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HOW DO THEY CALCULATE MY FICO SCORE?
FICO Score
Your FICO Score is a three digit number ranging from 300 to 850 and
was developed by Fair, Isaac an Company, Inc., and designed to predict
the possibility of a borrower becoming seriously delinquent on their
credit obligations. Higher FICO scores represent lower credit risks,
which typically equate to better loan terms.
The value of diligently tracking your credit score or FICO Score is
often underestimated. Your FICO Score and failure to know what is on your
credit report can keep you from qualifying for loans and in far too
many cases will cause you to pay higher interest rates.
First, check to see what is on your credit report. You can usually
obtain a copy of your credit report for free on a trial basis from a
number of agencies. A recent law passed allows you to get one free
credit every 12 months. You can click HERE to get your credit report.
Take caution, however, not to overuse these offers. Requesting too
many credit reports can actually have the opposite effect on your FICO
score. When lenders see a large number of credit report inquiries they
assume it is due to applying for loans and credit cards. This may
translate into money problems therefore can actually lower your FICO
score. At the most, you should only request your credit report one to
two times per year. That should be sufficient for you to stay on top of
your credit score.
Make sure you obtain a three-in-one report, a report that
encompasses all three credit bureaus: Experian, Trans Union and
Equifax. Each one calculates your credit score or FICO score in a
slightly different manner and may list different items. It is in your
best interest to find out what is being reported by each agency. If
you do have a bad credit score, some of the items that contributed to
your rating will take time to clean up, but the good news is that some
can be cleaned up in just a matter of days.
Save yourself some time and money and be leery of offers from
companies who claim they can fix your FICO score or repair your
credit. In most cases, these companies charge a small fortune and do
very little. There is really no secret to fixing your credit. You can
do it yourself and save yourself their expensive fees. There are
legitimate companies and lawyers that specialize in credit repair,
however. Just be sure to get references and use caution when one wants
you to pay all fees upfront. You should only pay for services after
they have removed incorrect items from your report.
When you receive your credit report, be sure to review it
carefully. There may be some information that is incorrect. For
example, you may notice that while you distinctly remember paying off a
bill in the past, it is now showing up as delinquent on your credit
report. In worst case scenarios, you may realize you have been the
victim of identity theft and someone else is having a good time at the
expense of your credit rating. You may also find debts that aren’t
yours, accounts you’ve never had, incorrect addresses, and multiple
misspellings of your name.
If you do see something on your credit report that looks suspicious or
that you know is completely incorrect, contact the credit bureau. You
can contact them at their toll-free number or write a letter. Keep it
brief, but state in clear terms what the situation actually is. If you
paid off the bill, include copies of backup documentation such as
cancelled checks or receipts. Mail the letter certified with a return
receipt requested. If the credit bureau cannot verify the debt or
information in question within 30 days, they must remove it by law.
You should also be aware of what factors contribute to your FICO
score. Payment history, account balances, age of established credit,
recent inquiries and opened accounts, and credit mix are the five major
factors that makeup your credit score. Knowing these, there are
several easy ways to improve your credit rating or to prevent damage in
the future.
Don’t succumb to offers for a certain percentage off a purchase if
you open a charge account. Typically department stores and retailers
offer new credit card applicants a one time discount on a purchase if
you apply for their store card. That 10% or 15% you might save on your
purchase may not be worth the negative impact on your credit score. If
you have a lot of credit cards, don’t feel you need to get the scissors
and start cutting, however.
Credit cards can work to your advantage if used properly and
responsibly. For the most part, credit score formulas look at the
balances on your credit cards; if you have maxed them out, etc. Closing
out accounts won’t necessarily improve your credit score. If you do
have an account that has a zero balance, the zero balance account is
actually helping your credit score. One component of the score
analyzes what percentage of available is credit being used.
A zero balance reflects 0% of available credit for that card is
being used and the lower this number for your overall portfolio, the
lower that component of your credit score. Experts recommend that at
any given time you should always have at least 25% of your remaining
credit limit available and unused. Additionally, don’t think that
consolidating your credit card balances on one card will help your
credit score.
Extensive moving around of money is a red flag to lenders and will
usually hurt you more than help you. Lenders know that it often
catches up with the borrower and thus, the FICO score may be lowered.
If you can afford to do so, pay your bills on time, ever month. It is
often helpful to set up an automatic bill pay or debt through your
primary savings or checking account. This will prevent you from
forgetting to make your monthly payments.
At Professional Debt Advisors we are not credit repair
specialists. What we are, however, are experts in debt resolution.
Our team can help remove unwanted debt from your credit report by
negotiating discounted settlements for you with your creditors. Call
us today to discuss your credit and how we can help reduce your debts.
To receive your free consultation please fill out the form on the
right or call us toll free at 866-559-3328 and inquire about our debt
solution. Become debt free today! |
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Debt Settlement - Straight Talk