Credit Score Factors?

Because the FICO credit is the most widely used for calculating a person credit score. So in this article we’re going to focus on how to improve your FICO score. But before we get ahead of ourselves, let’s first take a look at how it’s calculated. FICO calculates your credit score, and they breakdown is determined by the following benchmarks:

35% Payment history 30% Outstanding debt 15% Length of credit history 10% Types of credit in use(revolving or fixed. 10% Recent inquiries on your credit report .

1. PAYMENT HISTORY. This criteria takes your track record into account and accounts for 35% of your score. Thefirst thing any lender wants to know before given credit approval is how timely you’ve been in paying loans in the past. Late payments will automatically drop your score, while a good track record on most of your credit accounts will raise your score.

Also, public record and collection items such as bankruptcies and foreclosures will show up in this section, but if they are more than 7-10 years old they should be removed from you credit. If there not taken off, it shouldn’t cause do too much damage if your’re current payment obligations have been paid on time.

2. Debt Ratio Approximately 30% of your FICO score is based on your debt to equity ratio. When you almost close to hit the credit limit on all, or most, of your accounts, your credit score will take a hit, and be lower. So to a lender, this basically means that you’re over-extended, and may be at risk if more credit is extended to you.

3. LENGTH OF CREDIT HISTORY. 15% of your credit score is based on the lenght of your credit history. FICO tracks the age of your oldest account, your newest account and the average age of all your credit accounts. However, a longer credit history, especially when it shows a steady record of timely payments will increase your credit score.

4. REVOLVING OR INSTALLING ACCOUNTS. 10% of your FICO score is based on what kind of credit accounts you have. FICO looks at your mix of both installment-type and revolving accounts including credit cards, merchant accounts, finance accounts, and mortgage loans. You do not have to have one of each to get the highest score.

5. INQUIRIES AND NEW CREDIT 10% of your FICO score is based here. A credit inquiry is an item on a credit report that shows a business with a “permissible purpose” has previously requested a copy of the credit report. If you have many of these,lenders more think unfavorly because you apply for credit too much. As for new credit, If you only have a few credit accounts and some of them are old and never used, consider buying something small with those to keep them open. Then pay them off in full. This will keep those creditors from closing your accounts and will also make it easier for them to give you new or higher credit if you need it.

If you have opened several credit accounts in a short period of time, it presents a greater credit risk and can lower your score. Lenders frown upon this because they think you are just trying to get lines of credit.Every time you apply for credit, an inquiry is placed on your credit report. This inquiry can temporarily lower your credit score as much as 5 points per inquiry.

How Is YOUR Credit Score?

Generally speaking, if your FICO score is over 700, you should be considered at least a very good credit risk, and you won’t have problems getting a low loan rates.

670 to 699 is still considered good, but some lenders may not offer you the same rate deals as they do to those who have FiCO scores over 700.

630 to 669 is considered a fair credit score, but anything below that is considered poor.

Always remember that your FICO score is based on data in your credit report. So it’s very important to make sure the information in your report is accurate. So, the first order of the day is to get a copy of your credit report.

Having a poor credit record with a history of slow payments can hit you hard in all kinds of places. Obviously, if you buy or refinance a home, you’re likely looking at a higher mortgage rate. Same goes if you need to finance a new or used car. Take a look at Debt-Help-Reviews to get your free report on to raise your credit score.