Money Talk Daily

Posts Tagged ‘fico’

Easy Ways To Raise Your Credit Rating

If you’re interested in buying  your own home, there’s a very crucial point that loan officers look at when deciding the terms of your mortgage. Your credit score. A credit score is a numerical rating of your financial trustworthiness and usually range from 300 to 850. A high number indicates to potential loan officers that your credit habits are good. It shows you pay your debts as agreed and are responsible with financial matters. You carry debt that’s much lower than your credit limit. And there’s few or no blemishes on your credit report online. If you have a high rating, loan officers are more inclined to approve your loan. It also means getting lower interest rates.

Ways to receive your credit score

Legally you’re able to access your credit reports absolutely free once a year. But usually your credit score isn’t included with these free annual reports. It needs to be ordered separately through the 3 credit agencies. But there are free methods to receive a credit score for free from the 3 reporting agencies. But it usually requires joining a free trial membership to their credit monitoring service.

Which credit score to get

Each credit bureau comes up with their own score numbers, but you want to view is your FICO score. This is the score that most lenders use in making important loan decisions.  Curently Equifax offers a FICO score. You can also order it directly from FICO. FICO is a separate service from the 3 agencies. 

The 30 percent formula

First steps to take is to lower the debt on your revolving accounts like your credit cards. The idea behind this is that loan officers desire a large difference between your credit limit and your  credit debt. Now it’s not bad to charging large amounts and paying it off each month. But it won’t increase your rating. If your goal is to boost your score, then you should go with the thirty percent rule and charge less than thirty percent of the limit.

First get rid of the big mistakes

Significant mistakes include any errors that isn’t yours. Other mistakes are accounts mentioned as unpaid or were in collections more than seven years ago. Derogatory information prior to seven years have to be erased from your  reports. In the case of bankruptcies, it’s on your files for ten. But continue using your oldest cards that are clean. These help out in the rating calculations. Simply make a small purchase every month and pay it off each month.

Check the credit limits also

Once in awhile creditors report a smaller amount to the credit reporting agencies than the correct one. Ask the lender to correct this information. Also if there’s late payments indicated on your files, ask the vendor to erase them. The latter sometimes works for people with decent payment habits. The creditor may not agree to this request, but it’s worth giving it a shot.

Last but not least

Challenge the accuracy of anything on your credit files not mentioned as “current” or “paid as agreed”. Anything the credit agencies can’t verify after a certain period has to be deleted from your file. ‘nudge nudge’ ‘wink wink’. But don’t overdo this. Otherwise your dispute will be seen as frivolous. First try disputing a few of the older accounts with bad marks. Then after a few months challenge a few more. 

By following these easy tips to clean up your three credit report, you should  considerably improve your credit score ratings.