Know Your FICO Score & Why It Matters!
Are you looking to get your finances in order or are you looking to buy a house in 2019? If so, knowing and improving your FICO score should be a part of your 2019 plan. FICO, also known as 'Fair Isaac Corporation', was founded by Bill Fair and Earl Isaac in 1956 and focused on providing credit scoring services. Today, FICO is used to determine credit-worthiness and the interest rate charged for financial products, such as loans and credit cards . Underwriters have determined that people with low FICO scores default on loans with far greater frequency than do their higher scoring peers, so the lower the score, the higher the interest rate. Take a moment to request your credit report and FICO scores from the three credit bureaus — Equifax, Experian, and Trans Union — and look for areas to improve this year. Below is a list of topics to be mindful of as you review your credit reports and set your 2019 goals. I wish you all the best and financial success this year! - Timeka
Things to Keep in Mind
1. Delinquencies: Any form of delinquency can negatively impact the credit score. A 30-day late payment is less risky than a 90-day late payment.
2. New credit: Your score drops when you open several credit accounts in a short period, as you may be unable to meet new credit obligations.
3. A long credit history is better than a newly established one.
4. A consumer with “maxed out” cards may have trouble with payments.
5. Public records: Tax liens and bankruptcies jeopardize a healthy FICO score.
6. The use of consumer credit counseling agencies may lower scores.
7. Small balances, no late payments show responsibility.
8. Too few revolving accounts: If you fail to use credit, there is no way to evaluate your ability to manage it.
9. Too many revolving accounts may mean over-extension.
10. Credit scores affect interest rates. Some lenders establish lower interest for high FICO scores and vice versa.