What
is a FICO Score? - Improving
Your FICO Score
What
is a FICO Score?
FICO stands
for Fair Isaac Company. It is a little score that
immediately tells the creditor your credit worthiness. An example of a
great score is anything above 720 and a bad score anything below 550.
While FICO's
secrets remain secrets, there are some things that people have figured
weigh into the evaluation of the FICO score. While you may have no negative
listings on your credit report, there are still some factors that will
bring your FICO score down.
They are:
1. Having too much debt vs. available credit. If you have some credit
accounts in which you're maxed out, it will most likely bring your FICO
down.
2. Having too many lines of credit open. If you have 24 credit cards you
may be considered a higher risk due to your opportunity to get into trouble.
Plus, 24 credit cards is just rediculous.
3. Having too few lines of credit. If you only have 1 line of credit,
you really haven't proven that you can play the credit game without going
delinquent. The suggested number of lines of credit would be 5-7. Anything
more or less than that makes you a more risky customer. Lines of credit
could be car loans, credit cards, bank loans, house loans, boat, motorcycle
or ATV loans, ect. If you are a business owner, look for cards that aren't
listed on your credit report, and won't bring your fico score down due
to the high fluctuating balances.
Improving your FICO score:
The suggested ways in which you can improve your fico score are
to keep your accounts in good standing, keep all of your debts paid off
or low balances, and only open the credit accounts you need. There is
no FICO repair service that exists, yet the fico score is based in part
on the negative items on your credit report, so by getting these cleared,
you may start on the path to lower mortgage, car, and credit card rates.
If you can start having credit work for you instead of against you, real
wealth can accumulate.
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