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Friday, June 22, 2007

What You Need to Know About FICO Scores!!!

Knowledge is power! So here is some basic knowledge about where those FICO scores come from and how they are added up! This information gives you a road map for planning to improve your scores. On-time payments is the obvious one, but keeping your "credit used" to "available credit" low on individual cards is not so well known. Also, keep old card that you are not using as they have very long credit histories with no late payments. Use them occasionally and then pay them off. Never, never, never let a "public record" get attached!!! Like a Bankruptcy it will stay with you a long time. Here is some more general information:

35% of a FICO score is based on Payment History:

0 - 6 Months - Late payments get the biggest point hit

7-23 Months - Next period. Not as bad, but still a hit

24 + Months - Start to lose negative impact

30% of a FICO score is based on Balances

Keep used credit under 50% of available credit

Over 75% will severely hurt your score

15% of a FICO is based on Credit History

Time will improve your score up to 30 years is perfect

10% of a FICO is the Type of Credit

Diversity your credit types between a mortgage, car loan, credit cards.

Never use a "Buy Now Pay Later" this is a big credit HIT.

10% of a FICO is based on Inquiries

What counts and what won't is complicated. You should Opt-Out of all

involuntary credit pulls.

Go to and under Power Tools there is a video that will tell you how to Opt-Out.

Finally, if you have old (older than two years) "write offs" on your record. Leave them alone. As you can see above, after 24 months there is very little hit on the credit score, you have gone through the worst. But if you pay them off, the computer re-posts it as a new report, and then a pay off of an account that was written off and you get a very BIG HIT. So let sleeping dogs lie.

Now that you know the secrets, balance off those credit cards to all under 50%. Pay on time and never open a "buy now pay later" account. Finally, any items that are incorrect on your Report should be challenged with the Credit Agency and with the reporting company. Make them remove the errors.

Soon you will be over 700 and qualify for the best financing available!!!


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