Friday, February 18, 2011

Tips to increase your Fico Scores

Your Fico scores determine whether or not you can get credit loans on easier terms. If you have a higher Fico score you get rewarded when you are about to buy a house, a car or any other big-ticket item. Fico is the mode of measuring financial risks. The advantages of knowing how to increase Fico scores will help you to qualify for more loans together with best possible interest rates. Below are just a few ways if you want to increase your Fico scores fast.

1) Get a Copy of your Credit Report

The first step to improve Fico scores is to get a copy of your credit report from the major credit bureaus namely TransUnion, Experian or Equifax. Credit reports store the information about all your financial transactions and the money that you owe. FICO score is a method of ascertaining whether you are likely to pay your bills on time or you are a major financial risk to the lenders when you apply for any sort of loan. The benefit of checking your credit reports regularly is to look for any inaccuracy in it. Once they are removed your Fico score will increase. The corrections of errors may take up to 3 months or longer.

2) Paying Off Bills on Time

35% of your credit score is made up by your recent payment history. Increasing your Fico scores demand payment of your all your bills on time.

3) Pay down Credit Card Debt

30% of your Fico score is determined by Credit card debt and revolving charges. More specifically balances that are close to your credit limit can negatively influence your personal credit score. Lenders want you to maintain a lot of room between the amount of your credit card debt and your total credit limits. Most lenders consider a maximum of 30% to 40 % to be perfect. So more the debt you pay off wider will be the gap, which will increase your Fico scores. Creditors will also be happy to lend money.

Stop Closing Old Credit Card Accounts

Closing down old credit card accounts and paying off credit accounts decrease the total amount of credit available to you. It also makes the balances show larger in credit score determination. Closing down your oldest accounts curtails the length of your credit history, which will eventually lower your creditworthiness in the eye of a lender. It is not a good idea again to open new accounts while applying of a new loan, which may lower your Fico scores. In order to be eligible for more loans and obtain best possible interest rates understanding how to increase Fico scores will give you better options and save you a handful of money.