How to improve your credit score and Fico score

Your success financially will always be factor of your credit, there fore, having a good credit score will help you to succeed financially since you will be a trusted man in the credit world. There are many companies (credit bureaus) which store your credit information which is then used to calculate your credit worthiness through models like the FICO score.

If you want to improve your credit score, you will first of all have to know which factors are used to calculate your credit score and make them right. Let us take the example of the FICO in this case, this will help you to know how your credit score will be calculated so that  you make amendments where necessary

How a FICO Score is Calculated

This is an approximate of what is considered to be the calculation of your fico score, though the exact formula is kept a secret, this calculation will give a balanced view.

Recent Activity and Inquiries (10%) – This some how implies that you are desperate for money and will carry 10%

 Payment History (35%) – How you have been paying your past debts will take 35% This will include late payments and defaults payments.

Types of Credit You Have (10%) – This is measure of how you can handle your debts for example credit card debts and mortgages

Outstanding Debt (30%) - This simply refers to the amount of debt you are still having compared to the amount of credit extended to you.

Length of Time You’ve Had Credit (15%) – This will carry 15% of the weight in determining your credit score.

How to improve you credit score

Always pay your loans in time, loan providers will want to offer you credit if you keep your loan payments up to date and paying them punctually. Repaying back the loans after the credit terms date will strongly hurt your credit score.

You can also request a credit limit increase; this will automatically lower the percent. But you should take care so that you don’t dip into this additional credit just because it is available to you.

One of the methods you can use to improve your credit scored is to make sure your balances are spread out among different debts. This can work in the following way, if you have one credit card that is maxed out and two other credit cards that you are not carrying a balance on, you could balance transfer some of the outstanding balance from the one card to the other two. This will without doubt help you to get that credit which you need.

If it is really agent that you need to improve your credit score for nay reason, you can get a loan from friends, family members or relatives which you can use to balance out your debts. The good thing with such loans is that they will not be recorded by the credit bureaus.