Take Control of Your FICO

FICO - What is it?

The best and most widely used credit report model in the U.S. is called FICO and it stands for Fair Isaac Corporation. FICO scores are based on a client's credit information and are what banks and other lending enterprises use to base their lending calls on. If you want a low rate of interest on a new loan, a high loan amount and little to no collateral or security, then you want a good FICO score.

Payment History

The most important part of your FICO score (35%) depends on your payment history so if you pay your balances on time you will have a better credit history. Delinquent payments can negatively impact your score, and late payments and collections have a major negative result on your score. Delinquency and collections stay on record for seven years, so consider carefully before filing for bankruptcy since it'll completely obliterate your score.

Outstanding Debt

The next largest chunk to determining your score is outstanding debt. Percentage owed on car loans and mortgages and the number of credit cards and the top their limits can lower your score. For credit cards, the rule of thumb is to keep your card balances at 25 percent or less of their limits.

Credit History - Are You Haunted?

The longer you have had credit cards open and good standing the better it looks on your record, so dont close your oldest accounts. Fifteen percent of your FICO score is based on your credit history. On a side note, remember to not open more credit card accounts than you really need.

Inquiries and Types

Numerous credit inquires within a short period of time can have a negative effect on your score. On the flop side, having several types of credit accounts in good standing can increase your score. It helps your credit to have several installment loans such as a car loan and a mortgage open along with a few credit card accounts.