Boost your fico score today

Boost Your FICO Score Today !

by T.M.Hoy Credit and credit scores are the end results of a long line of attempts to find a substitute for personal relationships and trust between lenders and borrowers. Since most transactions between lenders and borrowers are faceless, accomplished via telephone or computer, credit scoring has become an all important part of consumers (and business owners) lives. Without a decent credit score the average person is basically cut off from access to anything that requires finance, whether it be a car, a home, credit cards, even shopping – all of which require credit of one kind or another.

Business-to-business and business to consumer transactions rely entirely on these strange algorithms that determine our daily lives, a score over which we often feel we have little control.

However, it's possible to take control again, once you understand precisely what the score tracks, how companies and lenders use it, and how you can shape and affect that score for the better. The main metric used by banks and lenders is called a FICO score. It stands for Fair Isaac and Company, the company that created software in the 1980s to determine credit risk. There are other scores, and other algorithms in use to determine risk, but FICO remains the standard and most widely used of all lending metrics.

FICO scores take the various bits of information from your credit reports, adjust it and compare it with other borrowers, and gives a number that attempts to predict the likelihood of your repaying a loan or debt. According to FICO the score is broken down as follows: 35% = payment history; 30% = amounts owed; 15% = length of credit history; 10% = new credit; 10% = types of credit used. The score ranges from 300 to 850, and is used by all three major credit bureaus along with a host of other lenders.

This information all comes from your credit reports. You can get a free credit report once a year from www.AnnualCreditReport.com ; or call them at 877 – 322 – 8228; ACR request form, PO Box 105281, Atlanta, GA 30348 – 5281. You can get the reports directly from the various credit bureaus themselves: Equifax (www.Equifax.com), 800 – 685 – 1111; Experian (www.Experian.com), 888 – 397 – 3742; Trans Union (www.TransUnion.com), 800 – 916 – 8800.

Your credit report collects a huge amount of information. It includes your current credit accounts, your payment history and the length of that history, credit inquiries made by companies and potential lenders, how you utilize your credit, any bankruptcies in your past, where you live, whether you own your own home, how often you have moved, how well you pay your bills, how much credit you have available and what types, whether you've been sued, arrested, in short – as comprehensive a record of your financial life as it is possible to compile.

There are a few rules of thumb and some basic do's and don'ts that govern how the score is created.

Most important of all, is to pay your bills on time – get and stay current on payments, even if you only are able to make a minimum payment. Your score is punished harshly by late payments. In addition your FICO score is affected when you use more than 35% of your available credit limit. Multiply your maximum credit limit on your cards by .35, and if your debt exceeds that number, pay it down or ask for a higher maximum. In either case your credit score will improve.

In general try and reduce the amount you owe overall, and keep your balances low. Don't open a bunch of cards or many new accounts too quickly – this also hurts your score. Having only recent credit

history is another source of low credit scoring.

The way you pay your utilities can also help or hurt your credit score. Your telephone bills, energy and cable bills, and so on do affect your credit score, and take that into consideration when paying the bills.

Some very simple things you can do to improve your credit include opening a savings and checking account. Having a bank account (or accounts) is a plus for lenders, and is a virtually free way to give your score a little help. Another simple and fairly inexpensive way to quickly raise your score is to take out a secured loan. You can do this by going to where you bank, putting aside a sum (say, $500) in a savings account, then ask to speak to a loan officer. Let them know you want to establish credit, and simply borrow that money back. It shows up on your credit a a loan. Your monthly payment will be quite low – pay it back over the course of the year, and your payments will average about $35 a month, and there is no credit check or hassle at all. At the end of the year you'll have $500 in savings and a boosted credit rating.

It's also worth your while to check your credit report for errors and dispute those errors. When asking for your report, make sure you are specific and ask for the “credit file disclosure”. This is all the information that credit bureaus send to employers and lenders; it is info theoretically for your eyes only and it will help you keep tabs on who's doing what with your credit. Credit bureaus depend on lenders, credit card companies, insurance companies, employers, landlords, and other businesses for the information they use – and mistakes unfortunately are not uncommon. Look to see if all the debts are actually yours. If not, write the credit bureau that has the inaccurate information on the report, and challenge it. They have 30 days to respond and if they fail to do so then under the Fair Credit Reporting Act of 1970 (the FCRA) they have to remove the negative information. If you do this right around Christmas time – say in November or December, chances are very good that they won't have time to respond and you'll win by default. In any case negative information is only allowed to stay on the report for seven years (excluding bankruptcies, which stay on for 10, and government debt – the government makes the rules themselves, after all).

When you are denied credit you have a right to see the report that was used to make that decision. Ask to see it. Sometimes it may be a case of a wrong Social Security number, a mixed up name, wrong dates, and so on. It's worth your while to keep on top of this stuff.

Another device you can use to help clean up your credit is the Fair Debt Collection Practices Act (the FDCPA). Under this act you have a right to a huge amount of information on any debts that have been sent to a collection agency. By filing a “debt collector disclosure statement”, and demanding the debt collector respond appropriately, chances are very good that the debt will simply be written off and taken off your credit report. This is because the debt collector disclosure statement asks a LOT of questions – including how much the collection agency paid for your debt, makes them divulge information about exactly how they got your debt, and many other uncomfortable questions that they would prefer not to answer. But you have a right to that information, and if they don't provide it the courts back you up and you will be able to have the debt removed from your record. A very good debt collector disclosure statement is available at http://www.scribd.com/doc/30832556/Debt-CollectorDisclosures-Statement-1-1.

The FCRA and the FDCPA are both very useful in helping to clean up credit, and are worth some research if your credit is less than sterling. You can find a lawyer who will help you fight companies that violate the FCRA and FDCPA, by contacting the National Association of Consumer Advocates, at www.naca.net.

If all else fails you can contact Consumer Credit Counseling Services. They are a reputable group that helps people clean up their credit history, and repay bad debt. They are available at: www.moneymanagement.org They are paid by creditors and therefore are free. Make sure you're not sucked in by scam artists using the CCC logo posing as a nonprofit organization. Most of these people recommend bankruptcy and really aren't out to help you. Credit counseling services on the other hand negotiates on your behalf to reduce your debt, and make one manageable monthly payment.

It is also worth bearing in mind that lenders do not depend entirely on your FICO score. Other factors that have a big impact include your employment history, the amount of income you earn, the amount of debt you can handle, and – very important, whether or not you own your own home.

What they are NOT supposed to consider (and this is by law) are race, color, religion, sex, marital status, age, where you live, the interest you pay on credit cards, your job including your salary, occupation, whether or not you're unemployed and your employment history, and any other information not found in your public “official” credit report (separate from and different than your “credit file disclosure”). If you feel or discover that a lender has denied you credit based on one of these factors you have a right to sue them.

The Federal Trade Commission (the FTC) is the main watchdog in this field, and you can contact them at www.FTC.gov.

I hope this short report has helped you and given you some perspective on the subject. If you liked it, and are reading this on a document sharing website, there's lots more good information available at my website: www.smallbusinessfinancingonline.com. Please pay me a visit !