How to Improve Your FICO Credit Score
What is Credit Score?
Credit score is a number used to measure your credit risk level. It's calculated from a lot of different credit data in your credit report, such as your payment history, the length of your credit history, the types of credit you have and amounts owed.
Usually, your credit score is generated by the software created by Fair Isaac Corporation--FICO, so it's called FICO score. 90% of the largest banks use the software. It can analyzes your credit report data and crank out a number (usually) range from 300 to 850. The higher your score, the less credit risk you will be, and the interest rate you are offered will probably be lower. If your score is over 700, it means that you have a good score and you can more financing options and better interest rates from your lenders. If your score is lower than 500, you may pay more money for your mortgage product.
Tips to Improve Your Credit Score Fast
If your score is lower, don't be discouraged, because there are many ways to improve your credit score. Follow these tips to improve your score fast:
1. Make sure to pay your bills on time. The longer you pay your bills on time, the better your score. If you have missed payments, get current and stay current.
2. Be aware that paying off a collection account will not remove it from your credit report.
3. If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
4. Keep balances low on credit cards and other “revolving credit”. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.
5. Pay off debt rather than moving it around.
6. Don't close unused credit cards as a short-term strategy to raise your score.
7. Don't open a number of new credit cards that you don't need, just to increase your available credit.