on FICO score ranges.
Other Names for FICO Scores
FICO scores have different names at each of the credit reporting agencies. All of these scores, however, are developed using the same methods by Fair Isaac, and have been rigorously tested to ensure they provide the most accurate picture of credit risk possible using credit report data.
Credit Reporting Agency FICO® Score
Experian Experian/Fair Isaac Risk Model
More than one score
In general, when people talk about "your score", they're talking about your current FICO score. However, there is no one score used to make decisions about you. This is true because:
Credit bureau scores are not the only scores used.
Many lenders use their own scores, which often will include the FICO score as well as other information about you.
FICO scores are not the only credit bureau scores.
There are other credit bureau scores, although FICO scores are by far the most commonly used. Other credit bureau scores may evaluate your credit report differently than FICO scores, and in some cases a higher score may mean more risk, not less risk as with FICO scores.
Your score may be different at each of the main credit reporting agencies.
The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the credit reporting agencies are different, it's probably because the information those agencies have on you differs.
Your FICO score changes over time.
As your data changes at the credit reporting agency, so will any new score based on your credit report. So your FICO score from a month ago is probably not the same score a lender would get from the credit reporting agency today.
contrary to james on point #2, if you are shopping for a loan, a mortgage for example, you are going to want to compare multiple offers, and since most lenders won't give you rates, until they know your credit, they are going to have to pull your credit, but comparing 5 companies for a mortgage, will appear as 1 "hit", as long as it is in a relatively close timeframe.
Do not close credit card accounts you no longer use as this will adversely effect your FICO score. Your FICO score is the determining factor by which you are made eligible or ineligible for loans, large purchases without a credit card and credit cards. The more unused credit you have available to you the higher your score will be. If you have a good amount of unused credit and a regular habit of paying on time, you're in like Flynn.
By Joan in CT
"don't shop around for loans of any type if each place is pulling your credit, these inquiries add up. "
That is simply not true.
"When a lender makes an inquiry about your credit, your score has the potential to drop up to five points. For this reason, some borrowers are afraid that comparison-shopping for a mortgage or auto loan will result in multiple deductions. This isnt the case. The score is set up to take into account that even though you are only looking for one loan, multiple lenders may request your credit report (i.e. make an "inquiry"). For that reason, all mortgage or auto inquiries made in the 30 days prior to when you choose your loan will not affect your score. To determine your score, the credit agencies also look back at any auto or mortgage inquiries that were made in the past two years (but are older than the 30 day window). If there are any within that 2-year window, all of the inquiries that fall into a normal "shopping period" are counted as just one inquiry when determining your score. The length of the "shopping period" varies depending on the version of the FICO scoring formula used by your lender and can be either 14 days (older versions of the scoring formula) or 45 days (newer versions of the scoring formula)."
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