by Jay Peters
http://credit-secrets-bible-online.com
©
2009
Your credit score is based on information about you
from companies that gave you credit in the past. They report on your payment history
to the credit reporting bureaus, who then develop a numerical credit score. It's
often called a FICO score after the Fair Isaac Corporation.
Your
FICO scores determines how high an interest rate you'll pay on your loans, credit
card balances, and home mortgage. The higher the FICO score, the lower the loan
rate. FICO scores range from 300 to a perfect 850. Anything under 700 is in need
of improvement. In this article you'll learn some common sense tips for improving
your FICO score.
Pay your bills on time.
It's
amazing how many people understand this simple concept, yet they still suffer
from a few "late-pays" every year. The solution may be as simple as
establishing a prominent location for filing your bills to be paid. That way you'll
never "discover" an unpaid bill hiding under your car seat or in the
pile of magazines.
Here's an insider tip: The older the
late-pay, the less damaging it is to your FICO score. So target your new late-pays
by calling the creditor, telling them you are making an immediate payment, and
you'll be surprised how many will drop the late-pay fee as a matter of good business.
Any late payments you make will lower your score, but establishing a good track
record of making payments on time will raise your score.
Get
a copy of your credit report.
You are due a free copy of
your credit report every 12 months from each of the three major consumer credit
reporting companies. The three companies have set up a central website, a toll-free
telephone number, and a mailing address through which you can order your free
annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or
complete a request form and mail it to: Annual Credit Report Request Service,
P.O. Box 105281, Atlanta, GA 30348-5281. You may order your reports from each
of the three nationwide consumer reporting companies at the same time, but if
you order the reports one at a time every four months you'll have a picture of
your credit over the course of the year.
The whole purpose
of getting your credit reports is to look for any inaccurate information in your
credit reports and then work with the credit bureaus to remove that data.
Keep
low balances on credit cards, but don't pay them off.
Credit
card companies want you to run a balance on your account; after all they make
their money on your interest payments. So, don't pay off the entire balance each
month. Leave a relatively low balance to demonstrate to new potential lenders
that you can handle credit in a responsible way. Your FICO score will thank you
for it.
Increase your line of credit, but don't open credit
cards you don't need.
Your line of credit is the sum of
all the credit limits on your accounts. A high credit limit helps raise your FICO
score. If you have a good track record with a credit card company, you can call
them, and ask for a higher credit limit. But don't open a lot of new credit cards
just to raise your credit limit. New accounts will lower your "average account
age", which will actually lower your FICO score.
These
are just a few of the common ways to raise your FICO score. There's no better
time than right now to get started, since the process is not instantaneous. It
takes time to earn a better credit score, but the rewards in lower interest rates
make the process well worth it.
