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Learn more about credit, credit reports, the Fair Credit Reporting Act, FICO scores, and other credit issues.
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Important Credit Information
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Credit Reports
Under Federal Law, all U.S. citizens are entitled one Free Credit Report every 12 months, from all three nationwide credit reporting agencies: Equifax, Experian and TransUnion. To obtain that free report, you must go to AnnualCreditReport.com. This is the Only Official service authorized by the 3 agencies.
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Credit Reporting Agencies
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Credit Monitoring
Identity theft is a major problem that we all face. Monitoring your credit file can help alert you to fraudulent activities like when someone tries to get credit in your name - so you can act before serious damage is done.
FICO Scores
Lenders use credit scores such as the FICO to calculate interest rates and credit limits. FICO is a score based on mathematical formula developed by the Fair Isaac Corporation. It is the most widely used score in the U.S.
There are several important determinants of your FICO:
- 35% punctuality of payment in the past
- 30% capacity used, i.e., ratio of current revolving debt (e.g. credit card balances) to total available revolving credit (e.g. credit limits)
- 15% length of credit history
- 10% types of credit used (installment, revolving)
- 10% amount of credit obtained in the recent past
The above percentages are approximate. Current income and employment history do not influence the FICO score. Generally, FICO scores range from
300 - 850. Scores at the higher end of the scale reflect a better credit rating.
Source: Wikipedia.com
FICO Tips
Improving Your Payment History
- Pay your bills on time.
Delinquent payments and all collections can have a major negative impact on your score.
- If you are having trouble making ends meet
Contact your creditors or see a credit counselor. This won't improve your score immediately, but as you begin to manage your credit and pay your bills on time, your score will improve over time.
- If you have missed payments
Get current and remain current. The longer you continue to pay your bills on time, the better your score will be.
Available Credit
- Pay off your debt rather than moving it around.
The most effective way to improve your score in this area is by paying down all of your revolving credit.
- Keep balances low on credit cards and other "revolving credit".
Having large amounts of outstanding debt can affect your score negatively.
- Don't close unused credit cards as a short-term strategy to raise your score.
- Don't open credit cards that you don't need just to increase your available credit.
For more tips on improving your credit, visit improve your score from MyFICO.com
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