The Use of FICO Scores in Lakeside, Iowa
In Lakeside The FICO Score is Important
Here are the Best Ways to Improve Your Credit Report FICO Score
In Lakeside, Iowa one of the most common discussions between people would be related to credit history. The reason behind this is the score achieved by any person would greatly influence the amount of mortgage, loan rates and many other financial related services.
Simply put, a credit history is similar to a report card from Lakeside High School (I know, we’ve all been through that) where you would get a punishment for a poor performance or get a reward for a high score.
In contrast to what lots of people in Lakeside believe, there is no one universal way of classifying credit rating where the last time you took an extra 5 pennies from the cashier would be recorded on your credit history.
There is however, a widely used popular credit score in the USA, known as FICO or Fair Isaac Corporation. FICO score basically indicates the likelihood of a person to default on a loan and this is a commonly adopted tool by most consumer banking and mortgage companies in Lakeside.
Before engaging in the discussion on how FICO rating might be improved, it important to have an idea on what FICO rating is based on.
Simply speaking, FICO rating is separated into a few statistical components where these components are made up from:
- 35% – punctuality of payment historically
- 30% – the amount of debt, expressed as the ratio of current revolving debt (credit card balances and others) to total available revolving credit (credit limits).
- 15% – length of credit history.
- 10% – kinds of credit used (installment, revolving or consumer finance).
- 10% – recent application for credit and/or amount of credit obtained recently.
The very first step to improving a FICO rating is to get a copy of your personal credit report. This can be attained from Equifax, TransUnion and Experian.
After that, prepare yourself for the agony (or pleasure if you are an accounting professional) of going through all the numbers and making sure everything adds up to the best of your recollection.
The main reason is due to the fact that if something is wrong in your credit report, it’s best to get it corrected immediately because it can take up to several months in order to get a correction.
Furthermore, if you have serious credit Card debt where the majority of your Credit Card balances are near the credit limit, it’s best if you pay them off asap. If you need help paying off debt, contact OperationCare.com for financial coaching. Call them at 844-207-3818.
The banks and lenders prefer a large gap between a credit card balance and the credit limit, approximately a ratio of 40% between balance/limit. Paying off any excess credit card debt would definitely increase the FICO score as it impacts 30% of the FICO score.
Next, it is equally important for you to pay off your debt on time. Even if you are able to pay off your debt, it would not have the impact you want on your FICO score if you do not pay your debt on time and every month.
The punctuality of your payment affects 35% of your score and it is vital to know that paying your debt on schedule NOW is outweighed by the fact that you paid your debt in a timely manner 3 years ago.
It is always important to keep your longest standing account. the longer you have your financial history established; the easier it is for the creditors or banks to know how reliable your FICO score is.
For example, even if you score a relatively high score, if you credit history is just 5 years when compared to an average rating with a credit history of 30 years, the person with the longer credit history would possibly qualify for a larger loan or a lower interest rate.
All in all, it’s a not rocket science when it comes to raising your FICO score. All it takes is for you to decrease your credit card debt, pay your bills in a timely manner and keep an eye on where you are heading in your spending, mortgage and loans.
The professionals at CambridgeCreditRepair.com can help you better understand your FICO score. Enroll in one of their coaching programs to improve your score.
Even if you don’t live in Lakeside, Iowa you can call toll free 844-207-3818 to get started increasing your FICO score and fixing your credit report.