Tips to Improve Your FICO

One of the largest determinants of overall financial health is your credit rating. Without a good FICO score you will have a difficult time obtaining a mortgage, auto loan, personal loan, or credit card. By having a good score you will not only drastically increase your chances of obtaining a loan, but you will also receive lower interest rates which will save you thousands of dollars in interest expenses over the course of your lifetime. If you have a poor credit rating, there are several tips to improve your credit.

The first of several tips to raise your credit rating is to make all of your payments on time. The largest single determinant of your credit score is how you have paid your creditors in the past. If you historically have not paid your bills on time, paying your bills on time going forward is the first step to improving your score. While late payments will remain on your credit score for 7 years, your credit score will increase after successfully making payment on time for a full year.

The next tip to raise your credit score it to pay down your credit card balance. Next to timeliness of payments, your level of outstanding credit card balances is the largest determinant of your credit score. For the best possible credit score, aim to keep your balances at 20% or less of your total limits. For example, if you have a total credit limit of $10,000, your balances should be below $2,000. If you pay down your credit card balances so they are less than 20% of your limit, your credit score will improve immediately. If you do not have the cash on hand to pay down your credit cards, you may want to consider calling your creditor and seeing if they would be willing to raise your credit limit. This would result in a lower overall credit utilization ratio.

The last of several tips to raise your credit score is to pay off charged off accounts through a pay for delete. If a creditor has ever charged off your account because you refused to pay back your debt, they most likely have written off your account. A charged off account will significantly affect your credit score, and will continue to do so for up to seven years after the account was written off. If you contact the creditor, they may be willing to delete the account from your credit file in exchange for payment in full.