How to Do More for Your Credit Score

Your credit score, also known as your FICO Score, plays an important role when you apply for a mortgage. Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change - but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.

You can get a free credit report from each of the three credit bureaus once a year at AnnualCreditReport.com. This is the only source for free credit reports, and it’s authorized by federal law. It takes time to build credit for the first time, or to improve your score – there are no quick fixes. But here are some steps the people at FICO say will help improve your score.

  1.    Check your credit reports for errors. Get your free credit reports from all three credit reporting agencies and carefully review them for any information that is incorrect or not up to date. When you find an error or information is missing, contact the credit reporting agency that issues the report, as well as the credit card or lender that provided the incorrect information. Checking your own credit report or FICO Score does not impact your score in any way.
  1.    Pay your bills on time. This makes up 35% of the FICO Score calculation. Late payments and collections have a significant negative impact on your score. If you’ve missed payments, get current and stay current. The longer you pay on time after being plate, the more your score should increase. But if your bill becomes a collection account, it will stay on your credit report for seven years. If you’re having trouble paying bills, contact your creditors, or see a legitimate credit counselor. Seeking such assistance won’t hurt your FICO Score.
  1.    Reduce your amount of debt. Making up 30% of the FICO Score calculation is your credit utilization – how much the amount of your debt has used up your available credit. So, keep balances low on credit cards. Pay down your revolving (credit card) debt, rather than moving it around. Pay off the highest interest cards first, while maintaining minimum payments on the others. Avoid closing unused credit cards or opening new cards to increase your available credit – this could lower your credit score.
  1.    More tips from FICO. Starting out, it’s advices that you should avoid opening a lot of new accounts too rapidly. This lowers your average account age, impacting your score, and can look risky if you are a new credit user. Open new credit cards only as needed – not just to have a better credit mix, which is unlikely to raise your score. Note that closing an account does not make it go away. It still shows up on your credit report and may be used when calculating your score.

Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.

To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It's likely to take some time to improve your score significantly.

If you have any questions about your credit score, please let us know. We’re here to help!

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