Improving ones FICO Credit Score
Because the FICO credit score is the most widely used scoring system, Americans put a lot of effort in maintaining good FICO scores. Websites such as Experian’s Free Credit Report (freecreditreport.com), TransUnion’s True Credit (truecredit.com), and credit.com offer useful advice on understanding and maintaining credit scores. myFICO (myfico.com), the official site for FICO scoring, also provides useful consumer resources.
The first and most obvious step to improve one’s FICO score is to make timely bill payments. Consistent late payments can take up to 100 points off the FICO score. Automating one’s bill payments can help prevent this problem.
Many people close credit accounts just to lower their balances. This isn’t a good idea—it shows lenders that the person is fickle and unable to maintain long-term commitments. However, too many open accounts can also be bad. It’s important to choose accounts well and build a long credit history.
Finally, card balances must be kept comfortably low. Even if an account is still in good standing, lenders can view it negatively if the credit is too close to the credit limit. A good rule is to stay below 30% of the credit limit—for example, a credit card with a limit of $30,000 should have no more than $10,000 in balances.