FICO Credit Score
Credit Scores range from
300 to 850. A credit score is basically a quantification
of an individual's creditworthiness. People with scores
below 620 are considered poor risks, and those with scores
above 680 are considered acceptable risks. The median
score in the United States is 723; typically, the higher
the score, the lower the mortgage.
The credit score factors
include whether debts are paid on time, what type of
credit has been granted in the past, how much of the
available credit has been used, and whether there are any
judgments, foreclosures, bankruptcies or liens.
While a FICO score is based upon several years of credit
history, consumers may be able to raise their scores
fairly quickly. Every bodies first step is to get a
current credit report from each of the three bureaus. If
there are mistakes that are damaging your credit, you have
a right to get them off by writing to the company that
issued the report.
In order to improve a
credit score is to reduce the balances on your credit
cards that are close to their limit. Major improvements
will result if the balance is actually paid down. Another
method of lowering your credit score is by transferring
charges to a another card with a low balance.
Those considering taking out a mortgage in the next few
months should avoid making substantial charges to credit
cards, even if they plan to pay the full balance.
Consumers who don't have much of a credit history
will not have a good credit score. If an individual is
added as an authorized user on a credit card issued to a
parent perhaps, the credit history of that card may be
reflected on the user's credit report as well.
Don't close old accounts in order to improve your credit
score. Since the FICO credit score takes into
consideration how long a consumer has had a particular
credit account, closing a longstanding account could
damage the score. And since the formula factors in the
ratio of used credit to available credit, closing an
account will increase that ratio and could reduce the
score.
The Fair Credit Reporting
Act (FCRA) requires each of the nationwide consumer
reporting companies — Equifax, Experian, and TransUnion —
to provide you with a free copy of your credit report, at
your request, once every 12 months.
How do I order my free report?
You can order your free annual credit report online at
annualcreditreport.com, by calling 1-877-322-8228, or by
completing the Annual Credit Report Request Form and
mailing it to: Annual Credit Report Request Service, P.O.
Box 105281, Atlanta, GA 30348-5281.
When you order, you need to provide your name, address,
Social Security number, and date of birth. To verify your
identity, you may need to provide some information that
only you would know, like the amount of your monthly
mortgage payment.
Warning About "Imposter" Web Sites
The FTC advises consumers who order their free annual
credit reports online to be sure to correctly spell
annualcreditreport.com, or link to it from the FTC's
website to avoid being misdirected to other websites that
offer supposedly free reports,but only with the purchase
of other products. While consumers may be offered
additional products or services while on the authorized
website, they are not required to make a purchase to
receive their free annual credit reports.
