Tips for a Better FICO® Score
It's important to note that raising your FICO® Score is a bit like being on a diet to lose weight. It takes time and there is no quick fix. In fact, quick-fix efforts can backfire. The best advice is to manage your credit responsibly over time. Here are some tips and advice for managing and improving your FICO® Scores.
Pay on Time
Always pay your bills on time
Late payments and collections can have a major impact on your FICO® Score. Also, note that paying off a collection account, or closing an account on which you previously missed a payment, will not remove it from your credit report. It will stay on your report for seven years.
If you have missed payments, get current and stay current
The less time your payments are late and the longer that you pay your bills on time, the better your FICO® Score will become. If you've had a hard time paying your bills on time, consider signing up for an automated bill payment service.
If you are having trouble paying your bills
Contact your creditors or see a legitimate credit counselor. This won't improve your FICO® Score immediately, but if you can begin to manage your credit responsibly and start paying bills on time, your score should get better over time.
Keep your balances low
High balances on your credit cards and other revolving credit will lower your FICO® Score. You may want to increase the amounts of your monthly payments until all balances are below 25% of your credit limits in order to improve your FICO® Score.
Manage Your Accounts
Have credit cards, but manage them responsibly
In general, having credit cards and installment loans and making all payments on time will raise your FICO® Score. People with no credit cards, for example, tend to be slightly higher risk than people who have shown they can manage credit cards responsibly.
Do not open cards that you don't need
While your available credit amount might increase, this behavior could backfire and lower your FICO® Score. New accounts will lower the average time you’ve had credit accounts established, which can have a larger effect on your score if you don't have a lot of other credit information on your credit report.
Keep in mind: Even if you have used credit for a long time, opening a new account can still lower your score.
Close unused credit cards cautiously
Owing the same amount but having fewer open accounts may actually lower your FICO® Scores. To protect your score, keep any balances very low on your active credit cards when you close unused cards.
It's OK to request and check your own credit report.
This won't affect your score, as long as you order your credit report directly from a credit reporting agency or through another organization that is authorized to provide credit reports to consumers. Every 12 months you are entitled by law to one free credit report from each credit reporting agency through AnnualCreditReport.com.
When Seeking New Credit...
Do your rate shopping within a short period of time
If you're looking for a mortgage, student loan or an auto loan, you may want to check with several lenders to find the best rate. This can cause multiple lenders to request your credit report, even though you're only looking for one loan. These requests are referred to as inquiries, and in some cases (outside of shopping for a mortgage, auto or student loan) frequent inquiries for multiple types of credit and loans can indicate higher risk (and therefore could lower your scores). To compensate for this, FICO® Scores distinguish between a search for a single loan and a search for many new credit lines. They also compensate for rate shopping, in part, by looking at the length of time during which inquiries occur; when you need an auto, student or home loan, you can avoid lowering your FICO® Score by doing your rate shopping within a short period of time, such as 45 days.
Re-establish your credit history if you’ve had problems in the past
Opening new accounts responsibly and paying them on time each month helps to develop a positive history that will raise your FICO® Score in the long term. Don’t forget to keep paying all your other accounts on time. Just one delinquency reported on your credit report can set you back.
Seek help from a non-profit credit counseling agency if you're continuing to have problems paying your bills each month
A legitimate credit counseling agency can work with your creditors to lower your monthly payments while protecting your FICO® Score.
Improvement Takes Time
Your FICO® Score is based on the information in your credit report at one point in time and can change whenever your credit report changes. But your scores probably won't improve a lot from one month to the next. While a bankruptcy or late payments can lower your FICO® Score fast, improving your FICO® Score takes time. That's why it's a good idea to check and monitor your FICO® Scores 6 to 12 months before applying for a big loan, so you have time to take action if needed. If you are actively working to improve your FICO® Score, you may want to check your score quarterly or even monthly to review changes. Please see our instructions on where to get your credit reports and scores.
