FICO scores are developed from "Fair Isac & Co". These scores show your credit worthiness and lenders will determine if they should lend to you based on this score. The three score keepers of your FICO are Trans Union. Experian and Equifax

You are permitted to receive a free credit report once a year from any of the 3 score keepers. Use Free Credit to check your scores. The reports will show all of your credit history, amount you have borrowed from creditors, mortgages and loans. Your payment history will show any missed or on time payments dating back 12 months. Bankruptcies, foreclosures will both show up and stay on your credit for 7 to 12 years. You will have to pay 7 dollars to receive your actual score and I would still recommend doing so. This is a great time to make sure your credit is in check and you have no unauthorized credit.

What makes up for FICO score?

  • 35% -Payment History. Late, missed and on time payments account for most of your score.
  • 30% -Amount owed to creditors vs. available amount to borrow. Lets say you have a 10k limit on your Master Card and you are borrowing half of that amount 5 thousand (Your debt ratio would be 50%). The lower you can keep the "%" borrowed will help your credit score higher.
  • 15% - Length of credit History. This shows creditors how long you have had credit, either good or bad. Never close old credit cards even with not so good standing. Once a card is closed your length is based on your open accounts only. If you have 3 cards, 1 card is 10 years and the others are 5 and you are looking to close accounts than close one of the 5 yr old cards. Multiple open accounts with zero balance can never hurt you, cut them up and throw them away if you want, but do not close them.
  • 10%- New Credit- Have you been applying to multiple creditors? The more applications completed to obtain credit will HURT you. This shows you are desperate for credit and they do not like it. I have seen many credit histories that show with in one day that 7-10 credit pulls from multiple lenders were made. This was due to a car purchase and the car dealer throwing your credit to multiple lenders. When buying a car and financing make sure you tell the dealer to only give out your credit to TWO lenders.
  • 10%- types of credit used - A Mix of credit on your report is good. Credit cards, mortgages and other loans with good standing show you are apt to make on time payments and credit worthy.
Focus on these core percentages and your FICO will be strong. Credit scores range from 300 to 850. For mortgage approval with a decent rate a credit score of at least 720 will be needed.

Keeping a high FICO will allow you to make home purchases and receive a lower rate when ever credit is applied for. You will be given a larger credit limit and be approved much more easily when a higher score is in hand. If you keep on time payments on all open credit and loans and keep a very low amount owed (preferably zero) on your credit cards along with at least 5years of history you will have a mid 700 FICO Score. So go check it out!


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