Improving FICO Score

How to improve your FICO score

Improving FICO score? You can raise your FICO score in many ways – improving your FICO score is actually easily than you think. What follows is a full action plan on how to improve FICO score, step by step.

How to improve FICO score: Pay your bills on time

Especially in the months prior to your applying for a loan, ensure that there are no late or missed payments on any of your bills. Even just one missed payment can hurt your score significantly.

How to improve FICO score: Reduce (and eventually eliminate) credit card debt

The less you owe, the higher your FICO score. Work on using your cards as rarely as possible, and eventually aim to eliminate your credit card debt entirely.

How to improve FICO score: Pay cash as far as possible

In the months before you need a high FICO score, charge as little to your cards as possible. Pay cash everywhere you go – and if you cannot afford to pay with cash, do not make the purchase at all.

How to raise FICO score: Closing accounts may hurt you

If you hold several cards, your debt-to-credit limit would be affected if you decide to close one or two of them. As your total credit limit decreases, your debt-to-credit limit ratio increases. It would thus be advisable to leave your credit card accounts open.

How to raise FICO score: Be careful about declaring bankruptcy

If you declare bankruptcy, your score would naturally be adversely affected.

If you file for Chapter 7 bankruptcy, all of your debt would be eliminated, but any of your assets can be liquidated to repay your debts. This means that you might not be left with any house or automobile under your name.

If you file for Chapter 13 bankruptcy, a payment plan will be arranged for your debts, which must usually be paid in full. However, interest payments and penalties would usually be waived.
A Chapter 13 bankruptcy stays on your credit report for seven years, while a Chapter 7 bankruptcy stays on your credit report for ten years – so do be aware of the long-term consequences.

Improving FICO score through other means

Other factors that also affect your FICO score

  1. Length of your credit history: The longer your average account age, the better your FICO score. So please do not open too many new accounts all at one go!
  2. How well you manage different kinds of debt: Demonstrating that you are able to consistently meet credit card payments makes you even more credit trustworthy than someone who does not hold any credit cards.

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