Credit Tips – Understanding Your FICO Scores So You Can Improve Them

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Understanding Your FICO Scores

Your FICO scores pretty much control your financial future so it is very important to know how they are figured. You should have a plan of action to get the best FICO score possible. We suggest you go to www.AnnualCreditReport.com and pull your report every 4 months.  Also, know that www.CreditKarma.com won’t be as accurate as an actual report.

There are 5 Parts to Your FICO Score

  • Payment history (35% of your score)
  • Amount of Debt Utilized  (30%)
  • Amount of new credit (10%)
  • Length of credit history (15%)
  • Credit Mix (10%)

Payment History

  • 1 missed 30 day payment can knock of 50 points on your FICO score.
  • FICO reports will show the last 24 months of your payment history
  • Bankruptcy stays on the report for 7.5 years
  • Foreclosures, liens, lawsuits, etc. stay on the report for 7 years
  • After 180 days a debt is considered a bad debt and collections can start.

Amount of Debt Utilized

  • Mortgages, Car loans, Student Loans, Credit Cards, etc.
  • Anything above 30 percent utilization on your available credit can hurt your FICO credit score
  • Tip – Pay all credit card bills 5 days earlier than they are due because their balances will be figured towards your debt utilization if not paid before the cycle date which is usually the same as the due date.
  • Tip – Pay off your accounts but don’t close them. It will help your FICO score from them to be available to you and not used.
  • Tip – Only use credit for transportation, education, or a home.

New Credit

  • Opening a bunch of accounts all at once will send up a red flag to FICO and it will hurt your score.
  • Tip – Open your credit accounts over time separated by months.

Length of Credit History

  • A long, good credit history is good for your FICO score.

Credit Mix

  • It’s best to have a mix of credit from a car loan to a credit card to student loan.

A Debt Coach offers credit counseling services to people who are experiencing credit and debt problems! We create customized plans with your budget in mind and deal directly with your creditors. No gimmicks, no funny business! Both the Government and your creditors are happy that we are here to help you solve your financial problems. 

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About A Debt Coach

logoA Debt Coach is a Non-Profit Credit Counseling Agency that helps consumers find options available for the financial problems they face. We offer credit counseling services to clients across the country who are experiencing credit and debt problems. A Debt Coach offers one of the most beneficial debt consolidation programs in the nation and we have provided counseling and advice to more than 200,000 consumers since 1992.
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Did you know that A Debt Coach provides free financial education and advice?We provide the advice so that people can get their lives back in order! The free education starts by downloading our free “Own Your Life” ebook.

Everyone who downloads the book will be approached to start the “Budget Bootcamp” with Randy after you read the book! Randy will help you create the best budget for your situation and put you on a glide path towards being totally debt free!

 

 

 

Posted in Credit Scores.