Afraid of the Fico Score? It seems everyone wants it. Landlords, Mortgage companies even utility companies.
It doesn’t have to cause so much apprehension as long as you are aware of what it is used for and what it can actually do for you.
Your Fico score helps issuers of credit decide and assess how you will more than likely pay on your debt. It’s used by most lenders to determine if you are a good risk. There are three credit bureaus that most lenders report to: Experian, TansUnion and Equifax. Scores range from 350 to 850. The higher the score the more lenders want your business and the better the terms are for the credit!
Here are some things you will want to AVOID AT ALL COSTS in order to keep your fico score in the higher digits.
MAKING LATE PAYMENTS, Payment history accounts for a whopping 35 percent of your score. Needless to say paying late is one of the worst things you can do. The more times late 30, 60 or 90 days, the more damage it will do to your credit. Making payments late can cause you to lose up to 200 points.
MAXING OUT CREDIT CARDS. Believe it or not when you max out your credit cards your available credit decreases compared to your available credit. Keep balances low or pay off those cards. Keeping your cards Maxed can cause you to lose about 100 points on your credit.
INQUIRES. While some like to say there is a difference between a hard inquiry and soft inquiry, the both impact your scores. So it’s always in your best interest not to have your credit run numerous times. The internet can be a killer on inquires. I had a client shopping for a mortgage once through the internet; she went to one of those sites where lenders compete for your loan. Well, all 10 lenders pulled her credit and her fico scores dropped. Needless to say she was not happy. Excessive credit pulls/inquiries can drop your credit score by 30 to 60 points! So beware.
CLOSING OLD CARDS. Who knew, you think you are doing something good and it bites you in the H____y! Once you close old cards your available credit decreases which in turn will impact your scores. Unless the card has annual fees where you just want to get rid of it. Having old accounts on your credit does not hurt you only closing the accounts do. Impact on credit up to 100 points!
So keep these things in mind and above all check your own credit at least one to two times a year to make sure you are not a victim of a stolen identity. You can go to MyFico.com and request a copy (cost is $20.00) the cost is well worth it to keep an eye on your credit. It’s important to take action and dispute any items that are reported in error. After all you never know when your fico score may come in handy.
