Things No One Tells You About FICO Scores

Things No One Tells You About FICO Scores

Do I need to obtain every kind of credit card to improve my credit? No, you don’t. In fact, experts do not encourage such practice. While it’s true that credit reporting companies will consider the variety of cards you use, it is not necessary to obtain each one of those credit cards. Why would you open an account that you don’t intend to use? It is advisable that you maintain one stable credit account like your basic credit card and ensure that the information is up-to-date always. If you are rebuilding your credit especially after bankruptcy, you might need to apply for a new credit card. Understanding credit scores shouldn’t be hard if you have the basic knowledge concerning credit cards.

credit score

What is FICO?

This is a credit scoring company that’s used by the majority of credit card holders in the US. It was formerly Fair Isaac and Company. Like all the other credit scores, FICO scores are determined using the information found in your credit.

How credit scoring companies determine credit scores

The formulas that FICO uses to calculate your credit scores remain the company’s own secrets. However, there are generally 5 factors that affect your credit scores namely payment history, the age of credit, credit mix, credit utilization, total debt, and new credit application. if you don’t want any surprises, check your credit reports regularly through a credit reporting company.

An experienced company is not a bad option

Although you can dispute the negative information on your credit all by yourself, a reputable company will always do you good. Maintaining a clean report will always give you the best credit rating.

The significance of FICO scores

When FICO scores are determined from your credit, the reporting agency gives at least 5 reasons which affect the rating. The reasons are normally negative i.e. the rationales for your low credit scores. If you don’t know how to repair credit score, seek help from the experts.

Minimum requirement of FICO scores

For your FICO scores to be calculated, the report you obtain from the reporting bureau must have sufficient information which must also be up-to-date. This means you should have at least one active account which has been operating for at least 6 months. You should also have another account(s) which has been recorded in the credit bureau in the last 6 months.

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