What Your FICO Score
Means to You

Credit Ratings Information and Tips
(cont.)

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(cont.) Items that influence your FICO score.

CURRENT DEBT:
This data comprises 30% of your credit rating. The idea is to have your credit card balances low or paid off and not be carrying a high debt to income ratio. If you have lots of debt riding on numerous credit cards, it's high time to stop charging more on them. Get your credit cards paid off or at least make sizable enough payments to lower your credit card balances. Sometimes a debt consolidation loan will make this easier to accomplish. Seriously consider throwing away some of your credit cards and only keep 1 or 2 in reserve.

DURATION OF CREDIT HISTORY:
People that are new to establishing credit are considered a much higher risk. This area of your FICO score represents 15% of your credit rating. Everyone first starting out in establishing credit is considered a higher risk.

CREDIT CATEGORIES:
This part of the score will consider the types of credit you have or have had and covers 10% of your FICO score credit rating. While it's good to show that you've paid off various types of loans and credit, don't open a store credit card that you do not intend to use.

RECENT CREDIT ACQUISITIONS:
This makes up 10% of your FICO score. If you've recently been taking on numerous financing plans and/or credit cards, this can signal a red flag to a lender that you are taking on too much debt too quickly. Some people run scams of this sort by signing up for as many credit cards as they can, max'ing them out and then declaring bankruptcy while hiding $30,000 or more and not reporting it.

Improving Your FICO score.
It's common sense when it comes to ensuring a good credit rating. Yet a large group of people still struggle in maintaining a good FICO score. Following these simple guidelines will help you in that:

  1. Make payments on time. For credit cards, get into the practice of doubling your payments to reduce the debt effectively. Remember, credit card providers generally want you to maintain a balance so that they can maximize the interest charges and have you make small payments. They'll put in a low minimum payment, but it's not in your interest to just pay the minimum unless you absolutely have to.
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  2. For people new to establishing credit, don't rush to get too many loans and credit cards in a short period of time. This holds true to a lesser degree with seasoned credit veterans also.
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  3. Don't get lots of credit cards simply to increase your line of credit. Doing so may actually lower your FICO score as other lenders recognize that you could potentially rack up more debt than you can actually manage.
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  4. Check your credit history at least once a year. It will reveal problems if there are any and also alert you to credit errors in which you will want to take prompt action against.

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v Selling Your Existing Home (part 1) and...
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