Steps to Improve Your FICO Score
Besides the obvious advice to pay on time, never ever be late and to pay down debt, there are other ways to improve your credit score. FICO is a scoring system developed by Fair Isaac Corporation.
It is an average of the three numbers reported by the three credit bureaus-Equifax, TransUnion & Experian. They each look at different information, evaluate and weight differently and consider different time frames.
This number will affect your interest rate and terms for your next mortgage. It can be difference of paying 4.5% vs. 6%. 850 is a perfect score which apparently few can attain. Anything over 750 is excellent-680 used to be. You need 660 to get a conventional mortgage, 620 for FHA.
35% payment history-last 12 months with zero late pays is most important, though the last 7 years will be eval
30% debt/credit line-less than 20-30% on any one credit card is ideal, no more that 50% for sure. A little bit on two cards is better than a lot on one.
15% length credit history-over 7 years is ideal, the longer the better. That is why you might want to use that odd card every once in a while that you have had for years.
10% new credit/inquiries- some inquiries are grouped as one-those within 30 days for mortgage, 14 days for car loan, but on-going inquiries through the year are not a good idea
10% types credit-installment vs revolving-house, car and three credit cards demonstrate you can handle different kinds of credit.
Ask me for a reference for a reputable mortgage broker working with a credit agency who will analyze your credit for FREE. Call my cell 847-814-7895.
With your permission they will pull your complete report from all three bureaus and make suggestions of steps you should take. Should you close that dormant account from a department store three Christmases ago or make a plan to use them every now and then. Should you clear up mistakes now from seven years ago or apply now and clear up later. Should you open a third credit card and reduce the balances on the other two. Should you open an account with a credit card that reports twice a month instead of once a month. They will ask you to check for mistakes, incorrect information or accounts that do not belong to you. Check out this Money Magazine article:
Hope this helps. Share any other ideas you come across.