| You can maximize your credit score by understanding | | | | The final 10% is based on what kind of credit you |
| the individual parts of the formula used to determine | | | | have. You want to have a good mix of credit. An auto |
| your FICO score. | | | | or home loan, in addition to your credit cards is best. If |
| FICO is the "be all and end all" when it comes to credit | | | | you have a bad credit score, which is considered to be |
| scores. FICO is the acronym for Fair Isaac Company, | | | | between 500 and 580, you have little hope of getting |
| the company that created and computes the score | | | | financing, especially in this financial climate, even at an |
| with which to determine your credit worthiness. | | | | exorbitant interest rate. But, if you DO manage to get |
| FICO utilizes a score from 300 to 850, which is based | | | | that loan, it can be the first step to repairing your bad |
| upon information they receive from the big three credit | | | | credit and you should take it. |
| reporting agencies, TransUnion, Equifax and Experian. | | | | Be careful when using your credit line. Repaying it early |
| Your score is based upon a number of factors, but the | | | | will help to reduce the overall interest paid and is easily |
| most frequently asked question is, "What percentage | | | | accomplished by making an additional principal |
| of what aspect goes into my credit score?" If you | | | | payment each month. |
| know this, you will know what you need to do in order | | | | A high FICO score is 850, though people rarely get |
| to raise it and maintain it at the highest possible level: | | | | that score. The average credit score is somewhere |
| 35% of your score is determined by timely payments. | | | | between 680 and 700. 620 is considered poor and |
| 30% is determined by the amount of debt you have in | | | | 720 is considered good. |
| proportion to the amount of credit that you have | | | | Your first step should be to obtain a copy of your |
| available. You should keep your balances under 40% | | | | credit report and make sure there are not any errors |
| of your credit limit. | | | | that are negatively impacting your score. It does |
| 5% is based on the length of your credit history. It | | | | happen. You can receive one free annual copy at and |
| takes time to build this portion of your credit score, so | | | | you are authorized a free copy if you are denied |
| this 15% is quite significant. | | | | credit. |
| 10% of your score is based upon any recent | | | | Understanding your credit score and maximizing it will |
| applications for credit. The more recent the | | | | save you a ton of money in interest charges over the |
| applications, the lower your score, though a car or | | | | rest of your life and will set you up to take advantage |
| mortgage loan application will not carry the same | | | | of financial opportunities as they arise. |
| weight. | | | | |