What is a FICO Score?
FICO is Fair Isaac and Company, a software analytics company that uses Big Data to help people reach their financial goals. More importantly, FICO gives one of the most trusted, established credit scores in the world today.
FICO takes the whole of your credit history into account when determining your score, including your payment history, credit to debt ratio, and any credit inquiries that may have been requested. A score is then generated by the credit reporting agency: Experian, Equifax, or TransUnion. It ranges between 300 and 850. The higher the score, the better your credit. A 750 or higher is considered an excellent score, but 650 is common and probably won’t hurt you.
How to Boost Your FICO Score
Talk to your local bank or lender about ways to improve your credit score so that you can reach your financial goals. Here are some factors to consider to boost your credit score or maintain a good credit score:
- Space out your debt. If you have multiple credit cards, don’t let all your debt pile up on one card while the rest remain at a flat zero. It actually looks better to have a little debt on multiple cards than to have your score dragged down by a massive amount of debt on one card. For this reason, it’s also important to make sure all your cards stay active.
- Make timely payments. Possibly the best way to maintain an excellent FICO score is to simply make your payments on time. Your lender needs to see that you’ll make mortgage payments on time, so set an example by not letting your bills and credit card debt pile up past their due dates.
- Invest in Retail Credit Cards. A gas station credit card or a membership card at your grocery store may seem like small, but if you have bad credit or not enough credit, it’s a good way to show that you can make regular payments on time.
- Double check your credit history. No one knows what you’ve spent or paid better than you, so if you think something looks wrong, trust yourself. Go over your credit history, and if you notice anything off, have it removed as soon as possible.