Your FICO Score
is a three digit number ranging from 300 to 850 and was developed by Fair,
Isaac and Company, Inc., and designed to predict the possibility of a borrower
becoming seriously delinquent on their credit obligations. Higher FICO scores
represent lower credit risks, which typically equate to better loan terms. The
value of diligently tracking your credit score or FICO Score is often
underestimated. Your FICO Score Failure to know what is on your
credit report
can keep you from qualifying for loans and in far too many cases will cause you
to pay higher interest rates.
First, check to see what is on your credit report. You can usually obtain a
copy of your credit report for free on a trial basis from a number of agencies.
A recent law passed allows you to get one free credit every 12 months. You can
go here
to get your credit report. Take caution, however, not to overuse these offers.
Requesting too many credit reports can actually have the opposite effect on
your FICO score. When lenders see a large number of
credit report inquiries
they assume it is due to applying for loans and credit cards. This may
translate into money problems therefore can actually lower your FICO score. At
the most, you should only request your credit report one to two times per year.
That should be sufficient for you to stay on top of your credit score.
Make sure you obtain a three-in-one report, a report that encompasses all three
credit bureaus: Experian, Trans Union and Equifax. Each one calculates your
credit score or FICO score in a slightly different manner and may list
different items. It is in your best interest to find out what is being reported
by each agency. If you do have a bad credit score, some of the items that
contributed to your rating will take time to clean up, but the good news is
that some can be cleaned up in just a matter of days.
Save yourself some time and money and be leery of offers from companies who
claim they can fix your FICO score or repair your credit. In most cases, these
companies charge a small fortune and do very little. There is really no secret
to fixing your credit. You can do it yourself and save yourself their expensive
fees. There are legitimate companies and lawyers that specialize in credit
repair, however. Just be sure to get references and use caution when one wants
you to pay all fees upfront. You should only pay for services after they have
removed incorrect items from your report.
When you receive your credit report, be sure to review it carefully. There may
be some information that is incorrect. For example, you may notice that while
you distinctly remember paying off a bill in the past, it is now showing up as
delinquent on your credit report. In worst case scenarios, you may realize you
have been the victim of identity theft and someone else is having a good time
at the expense of your credit rating. You may also find debts that aren’t
yours, accounts you’ve never had, incorrect addresses, and multiple
misspellings of your name.
If you do see something on your credit report that looks suspicious or that you
know is completely incorrect, contact the credit bureau. You can contact them
at their toll-free number or write a letter. Keep it brief, but state in clear
terms what the situation actually is. If you paid off the bill, include copies
of backup documentation such as cancelled checks or receipts. Mail the letter
certified with a return receipt requested. If the credit bureau cannot verify
the debt or information in question within 30 days, they must remove it by law.
You should also be aware of what factors contribute to your FICO score. Payment
history, account balances, age of established credit, recent inquiries and
opened accounts, and credit mix are the five major factors that makeup your
credit score. Knowing these, there are several easy ways to improve your credit
rating or to prevent damage in the future.
Don’t succumb to offers for a certain percentage off a purchase if you open a
charge account. Typically department stores and retailers offer new credit card
applicants a one time discount on a purchase if you apply for their store card.
That 10% or 15% you might save on your purchase may not be worth the negative
impact on your credit score. If you have a lot of credit cards,
don’t feel you
need to get the scissors and start cutting, however. Credit cards can work to
your advantage if used properly and responsibly. For the most part, credit
score formulas look at the balances on your credit cards; if you have maxed
them out, etc. Closing out accounts won’t necessarily improve your credit
score. If you do have an account that has a zero balance, the zero balance
account is actually helping your credit score. One component of the score
analyzes what percentage of available is credit being used. A zero balance
reflects 0% of available credit for that card is being used and the lower this
number for your overall portfolio, the lower that component of your credit
score. Experts recommend that at any given time you should always have at least
25% of your remaining credit limit available and unused. Additionally, don’t
think that consolidating your credit card balances on one card will help your
credit score. Extensive moving around of money is a red flag to lenders and
will usually hurt you more than help you. Lenders know that it often catches up
with the borrower and thus, the FICO score may be lowered. If you can afford to
do so, pay your bills on time, ever month. It is often helpful to set up an
automatic bill pay or debt through your primary savings or checking account.
This will prevent you from forgetting to make your monthly payments.
Knockout Debt is not a credit repair specialist. What we are, however, are experts in debt negotiation. Our team can help remove unwanted debt from your credit report by negotiating discounted settlements for you with your creditors. Call us today to discuss your credit and how we can reduce your debts. To receive your free consultation please fill out the form to the right or call us toll free at 888-443-3328 and inquire about our debt solution. Become debt free today!