Improving Your FICO Score

Building a Good Credit Score

Planning on borrowing for a new home? Taking out a personal loan or are you looking at wisely adding a new credit card to your finances?

Chances are your ability to make many life affecting changes will be impacted by your credit score. Even in the professional arena, your FICO score may determine your ability to live your best life. A good FICO score allows you to obtain credit or access the money you need.

A good FICO score shows lenders that you are creditworthy and increases your eligibility for different forms of credit. Improving your credit score makes it more likely you will qualify for a fair interest rate with better terms on what you borrow.

A low score, on the other hand, can really hurt your ability to progress in your life and live with peace of mind. The low FICO score will hamper your eligibility for loans or to own a home. Borrowed money will be much more expensive as you are subjected to higher rates of interest. You will be paying more and your entire quality of life may suffer. This is bad news.

You can recover from bad credit, and it is relatively simple to monitor your score and take action to protect it. There are tools you can use and strategies to help improve your FICO score and care for your financial health.

Obtaining and reviewing your credit reports is a solid start to the protecting your financial history. Your credit card company may give you access to free reporting which could give you free insight into where you stand. As a consumer, you a free copy from each of the three credit reporting agencies—Equifax, Transunion, and Experian. If you search online you may be able to find reputable score reporting companies that aggregate this information for you. They can also give you insight into potentially derogatory marks against your credit and help you plan for tackling these.

Knowledge is power when it comes to building and protecting your credit. Credit reports allow you to dispute errors being reported in your credit history where debts or derogatory marks may be incorrect. You can write directly to creditors reporting in error and to the credit reporting agencies to dispute inconsistencies and inaccuracies on your report. This can help you to show your best footing on your credit report.

After you are able to clean up your credit report, the next step is to stay up to date and in good standing with your credit accounts. A good payment history of on time payments will reflect in your score and constitutes 35% of your total credit score. This is something that takes time to build so it is important to make it a habit of paying your debts on time and maintaining a good debt to credit ratio, with your balance accounting for 30% or less of your total credit. This ratio makes up 30% of your actual score. 

Once you get a handle on your credit, it is important to start working to reestablish good credit. It is a slow moving process that is often challenging, but making the right choices can put you well on your way even if you come from a starting point of very low credit. Obtaining a secured credit card where you pay prior to secure the credit balance is a great starting point for the consumer looking to rebuild their credit. On top of this you will want to keep any credit cards open. This will help your utilization ratio because closing a credit card increases the balance against open credit.

Dealing with debt and your financial future can be relatively straightforward if you get and stay on track. To learn more, visit we have resources available for you to get a better handle on your financial future.  Contact us today.