Get Free Credit Score – FICO Report

Jed C. Jones Ph.D. asked:




Your FICO, or credit, score is calculated independently by the Big Three credit reporting agencies (viz., Equifax, TransUnion, and Experian) based upon a shared formula. Your score has a huge influence on your financial health. An improvement of just 40 or 50 points can mean paying hundreds less per month for a 30-year mortgage, for example. Anything you can do to increase your FICO score can literally mean money in your pocket.

The creators of the FICO score, the Fair, Isaac & Company, hold their exact formula for calculating your score under lock and key as top secret. But, they have made public the 5 main components of your credit score and how heavily each component is counted in the formula. The breakdown is as follows (note: this information is subject to change at any time, so be sure to check the Fair, Isaac & Company Web site or recent press releases for the most up-to-date information):

Payment history: 35%

Amounts owed: 30%

Length of credit history: 15%

New credit: 10%

Types of credit used: 10%

Based upon these 5 components, here are some quick tips for keeping each one looking good in the eyes of the Big Three credit reporting agencies:

Payment history: Of course, if you have never made any late payments on any of your accounts, your payment history should look quite attractive. Items in your past that can bring down this part of your score are: bankruptcies, law suits, and wage attachments. Avoid these, as well as late or defaulted payments, and the payment history portion of your score will be squeaky clean.

Amounts owed: This component basically boils down to a ratio of the amount you owe to the amount of credit extended to you. Also factored in is the number of credit accounts you now have open. For example, if you have multiple credit cards with a total of $10,000 in credit lines but you owe a total of $5,000 on those cards, your ratio is 50%. Obviously, the lower the ratio, the better. In terms of the number of accounts open, credit bureaus like your having at least a few accounts open (to show you are capable of paying your debt), but they also do not want you to have too many accounts open (since that could make you look overextended). The guide here is balance.

Length of credit history: This component actually factors in two items: the total length of your credit history (i.e., how many years since you opened your first credit card account or got your first car loan, etc.) and the average length of time your current accounts have been open. In both cases, the longer, the better, in terms of your FICO score.

New credit: If you are building your credit score, try not to apply for too many new credit cards or loans at once. Instead, take your time and slowly build up a borrow/payback history with each loan instrument over the course of 6 months or a year.

Types of credit used: Having multiple types of credit can help your FICO score. This refers to, for example, a mix of revolving credit cards (e.g., MasterCard or Visa), charge cards (e.g., American Express or Discover), installment debt (e.g., mortgage or auto loans), store charge accounts, etc. Again, having these multiple types of credit is only useful if you keep the balances low relative to your total credit line (see “Amounts owed” above).

By remaining aware of what factors the Big 3 credit reporting agencies use to calculate your FICO score, you are on much more even footing in terms of aligning your spending habits, payback habits, and types of instruments you have open with their expectations of what constitutes a “good” borrower.

Glenn

kchabot asked:

A great video to watch to understand what a Fico Score consists of.

Ruby

ThePartnersTrust asked:

www.thepartnerstrust.com ~ Partners Trust’s Mike King on the different things to look out for that can have negative effects on your FICO score.

Tyrone

Alison Cole asked:




Credit score like FICO score examines the borrower’s credit history by taking into account several factors such late payments, the time your credit has been made, the amount of used credits against the amount of available credits and the length of time you’ve been living in your present residence. Credit scores also consider your employment history as well as your negative credit background. If your FICO score rating is bad, you don?t have a choice but to improve or repair it.

It is difficult to improve your credit quickly. However, FICO score repair is achievable over a span of time. And you can always do something to help with repairing a low FICO score and rebuilding a better credit record. There are lots of steps to repair and improve your credit score. And many of these things are easy to do.

Pay or Settle your Bills on Time

It seems so simple, right But it is the best thing to do in order to make your credit score higher and more acceptable. Late collections and payments definitely have a serious negative impact on your credit score. If you are encountering problems in paying your bills, try to talk to the lender and make arrangements. Debt negotiation of arrangements should be realistic so you won?t find it hard to follow that agreement. Don?t forget to document all your conversations with time and dates and the person you spoke with.

Minimize your Balances on Unsecured Debt

It is important to maintain low balances on your unsecured debts such as credit cards. Your credit score will negatively be affected by a credit card that?s ?maxed? out or has high outstanding balance.

Avoid Applying for Credit Too Often

If your credit report shows that you have a high number of inquiries, it can make your credit score bad. So if possible, do not apply for credit regularly. Also, try to take away the negative items in your credit reports. Be very sure that all the information there is accurate.

Frank

Jeff T asked:


My FICO last year was around 754. This year it went down to 732. Nothing has changed in my credit that I know of to lower it. I would love to be up in the high 700′s. Thanks for any help!

Kurt

Curt F asked:


Hi everyone. About five days ago I paid off both my credit cards finally. I’m trying to increase my FICO score so I can consolidate my student loans and reduce the interest rate. However, I only have 8 more days that I’ll be able to consolidate as the grace period ends this month. I was unaware that the FICO score doesn’t update automatically as ones credit status changes. Does anyone know how long this process takes and if there is anyway to speed it up? Thanks for your help.
-Curt

Irene

Helen Hecker asked:




Whether you have a good FICO score now or not, if you’re looking for ways to raise your credit score and clean up your credit report there are plenty of tips here on what you can do. One of the best ways to raise your score is the following:

Call your credit card company and ask them to raise the limit on your card or cards if you have more than one. Hopefully they will do that and this is just one way to go, but there are other ways to raise your FICO score too.

Once you get the increased limits on your credit cards, if you’re not currently using them you can and should make small charges on these accounts to keep them open but pay them off each month and on time. The purpose of these higher limits is to give you a greater amount of unused credit. The credit bureaus use these amounts in determining your score. The more you have available to you weighed against what you have used, the better your score will be and is reflected on your credit report.

Doing this will raise your credit score from between 30 to 50 points within six months.

Keep all your credit cards open. Also consider signing up for a new card and get the upper limits. Try to get a low interest card. You may be getting offers in the mail now. Even with slower economic times people still get offers in the mail.

It’s always best not to close a credit card account, because you reduce the amount of credit available to you. And your score and report are based on the history of these accounts also.

If your current credit card company attempts to raise your interest rate you can opt out and the company will send a letter to the credit bureau explaining that you’re not closing the account but opting out and they are closing it. This should not affect your FICO score, whereas if you closed it, it would. Before you opt out though, try to get another card if you need one so you’ll have it to fall back on should you need it. If you get it then call on the customer service line and say you want to opt out, not close the account.

If you follow some of these tips you should be able to raise your FICO score within six months. Make sure to make all payments on time because late payments can significantly lower your score and place some negative marks on your report. There are many other things you can do to raise credit scores also.

Scott