Your FICO score ranges between 300 and 850; the higher your score the more likely you'll get charged lower interest rates on loans, you'll have lower insurance premiums and you'll get a job. The best way to improve your FICO score is to focus on your history.
What Makes Up My FICO Score?
Your FICO score is made of five components; here are their weightings:
- How much new credit you have (10%)
- What types of credit you have (10%)
- Your total debt (30%)
- How long you've had each credit account (15%)
- How you've handled your credit -- your credit history (35%)
As you can see, your history is the biggest component.
What Makes Up My History?
Here are the various ingredients that go into your history:
- Information on the four various types of credit: installment, retail, credit cards and mortgage
- How long overdue your payments have become, the amount owed and the number of past due items
- How much time has passed since your last delinquency
- Are there any adverse public records in your history, such as bankruptcy or liens on property
- How many accounts you're paying on as agreed to
There is no indication that these are weighted in any way; they are probably of equal importance.
What Is History's Affect on My FICO Score and My Credit Report?
The severity of delinquency on your score and your report varies with what you're delinquency is from. Being delinquent on a mortgage is the most severe. If you're 30 days late on your mortgage payment, it can lower your score by 110 points and it can take as long as three years before your score recovers fully.
Negative items on your report can stay on your report for up to seven years, with a bankruptcy clinging on for up to 10 years. Information from utility companies is not listed on your credit report, nor is it included in the calculation of your FICO score.
What's The Most Effective Way To Improve My Score?
It's real simple: pay your bills, ALL your bills, on time.
Do you know what your FICO score is?