In Today’s Uncertain Economy You Can Raise Your FICO Score

FICO the three main credit bureaus, Experian, Equifax, and TransUnion maintain a procedure to evaluate folk’s credit worthiness by arriving at and conveying a number to your credit report. They do not give away the exact formula however do make available a lot of information on how they get there at your (FICO) score. The score can manipulate many things in your life depending on whether you have a low, medium, or high score. The main use is clear, if you need to borrow money to buy a car, house, or pay your tuition for the next college session, you will need a respectable credit score. Uses that are not so obvious are:

1. If you are applying for an employment, your prospective employer might check your credit score. Some believe it tells them how dependable you are about commitments.
2. If you apply for car or any new type of insurance. Insurance companies believe it is an warning of the risk of writing a policy for you. It can also of course tell them if you will pay your bill or not should they let you pay it over time.
3. If you need to rent a home or apartment your new property-owner will in all likelihood check out your credit score beside with your references to assure them you will pay the rent on time.
4. If you are looking for a new mate or love in your life and put yourself on the market with one or more dating services, it’s more probable than not that eventually a potential mate will have your credit score checked. Sounds cold and calculating, but with Internet resources as available as they are, let’s face it, you are going to get checked out.So you can see that an excellent credit (FICO) score is important in today’s world. Credit scores range from 300 to 850 and your number is somewhere in between. The minimum score most home lenders require today is 620, but for the best loan interest rate and term you will need one in excess of 720. The higher the better is the rule. Now if you have a FICO score below 620, you don’t have to fold up your tent and silently steal away in the night, you can do something about it.

If you have a score below 500 it’s going to take more than just corrections it a bit and will take more than a little time to get it above 700, however you can do it over time. Here is the way to go about raising your credit score.

The first thing not to do don’t pay someone money to do it, there are a number of companies who say they will raise your credit score from 500 or so to above 700 in thirty days or less. Regrettably, all you will get from many after you have paid $1,000 or more for their service, is a bank account with less money and their unanswered calls and emails. There is no secret speedy and legal way to raise your credit score several hundred points in thirty days.

The following are things you really can do, and over time they will raise your FICO credit score.

1. Request a relative or friend to obtain a authorized User Master Card or Visa Card or An American Express Credit card with an excellent payment record that has been opened for at least 10 years.( within 45 days you will have an account that’s never late for 120 moths)
2. Get a copy of your credit report, you can get a free one once a year from each credit bureau at annualcreditreport.com, which is a government run service for that purpose. You can also get your report directly from any of the three major credit bureaus for a small fee. Evaluate the report line by line and underline any factual error, such as late payments that you think were on time, financial records that are not yours or any negative information over 7 years old. Put in writing to the credit agency and dispute any severe items. They are required to remove them or tell you why they don’t in thirty days. In many cases that’s all you need to do to get the negative information removed.
3. Stop using your major cards (Master card & Visa) and pay down the balances as rapidly as you can. You will move your score up as the differences between what you owe and your credit limit for each card grows. Try to owe less than 30% of your limit on all your credit cards, especially the major ones.
4. In March of 2009 credit issuers have been reducing credit limits on cards. That will lower your score if they do that to any of your accounts. Pay close attention to those limits each month when you receive your bill. If they have been lowered, call the card issuer right away and protest, asking them to reinstate your original limit, especially if you have been responsible with your handling of their card. In many cases that is all it will take to get the limit reset. Your alternative is that you can transfer the balance to another card or pay it off with an installment loan.
5. If you have one or more cards that you have charged up to the maximum limit, you may want to consider getting an installment loan and paying the balances down under 30%. The installment loan will be treated differently on the FICO formula (more favorably) and you will have better appearing credit accounts.
6. Another way to increase your score is by borrowing enough to pay down your accounts by borrowing from a friend or relative. The loan won’t show up on your report and your accounts that you paid down will raise your score. Now don’t pay off the accounts just pay them down to small balances. If you pay them off it will lower your score instead of raising it. A word of caution here, make sure you can afford the extra payments using this strategy and the one above.
7. Don’t let your accounts go dormant with no balances, several credit card issuers are closing dormant accounts and if they do close yours it can lower your score. Maintain a small balance on the accounts to keep them active. Keep in mind, accounts with a balance under 30% of the credit limit on the account means a higher score overall.

Use some of the methods I’ve suggested here, pay attention to your credit accounts and maintain them by making regular on time payments, and you will be surprised at how quickly you can have a score above 720.

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Posted by HUD Baltimore Homes on April 8, 2009. Filed under HUD Homes. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry