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Information and advice on credit score concern - The Bills.com Blog
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Information and advice on credit score concern
Sunday, Jan 6, 2008
Question: I am paying my bills off but mycredit score is going down instead of up. What gives?
Answer: The formulas used to calculate your FICO score are complicated and vary from one credit bureau to the other. Paying your bills on time is only one of the factors involved. There might be other issues that are causing your score to go down at this time. First of all, it's important to obtain copies of your credit report from the three major credit bureaus and review them for accuracy. A credit report will give you a complete picture of your current situation.Since you are worried about your score, let me tell you a bit more about credit scores. The most important step in understanding your credit score is to know what a credit score is and how it is determined. A FICO credit score comes from the Fair Isaac Company. Three quarters of all lenders use the FICO credit score when considering requests for loans or credit which is why this is an integral part of understanding your credit score.
Given below is a rough formula used to calculate your
score:
~ 35% on your payment history
~ 30% on the amount you currently owe lenders ~ 15% on the length of your credit history ~ 10% on the number of new credit accounts you've opened or applied for (fewer is better) ~ 10% on the mix of credit accounts you have (mortgages, credit cards, installment loans, etc.)
The best way to improve your credit score is to pay your bills on time and manage your credit wisely. The most important item is your mortgage. Make sure you pay it on time every month in order to maintain a good credit score. Installment loans, where you borrow a set amount to buy new furniture or appliances, for example, are given more weight than credit cards.
Keep your spends
~ 35% on your payment history
~ 30% on the amount you currently owe lenders ~ 15% on the length of your credit history ~ 10% on the number of new credit accounts you've opened or applied for (fewer is better) ~ 10% on the mix of credit accounts you have (mortgages, credit cards, installment loans, etc.)
The best way to improve your credit score is to pay your bills on time and manage your credit wisely. The most important item is your mortgage. Make sure you pay it on time every month in order to maintain a good credit score. Installment loans, where you borrow a set amount to buy new furniture or appliances, for example, are given more weight than credit cards.
Keep your spends
well below your credit limits, because your FICO credit score will definitely be lower if you are maxed out on your credit cards. Don't have more than two or three credit cards because a large number of credit cards also lowers your FICO score. Don't apply for several credit cards at one time; it makes lenders nervous and will lower your FICO score. Other factors also affect your score, such as home ownership, which raises it, and moving frequently, which lowers it. Bills.com has comprehensive information about credit scores and articles on how to understand credit scores. You can read more at http://www.bills.com/credit-score/.
I hope the information provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
I hope the information provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
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