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Home Mortgage-FICO-Top Ways to Improve Your Score
There are very few things you can do before applying for a home
mortgage loan that are more important than knowing your FICO score.
Fair Isaac & Company- the heart of FICO, the score that greatly
determines your interest rate on any loan-car, furniture, home
equity, and of course on credit cards. It can even determine IF
you get the loan.
A FICO score is a
composite of many historical factors (as many as 22) used by
millions of people to create a single score that is used by
virtually all lenders to predict future behavior.
Of course FICO
isn't everything. On the other hand as they say "it is way ahead of
whatever is in second place". Employers are using it to determine
stability. Landlords are using it to determine ability to pay timely
and other factors associated with being a good tenant. Too, lenders
use it to determine if you get a loan and at what rate. Insurance
companies use it to determine what kind of risk you areImproving your FICO
score can help you:
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Get better offers for credit
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Lower your interest rates
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Speed up the approval process
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Save You Money
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Perhaps get a better job
There are several
things you can do to improve your FICO score: some are obvious, some
not so obvious. It takes a lot longer to repair your credit than it
does to ruin it. So if you have questionable credit NOW is the time
to get going at fixing it. Lenders are looking for trends-establish
a new one NOW. They are looking for a long history managed well.
Get a Copy of
Your Report and Review: Believe it or not mistakes are made. It
is up to you to get them corrected.
Pay Your Bills
Timely: Maybe the biggest factor of all in determining your
score.
Minimize
Credit Card Applications: Don't open a lot of accounts at
once-spread them out over a year or more. I used to think the more
the merrier-WRONG!
Don't Apply
for Credit You Don't Need: Every time you apply it shows up on
your report.
Keep Balances
Low: The magic number seems to be in the 25-30% range of credit
used to amount available. So if you have an available limit of
$10,000, keep your usage at $2,500-$3,000.
Seriously
Reconsider Closing an Account: It is better to use an account
very occasionally than close it.
Use Credit
Responsibly: It will pay immeasurable dividends for you.
Check out
www.myfico.com for a calculator
using current rates. There is a wealth of information at
www.fico.org
For a single
three digit number to have such an enormous impact on your life, it
behooves you to keep that score as high as you can get it. It will
save you ton of money and maybe even help you get a desirable job.
Keep an eye on your score with regular monitoring and use your
credit wisely.
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