Improving Your FICO
"Given that credit scoring is based on proprietary statistical models, there's little hope that consumers will ever fully understand why they've been allocated one score over another.
“It's far too complex and confusing for consumers. It's just very, very difficult to know what you should do,” said Gerri Detweiler, author of The Ultimate Credit Handbook and founder of DebtConsolidationRx.com.
“Part of the problem is there's just so much information being put into and coming out of credit reports. It's getting harder than ever to stay on top of it, but if you don't, you end up really paying the price,” she said.
A steep price: A consumer scoring 600 pays about $300 more per month on a $150,000 mortgage, or almost $108,000 over the life of a 30-year fixed-rate mortgage versus someone logging an 800, according to the MyFico.com calculator.
“The irony is, the higher your score, the farther you can fall,” said Craig Watts, spokesman at Fair Isaac, creator of the FICO score.
One late payment could push an 800 down to 640. When someone with an 800 “stumbles for the first time it puts them in such a different pool of consumers their credit risk increases hugely,” Watts said.
That consumer is “much more likely to run into problems than they were before they encountered that single (late) payment. In order to reflect that change in their risk, the score drops precipitously,” he said.
Given the degree to which scores affect your financial life, consider the following ways to push your score higher.
1. Ensure lenders are reporting your credit card limits.
2. Pay down a home equity line of credit.
3. Request good credit history on your report.
4. Be wary about moving to a new “credit scorecard.”
5. Ask about the date of last activity.
6. Remove duplicate data.
7. Consider credit rescoring through a mortgage lender.
8. Don't close old accounts.
9. Keep revolving-account balances low.
10. Don't open too many credit lines.
Read the full article on KansasCity.com (registration req.)
“It's far too complex and confusing for consumers. It's just very, very difficult to know what you should do,” said Gerri Detweiler, author of The Ultimate Credit Handbook and founder of DebtConsolidationRx.com.
“Part of the problem is there's just so much information being put into and coming out of credit reports. It's getting harder than ever to stay on top of it, but if you don't, you end up really paying the price,” she said.
A steep price: A consumer scoring 600 pays about $300 more per month on a $150,000 mortgage, or almost $108,000 over the life of a 30-year fixed-rate mortgage versus someone logging an 800, according to the MyFico.com calculator.
“The irony is, the higher your score, the farther you can fall,” said Craig Watts, spokesman at Fair Isaac, creator of the FICO score.
One late payment could push an 800 down to 640. When someone with an 800 “stumbles for the first time it puts them in such a different pool of consumers their credit risk increases hugely,” Watts said.
That consumer is “much more likely to run into problems than they were before they encountered that single (late) payment. In order to reflect that change in their risk, the score drops precipitously,” he said.
Given the degree to which scores affect your financial life, consider the following ways to push your score higher.
1. Ensure lenders are reporting your credit card limits.
2. Pay down a home equity line of credit.
3. Request good credit history on your report.
4. Be wary about moving to a new “credit scorecard.”
5. Ask about the date of last activity.
6. Remove duplicate data.
7. Consider credit rescoring through a mortgage lender.
8. Don't close old accounts.
9. Keep revolving-account balances low.
10. Don't open too many credit lines.
Read the full article on KansasCity.com (registration req.)
posted by Dave at 4:31 PM
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