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Ten Ways to Improve Your
FICO® Score
Provided by the credit
scoring experts at Fair, Isaac and Company
When you apply for credit,
your credit score helps lenders decide how likely it is that they
will get paid back on time. The most
widely used credit bureau scores are developed by Fair, Isaac and
Company. These are known as FICO
scores. With a higher score you’ll be able to qualify for better
interest rates, higher credit limits, and more types
of credit than you would with a low score.
There are no tricks or quick
fixes to getting a good credit score, but you can raise your score
over time by demonstrating that you
consistently manage your credit responsibly. Here are 10 tips that
can help you raise your score:
1. Pay your bills on time. Proving
that you can pay your bills on time is the best thing you can do
to improve your score. And it’s
never too late to start. Even if you’ve had serious
delinquencies in the past, these will count less over
time.
2. Keep credit cards
balances low. High outstanding
debt can pull down your score.
3. Check your credit report
for accuracy. There may be
inaccurate information on your credit report that can be easily
cleared up. Always contact the original
creditor and all three credit bureaus whenever you clear up an
error, so that the inaccurate
information won’t reappear later. Requesting a copy of your
credit report won’t affect your score
if you order it directly from the credit reporting agency or an
authorized organization.
4. Pay off debt rather than
moving it around. Consolidating
your credit card debt on one card or spreading it over multiple
cards will not improve your score in the long run. The most
effective way to improve your score is by simply
paying down the amount you owe.
5. Have credit cards—but
manage them responsibly. In
general, having credit cards and installment loans which you
pay on time will raise your score. Someone
who has no credit cards tends to have a lower score than someone
who has managed credit cards responsibly.
6. Don’t open multiple
accounts too quickly especially if you have a short credit
history. This can look risky
because you are taking on a lot of
possible debt. New accounts will also lower the average age of
your existing accounts, something
that your FICO score also considers.
7. Don’t close an account
to remove it from your record. A
closed account will still show up on your credit report, and
may be considered by the score. In fact,
closing accounts can sometimes hurt your score unless you also pay
down your debt at the same time.
8. Shop for a 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, based in part on the length of
time over which recent requests for credit
occur.
9. Don’t open new credit
card accounts you don’t need. This
approach could backfire and actually lower your score.
10. Contact your creditors
or see a legitimate credit counselor if you’re having financial
difficulties. This won’t
improve your score immediately, but
the sooner you begin managing your credit well and making timely
payments, the sooner your score will
get better.
These tips won’t create a
dramatic overnight jump in your credit score—developing a solid
credit history takes time. A good
first step is to order your FICO score through myFICO.com.
When you get your score, you’ll also get
an explanation of your score, ways you can improve it, and a full
credit report from Equifax—one of the three major
US credit reporting agencies.
For more information visit www.myFICO.com
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