This little three digit number can really affect your budget. Lenders use this score to determine the terms of credit they may extend to you. Auto and homeowner’s insurance companies, and phone companies use credit scores to decide to do business with you. The higher the credit score the lower your costs may be. The credit score is also called the FICO score after the company, Fair Isaacs Corporation, which developed the system of analyzing the information contained in your credit report. The information analyzed includes your payment history, the number of delinquent debts you may have, your total existing debt, and the length of time you may have had the accounts opened.
If you want to improve your score, your journey begins with obtaining a copy of your credit report. Review the report for accuracy and immediately dispute the errors. Get current on all of your accounts and stay current on all your accounts. Past due amounts and late payments negatively affect your score. Pay down revolving accounts such as credit cards so that the balance of the account is no more than 30% of the credit limit. Do not close inactive accounts. Do not pay for your credit report (you are entitled to one free each year) and do not pay someone else to improve your credit score for you. Do visit www.consumer.ftc.gov and click on the “Money and Credit” tab. You will find instructions on how to obtain your free report and how to dispute any errors you find. There is a wealth of information on this consumer protection site that can help you improve your credit score.