Maintain your fico score
Your FICO score is what most lenders use to calculate your credit risk. They use it to decide whether to offer credit to potential borrowers and at what interest rate.
It is made up of 5 elements:
- Payment History: (35% of the total credit score) Included is the borrower’s payment history with the repayment of past debt the most important factor.
- Credit Utilization: (30% of the total credit score) This is the percentage of available credit that has been borrowed.
- Length of Credit History: (15% of the total credit score) This is the length of time each account has been open and the length of time since the account’s most recent action.
- New Credit: (10% of the total credit score) Borrowers should avoid opening too many credit lines at the same time.
- Credit Mix: (10% of the total credit score) This is the combination of different types of credit such as revolving and installment.
Tips for Maintaining or Repairing Your FICO Credit Score:
- Check your credit report to make sure that there is no incorrect information in it such as late payments incorrectly listed and that amounts owed are correct. If there are errors, dispute them with the credit bureau.
- Setup payment reminders. Making payments on time is one of the most important factors in calculating the credit score.
- Consider enrolling in automatic payments through your credit card and loan providers to have payments debited from your bank account to ensure that payments are timely.
- Reduce your amount of debt. The first step is to stop using your credit cards. Analyze what accounts are charging the highest interest rates and attach paying those off first.