How to Improve your FICO Score
Business & Internet November 4th, 2007
What is FICO Anyway?
FICO was developed by Bill Fair and Earl Isaac of Fair Isaac Corporation, originally designed to assist mortgage lenders to determine the possibility that the borrower may default, or not pay, their loans and other financial obligations. Since it was developed by the Fair Isaac Corporation, it became known as the FICO score. Now, it is widely used outside of the mortgage lending profession. Your FICO score has become synonymous with your credit score.
Your credit and FICO score are aggregated by 3 major organizations:
You might be surprised at how important it is to keep and maintain a great credit score. Your credit score, often called your FICO, affects almost every aspect of your life including:
- How much house you can own
- How much can you mortgage
- Your monthly mortgage payment
- Your mortgage interest payment
- How much car you can own
- How much money you can borrow
- The interest rate you pay on loans
- How much interest you pay on credit cards
- How much you pay on insurance premiums
- Whether a company will hire you
- Whether an insurance company will insure you
- Whether an insurance company will pay your claim
- Whether a judge will award you a release on bail
- The amount of bail a judge might set for you
- Whether a landlord will rent to you
- How much of a security deposit a landlord will ask of you
- Whether a prospective spouse might marry you
- Whether a bank will issue you a credit card
- Whether a utility company will require you to pay a deposit
- Whether a telephone company will require a deposit
- Whether you are allowed to work in finance, insurance, or real estate
- Whether a retailer will issue you a private label credit card
Enough said? So, how do you…
Raise your FICO Credit Score
- Get a copy of your credit score
- Dispute all derogatory items
- Never close or cancel your oldest accounts
- Always keep open your oldest accounts
- Keep at least 3 good credit accounts open
- Close all other accounts with inactivity
- Request a credit line increase twice a year
- Request the maximum amount of credit they will offer you
- Keep your balances as low as possible
- Pay off your credit card balance every month if possible
- Always pay more than the minimum payment, even if it’s only $5 more
- NEVER be late or miss a payment
- Avoid responding to every credit card offer you receive
- Try to keep the number of credit inquiries down as low as possible
- Buy a home and take out a mortgage on that home