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.

Tracking Payments

The biggest part of your FICO score (35%) relies on your payment history so if you pay your debts on time you’ll have a better credit score. Late payments can adversely have effects on your score, and delinquent payments and collections have a major negative result on your score. Delinquency and collections stay on record for 7 years, and think twice before filing for bankruptcy it’ll complete devastate your score.

Outstanding Debt

The next largest chunk to determining your score is total debt. Percentage owed on car loans and mortgages and the quantity of credit cards maxed out can lower your score. For credit cards, the guideline is to keep your card balances at 25% or less of their maximum.

Credit History – Are You Haunted?

The longer you have had credit cards open and good standing the better it is on your record, so don’t close your oldest accounts. Your credit score determines 15% of your FICO score. On a side note, remember to not open more credit card accounts than needed.

The Type of Credit and How Often Accessed

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.

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