Quick tips for increasing your personal FICO score

01May07

The fastest way to increase your FICO score, without any outside help, is to pay down your balances, with paydown of your revolving credit (for example, credit cards) balances giving you the most points for the buck.

30% of your score is credit utilization: how much of your credit limit is used up by your balance? On each revolving account, you need to keep your balance below 30% of your credit limit, or you will hurt your FICO score. For example, if you have a $200 credit limit, you must not have a balance higher than $60, which is 30% of $200. Do NOT close a paid off credit card account….

They also look at total utilization: they total up all your balances, and all your credit limits. That total percentage utilization must be kept below 30% of total credit limits. Close that paid off account, and you’ll take away $0 in total balance, but you’ll take away $$$ in credit limit, and up goes your total utilization.

15% of your FICO score is for length of credit history. The average credit user has an oldest open account
that has been open for 14 years. They also score you on the average length of time all your open accounts have been open. So if you close that paid off account, you’ll hurt your score because (1) you lose an old account and (2) the average age of your accounts could go down.

So consider sacrificing for a few months by taking a second job, and paying your extra earnings toward reducing your balances

How much will my scores increase when negative items are removed? 

It depends on the type of debt. 

• Collections average 20-30 points
• Tax Liens approx 100
• Bankruptcies approx 100
• judgements approx 50
• late payments 5-10 points
• 40% LTV on credit card – -10
• 50% LTV on credit card -20
• 60% LTV+ on credit card -30  

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