Raise Your FICO Score
by Caton Hanson
A FICO score is one essential part have knowing how to manage your finances. The number is determined using a very difficult and confusing system used by lenders and underwriters. It is not necessary to know everything about this system but knowing a thing or two can prove to be a large benefit to you in keeping up your score. The more your know about the system, the more you can use it to your advantage and this is really the way of keeping your credit score afloat. It is key.
Before anything, you need to know the basics of the FICO system. The first place to start is understanding the FICO ladder. A FICO score is somewhere between 300 and 850. Didn't know that? You should. If you didn't, that's okay, because after today, you will know a lot more than most people do about FICO scores. The best spot to be is somewhere between 720 and 850. This is wonderful. Again, if you're not in this range, it's okay, anything above 675 is still good. If it's below that, then... you can worry a little. But just a little because there are still ways to bring it up. The lowest score is 300 and if this looks like yours then you are in trouble, you should worry, and I cannot help you.
A FICO score is composed of many different parts. To determine your FICO score a bureau looks 35% at your paymnet history, meaning how many payments are delinquent or late. If a payment is past thirty days late, it is reported to a bureau and they will then lower you FICO score. Another 30% of you FICO score depends on you credit/debt ratio. Not know what this means? That's ok too. Let's say you have a credit card with 10,000 dollar limits. If you have used 4,000 of that, your debt-credit ratio is 40/60. This is ideal.
15% of the FICO score is based on how long you have had credit. Not only credit in general, but also a particular line of credit. If you have a car payment and have made regular payments for the last three years, this is actually better than paying it all off in cash. At least for your credit score. There is a point of diminishing return though so this isn't always the smartest move.
Some special factors that can influence your FICO credit score include money you owe due to a court judgment or tax lien. These can carry a very large credit score penalty. If you have more than a particular number of consumer finance credit accounts, you will also find that your score is impacted negatively. The number of credit checks made recently can also lower your score, although the credit bureaus do allow for a certain number of checks in a particular window of time, such as might occur when you are shopping for the best rate on a loan.
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Source: http://www.PopularArticles.com/article181749.html
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