A FICO score is a credit score developed by FICO…..Fair, Issac Company. FICO is a company that specializes in what’s known as “predictive analytics,” which means they analyze your information to predict what is likely to happen.
In the case of credit scores, FICO takes credit information and uses it to create scores that help the lenders “predict” behavior. Whether people are going to pay their bills on time, or whether they can handle a larger credit line. Some of the factors that go into predicting your behavior are:
- Debts/Amounts owed
- Length of credit history
- New credit/inquiries
- Mix of accounts/types of credits
How can you go about improving that score?
- Check your credit report. Even if you have to pay to see your credit score, getting a copy of your credit report and checking for any inaccuracies is a must for improving your score.
- Pay your bills on time….this is the largest factor in determining your FICO score.
- Lower the balances on your current credit cards. Maintaining a high balance will lower your FICO score. Make larger payments to bring down your card balances.
- Avoid opening accounts you don’t intend to use and don’t close accounts that you have had for a long time because these accounts show that you have been responsible for a long period of time.
- Don’t use one credit line to pay off another. It is better to keep low balances across multiple credit cards rather than consolidating them into one large debt. This helps to lower your credit to debt ratio.
- When shopping for a loan do it quickly. Having too many inquires can actually lower your FICO score. It will look like you are trying to borrow money from multiple sources.