How to Fix My Fico Score
My score is too low, can anyone help me understand why?
Fico Scores are used heavily in today's lending industry and you need to understand how they work and what makes up a Fico Score. Here are some other names you may have heard people use when pertaining to their credit score; Credit Report Score, Beacon Score, Equifax Score, Fico Score, Trans Union Score and Experian Score all pertain to your credit score.
What Makes Up the Credit Score
* 35% = Based on your payment history. (ie. on-time pays and delinquencies) More weight on good pay history. So it pays to keep good credit paid on time.
* 30% = Capacity (Capacity is King)
* 15 = Length of Credit
* 10% = Accumulation of debt over the past 12-18 months. #of Inquires, # open dates.
* 10% = Mix of credit. Installment debts will increase score, while revolving debt can lower the score. # of finance company loans also can lower the score.
What doesn't affect my Credit Score?
* Debt Ratio.
* Time at residence. Moving has no factor.
* Income = higher income does not make it better.
* Length of Employment
What Actions will hurt my Credit Score?
* Missing payments. It will take up to 24 months to fix slow payments on your credit report.
* Credit Cards Maxed out. Keep balanced below 70% of its limit.
* Closing out Credit Cards (This lowers your overall capacity)
* Shopping for Credit Excessively.
* Opening up to much credit in a short time frame.
* Having more revolving debt than installment debt.
* Borrowing from finance companies.
Approximate Credit Weight for each year.
* 40% = Current to 12 months
* 30% = 13-24 months
* 15% = 25 - 36 Months
* 10% = 37 month plus
How to Improve your Credit Scores!
* Pay Down On Credit Cards.
* Do Not Close Credit Cards because your Capacity will decrease.
* Continue making payments on time. Older slow pay will become less of a factor over time.
* Slow down on opening up new accounts.
* Acquire a solid credit history with years of experience.
* Moving revolving debt to installment debt.