How To Improve Your FICO Score

How to improve your FICO score? That is what we will discuss here. Your FICO score is very important to you. It tells lenders about your credit worthiness and your likeliness to repay a loan. You need to know what this number is, and if it is low then you need to make some changes in your spending and money management behaviors. Keep reading and we will show you the answers on how to improve your FICO score.




Your FICO score is a number. The higher the number, the better your credit worthiness. A low number means getting credit will be difficult. Also a higher score means lower interest rates. So, let’s look at how to improve your FICO score. First, get a copy of your credit report from the three major credit bureaus. These are Experian, Equifax and TransUnion. Once a year, you can get your credit report from all 3 for free. We urge you to do this. It makes good financial sense. The cost is nothing, you can order the reports online and have them either mailed or electronically delivered to you. If you have ordered once already, then you’ll have to pay a small fee to get the reports. We suggest ordering the report and your score (they are separate from each other). It costs a little more, but it is important. Now that you have this information, what is the next step?




Armed with the information in your credit report and your FICO score, you can now start to make significant changes. In order to greatly improve your score, you need to clear up any collection accounts -- even the old ones. Collection accounts will trash your FICO score. Clear them up, pay them off and make arrangements with the collection agency or creditor that they either remove the collection record, or it is reported as current and paid as agreed. You’ll have to pay them first, but get it in writing before you send them money that they will do this. Send them an agreement and make them sign it. Send all correspondence by certified mail. Now that you have dealt with your collection account, let’s look at your credit cards. Are you carrying a balance every month? If so, how much is it? Are your cards maxed out? Another great way to improve your FICO score is to pay down the amount of debt you have. Credit cards should be paid off every month if possible (you will save tons of money on interest this way). The lower your credit card balance, the better your FICO score. Look at your other loans. Are there any that are close to being paid off? Can you make an extra payment or two in order to get those paid in full? You’ll save a little on interest and you’ll improve your score. How often do you apply for credit? Keep your credit applications to a minimum. Every time you apply for credit, the inquiry into your credit file can lower your score. Have you moved or changed jobs recently? If you can stay with the same employer (although it's getting harder to do this), you may also want to consider not moving too often. Both of these are taken into account when compiling your FICO score. How to improve your FICO score? Just follow the steps outlined above.

Now that you know what your FICO score is and how to improve it, you need to take action. Your score will not improve overnight, but if you follow the above advice, you will see a significant improvement in your FICO score in just a few months (it takes that long for everyone to start reporting to the credit bureaus). This is a proven way of how to improve your FICO score.