How can I bring up my Fico score quickly?
There are times when you need to
repair your Fico score quickly
in a matter of days or hours, such as when you’re in the middle of arranging
a mortgage and cannot wait for the 30 days or longer that it will take for the credit reporting agency to address your concerns.
Here are some advanced tactics that may help:
Rapid rescoring – This is a method that many borrowers and even lenders have resorted to because of inaccuracies in the reporting of credit information
and the long waiting time involved in having errors corrected. If there is any error in your credit report, you can bring it to the attention of your lender or mortgage
broker and submit proof of the error. He will then send the proof to a credit agency that provides the rapid rescoring service, which will in turn contact
the credit reporting agency that made the error. If the credit agency agrees that an error was made on your credit report, your Fico score will be recalculated.
The service may or not be free; this will depend on the services that your lending company offers. Rapid rescoring may take several hours to a day.
To have your credit score rescored, ask your lender if they offer the service. If they don’t, you can ask them to contact a rapid rescoring service to do the job.
Lower your debt utilization ratio – For instance, if you've borrowed money or got a loan with a big balance, pay off a big chunk of it so that the ratio will decrease.
The change in your Fico score will usually be seen after 30 to 60 days.
To do this, delve into your savings account, use your current income, or sell some of your stocks or other investments. Don’t get a loan.
Getting one just to lower the debt utilization ratio is not advised, because that will show up on your credit report and will be more harmful instead of helpful.
Purchase with cash instead of credit – Any purchase you make with your credit card will only add up to the amount that you’re using out of your total credit limit.
If you intend to apply for a loan and need to
improve your Fico score immediately
, consider paying cash for most of your purchases for the next three months leading up to your loan application date.
Another way is to pay off all or most of your credit card bills before the credit card company sends out the billing statement.
This will bring your outstanding balance down to zero, or will significantly reduce it. If you do this, however, make sure you make another payment when the billing
statement comes if your balance is not zero. Failure to do so will be considered as non-payment, even if you had already paid off a big amount previously.
Correct the big mistakes on your credit reports – If somebody else’s collections, charge-offs, or bankruptcy is on your credit report, have those removed.
That will
improve your Fico score significantly
.
If your credit report shows that an account you had closed before is still open, leave it alone. Having it reported as “closed” may hurt your Fico score.
Ask your creditors to report positive information – You may find that information that would be helpful to your Fico score has been omitted in your credit report.
Not all creditors report to all the three credit bureaus, and many of them – if they do report information – do so erratically.
If you find that your creditor has failed to report a bank account in good standing, for example, ask them to report it to all the three credit agencies.
This will help you
get a better Fico score
.
What are the uses of my Fico score?
The Fico score is the most important measure that lenders use to evaluate whether you are credit worthy. Your Fico score is used for the following purposes:
- Banks use your Fico score to determine if they should lend money to you or not. A low Fico score shows that you will probably be unable to repay your loan, and your application is likely to be rejected.
- Banks will also use the Fico score to determine the rate of interest at which they will lend money to you. A higher score will merit a lower rate of interest.
- Mobile companies will check your Fico score to determine if you have a history of prompt payments, and decide whether to give you the phone connection or not.
- Apartment rental companies will use your Fico score to decide whether to rent an apartment to you or not. A high Fico score means you have a proven history of being a prompt and regular payer.
- Insurance companies use this score to determine your monthly premium amount.
- Any institution that is interested in entering into any kind of financial agreement or lease, or any institution that is looking to lend money to you will check your Fico score.
- Prospective employers use the Fico score to determine your integrity and honesty, especially with money. For companies, this is helpful in deciding on promotions, retentions, reassignments, and is often used when employees are being considered for sensitive positions.
- If you have applied for financial assistance from a government agency, the agency will look at your credit report and Fico score to determine whether you are eligible. The check on your credit report is done to look for any hidden assets or income that you might have but did not declare in your application.
- Local and state government officials will inspect your credit report and Fico score to see if you can make child support or alimony payments.
Why is it important that I review my Fico score?
Knowing what your credit score is and what caused it to be high or low will help you change your spending and paying habits. Your Fico score will come with a summary of the factors that influenced your score, along with any additional explanatory information. These positive and negative factors will give you an idea about which areas you need to improve on. It is important that you fully understand these factors and their explanations in order to be able to take the right action.
Positive factors are listed in order of importance, and may show the following:
- Your credit accounts show that you have no late payments
- You have a long credit history
- The proportion between the balances and the credit limits in your revolving or charge accounts is low
Negative factors will also be listed in the order of their importance, and bigger offenses will be mentioned first, for example:
- In the past 12 months, you made a lot of inquiries looking for additional credit or other financial services
- You have a high number of consumer finance accounts, such as credit cards
- The proportions of the balances to the credit limits on your accounts are too high
- You have a fairly short credit history
Even people with a good credit score may find negative factors in their Fico score. Changing financial circumstances, as well as your use of credit, are unavoidable and will always affect your credit score. The positive and negative factors in your Fico score serve as guidelines to help you repair and boost your credit score.
What kind of information affects my Fico score permanently?
If you have had an unfavorable credit report and low Fico score, time – and your continuous efforts to improve your spending and payment habits – will erase some of the black marks on your report and score.
Most credit information will stay in your credit report for seven years. This includes late payments, your account being turned over to a collections agency, bouncing checks, etc. The seven-year term will start from the date the event took place.
Late payments and charge-offs on your credit card will be erased only after seven years. It takes ten years before bankruptcy can be removed from your credit report.
There are some exceptions, however, and according to the Federal Trade Commission, the following items will appear permanently on your credit report:
- If you had applied for a job with a salary above $75,000, the credit information on that job application stays in your credit report without any time limit
- Criminal convictions against you will always stay in your report
- If you applied for more than $150,000 worth of life or credit insurance, that credit information will stay in your report without any time limit
- Any lawsuit or unpaid judgment pending against you will stay in your credit report for seven years or until the statute of limitation runs out, whichever is the longer term.
One delayed payment can result in a major crippling of your Fico score. Even after you have resolved your financial problems and have since established a pattern of regular and timely payments, that one-time mistake will be seen by anyone who looks at your credit report and Fico score.
