Tag Archives: FICO

34Your credit history is also a fundamental determinant of your overall score. Therefore, you should repair it appropriately. Your credit history is divided into categories basing on the data used to calculate your credit score. These categories can guide you to correct your credit history comprehensively enabling your credit repair process to be successful.

Check Your Credit Report Keenly
Begin your repairing process by thoroughly checking your credit report. This checking is meant to identify any errors that affect the score significantly. Ensure that there are no incorrectly listed late payments and all the amounts owed for every one of your open accounts is correct. In case you identify any errors, you should immediately raise a dispute with the credit bureau.

Set up Payment Reminders
Timely payments of your debts contribute significantly to your credit score. Some financing institutions send an email and text message reminders enabling you to make your payments on time. Though you can enroll in automatic payments debited from your bank account to avoid late payments, it does not show a sense of good money management skills on your behalf.

Reduce Amounts of Debts Owed
Achieving this feat is easier said than done. Nonetheless, reducing your debts gives you a sense of fulfillment more than it helps in your credit repair process. First, stop using your credit cards and check all your accounts to determine how much you owe and how much interest rate each of your accounts charges you. Come up with a plan that allocates more money to the accounts charging higher interest rates and maintain lesser payments on the other accounts.

Payment History Tips
In the past, there was no legitimate way to track down the consumers' credit activities. Nonetheless, the Fair Isaac Corporation designed a credit scoring system that is known as the FICO score. Since the three primary credit agencies have distinct information on each consumer, the FICO score calculated by these agencies are not equal. Payment history contributes up to 35% to your FICO score calculation. Though they have this significantly high percentage of effect to improving your score, past instances of missed and late payments are not fixed easily.

You can start your credit repair by making sure that your delinquent payments are made on time. If you had late payments, you should avoid any late payments in future to impact your score positively. The timely payments with time will neutralize the late payments since your good payment patterns will show that you have significantly improved your credit management strategies. Always remember that even if you pay off a collection account, it remains on your credit report for seven years. Whenever you encounter a financial crisis, contact your creditors and legitimate credit counselor to restructure your payments to suit your lower income comfortably.

Amounts Owed
The amounts of debts you owe contribute 30% of your total credit score calculation. This category can be cleaned more easily than payment history though it will require you to have strict financial discipline. Since high outstanding debt can take a toll on your credit score, you should keep all your credit cards and revolving credit balances low. Moreover, you should pay your revolving credit instead of moving it around.

You should never close your unused credit cards to raise your score quickly since having them same debt will be fewer open accounts may significantly your score. Also, you should not open new credit cards that you do not intend to use just to increase your available credit. Though it may seem like a brilliant idea, the strategy may backfire and lower your credit scores considerably.

Length of Credit History
Financial experts advise that if you have been managing your credit for just a short time, you should not open new accounts too rapidly. If you open new accounts, they lower your average account age and it significantly lowers your credit score considering that you do not have a lot of other credit information. Moreover, having a rapid account buildup makes you appear risky especially when you are a new credit user.

New Credit
Always do your rate shopping in a restricted period since FICO scores differentiate between a search for a single loan and that of many new credit lines. To enhance your credit repair process in the long term, you can open new accounts in a responsible manner and pay them off on time. It is also advisable to order your credit report right from the credit reporting agency or from a consumer credit reports providing organizations that are authorized. Obtaining your report through any other way may affect your score.

In conclusion, you should fix errors in your credit score history to kick-start your credit repair process. Then, follow all the guidelines that will enable you to create and maintain consistent, good credit history. Nonetheless, to rebuild and raise your credit score, you will need patience and discipline.

d6THE FIRST THING TO DO

The first thing to do is to get a free copy of your credit report. By law you're allowed annually one free copy of your credit report from the three major credit agencies: Experian, Equifax and TransUnion. It's important to get all three reports from all three agencies to compare and contrast any discrepancies such as late payments, charge offs or delinquencies.

SET ASIDE SOME TIME TO REVIEW

Now that you've gathered all the information from the credit agencies, set aside some time to figure out where you went wrong with your credit and prepare to fix it. If there are any items on your credit report that are wrong or don't look familiar, file a dispute in writing. Even errors such as misspelling of your name, social security number or address could mean your personal information is mixed up with someone else. The credit agencies are obligated to remove any errors in personal information, which will help increase your score. The most highly used credit score scale used by the largest banks and lenders is the FICO score and generally a score of 720 and above is considered good.

MONITOR YOUR CREDIT REPORT

One important factor to raising your credit score is to make sure you pay your bills on time. While this may not seem important, 35% of your FICO score is determined by your history of payments made - whether you were late or current with your obligations. During this time of repairing your credit, you should prohibit yourself from applying for any additional credit, which may lower your score. If you have any other credit cards you don't use as frequently, use them to make small purchases every few months to help grow your score and pay the bill off in full. If there are any outstanding balances from other cards stop using these cards until you pay them off even if it's the minimum amount.

SEEK A CREDIT REPAIR COMPANY

If you don't want to repair your credit on your own, you can go through a company that specializes taking care of that task for you. Many companies advertise that they're the best and can help you clean up your credit within a short period of time. It's very important to do your research on various credit repair companies to avoid getting scammed. Ask friends or family about a reputable credit repair company they may have used. Be prepared to pay associated fees with such a company.

REBUILD CREDIT

If you're afraid to delve into the credit game after getting your credit score on the right path, obtaining some type of credit is key to rebuilding and keeping your good score intact. Look into getting a secured credit card, which is fairly easy to apply for. The good thing about a secured card is you put down a security deposit and whatever purchase is made will directly debit from the card. Managing the account properly and having this card reported to the three credit agencies will help maintain a good credit rating.

Once you get the secured card, don't go on a spending spree and reach your card's limit. You may have the idea in your head that swiping the card as much as possible will improve your credit score but it may look as if you're about to max out to the credit agencies. You will want to use about 10-25% of available credit from the card to have a favorable score.

sA BOUNCED CHEQUE

A bounced cheque is one of those reports that will never show up on the traditional credit report. This however, does not make its potential implications on your credit score any insignificant. While your bank may not list your bounced cheque case with the credit bureau, you might still find the record listed due to a bounced cheque that was taken up by a collection agency, civil or criminal charges against you owing to it or writing it to a company which reports to the credit bureau.

The bank may also list you on their ChexSystem which means your ability to open a checking account with another bank is not only limited for some years duration but also your credit limit is reduced.

FREQUENT APPLICATION OF NEW CREDIT CARDS

Anytime you apply for a credit card or a loan, the lender performs an analysis known as the 'Hard Credit' inquiry which seeks to review your credit score profile. This exercise will determine your FICO credit score to a tune of 10% and the score sticks to your credit report for a period of two years.

Frequent application of new credit cards also insinuates you are a financial risk to the lender. Statistical analysis has proved that having numerous new credit cards in a short time span is a bad indicator of an individual's financial responsibility hence it causes a drop on their FICO score.

DELAYED PAYMENTS

Delayed payments are characteristic in high risk debtors due to unreliability. With your payment history accounting for 35% of your credit rating, you run the risk of having your bank sell you out to the collection agencies or notify your late payment to the credit bureaus. Both of these have a negative effect on your credit rating especially if the delay exceeds 30 days. This period will however vary from one institution to the other.

A singe late payment may soil your previously good credit rating, though this takes into consideration the severity of the delay, its frequency, and current credit score and how recent it occurred. This might be avoided where you reach out to your lender for a compromise in payment method in cases where some personal issue has arisen making your prior arrangement hard to comply with.

CO-SIGNING FOR FRIENDS AND FAMILY

Before endorsing friends and family for a loan, you may need to consider its effect on your credit rating. Co-signing for a credit with a very high balance could affect your utilization ratio, consequently causing a drop in your credit score.

As a guarantor, you take up the responsibility of ensuring full settlement of the loan by the borrower in accordance to the stated terms. A default or inconsistent loan servicing by the borrower lowers your credit score.