Improving Your Credit Score - Tips for Success

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Bill Fair and Eric Isaac. Have you heard of them before? They are the F (Fair) and I (Isaac) of FICO. Founded in 1956 these two gentlemen created a particular system of measuring risk that is the most widely used score for industry professionals. Everyone is entitled to know their FICO credit score and there are scores (pun intended) of websites available to help you get yours.

Having a good credit score, which is now considered to be in the ballpark of at least 700 points, is the determining factor that decides how much interest you are going to pay on major purchases such as a mortgage, car loans, equity lines, credit cards, and other sources of credit and loan. This three digit number will also decide how much of a credit limit you have been awarded.

So what goes into making this vital score that determines the course of our finances? Let me do a simple and basic breakdown.

10% - Recent research into obtaining new credit (i.e. Have you recently been applying for new credit cards?)

10% - The types of credit that you use (Installment loans, revolving, etc.)

15% - Accounts for the length of credit history you have (The longer, the better)

30% - Expresses the amount of debt you have in ratio to the amount of credit you have available.

35% - Getting your payments in on time. Late fees are not the only thing you will be paying for.

As you can see, so much of keeping our credit score in good standings is paying our bills on time. Lenders love to know that if they are going to loan you a certain amount of money, they can count on you to be reliable in paying them back.

There are other things that affect your credit. Settling on your credit cards and closing the accounts will negatively impact your credit. Letting your account expire because of inactivity will close your account as well. If you call your creditors and ask to be put on a program to pay off the balance of your credit line, they will likely close your account without you knowing it, unless they state otherwise. Tax liens, court rulings, and the number of recent credit checks can also weigh down your credit score.

People have figured out ways to increase their credit score in simple ways such as opening new lines of credit with the purpose of increasing their credit debt to available credit ratio. They will do that by opening several department store cards and making sure they do not spend the credit that was given. If you decide to do this to add a few more points to your score beware of fees that the bureau may penalize you for opening so many accounts at once.

Other people have gathered together simple facts and procedures to making your credit score improve significantly. If you are interested in learning more about improving your credit score, please see the recommendations tab on my website at http://www.dianathecreditcounselor.com/index.php?p=1_5_Recommendations for more information. May you have happy credit days ahead!

Sincerely,

Credit Counselor,

Diana E. Jones

About the Author:
Diana Elaine Jones works as a credit counselor on the east coast financial district in the United States. Her passion is educating people to live debt free and she daily recommends tools to help people get on their way to living financially sound.