How to Increase Your FICO Score

Understanding you FICO score is the first step in improving it. Let's say you have a FICO score under 620. This means you will not be offered the best interest rates when applying for a loan and will pay significantly higher rates. People with a FICO score of 760 and above get the best interest rates, which mean they pay less. Your FICO score is based on a formula created by Fair, Isaac & Co, Inc. This formula includes proportion of balance to high credit on revolving accounts, types of credit used, insufficient length of credit history, number of accounts opened in last 12 months and number of recent inquiries. The following steps will help you improve your FICO score according to the formula the Fair, Isaac & Co uses.

Instructions

1

Opening too many accounts in a short amount of time lowers your FICO score. Spread it out through out the year when you open credit cards or apply for loans.

2

Don't cancel a credit card even though it is paid off. The amount of time you have with a credit card company increases your credit history and this is a good thing for your FICO score.

3

Increase your FICO score by retaining a line of credit larger than the amount owed. Keep credit card balances low. Keep debt 30% or less based on the amount of the line of credit on your credit card.

4

Keep it simple and PAY YOUR BILLS ON TIME! Avoid additional stress in your life by setting up auto pay or direct deposit to pay your bills on time each month. Automatic payment of monthly bills will help prevent late payments. Credit cards can increase an interest rate substantially from just one missed payment and this will lower your FICO score.