Dear Ash Cash,
What affects my credit score and what can I do to fix it?
For those who are not familiar, your credit score or F.I.C.O. is a
credit reporting system started by the Fair Isaacs Corporation. It is
a numerical measurement of your credit worthiness that ranges from 300
to 850. Your F.I.C.O. score is used by most lenders to determine
whether or not you can obtain credit.
Your score can stop your from getting loans, renting or buying a home,
purchasing a car, opening a bank account or even getting a job.
Getting a handle on your F.I.C.O. score is easy if you educate
yourself on how F.I.C.O. is calculated then discipline yourself. The
five categories that is used to calculate your score are: How much
debt you have or usage (30%), Your payment history (35%), Your debt
usage ratio (How much you owe in relation to your credit limit) (30%),
How far back your credit history goes (15%), New credit (10%) and your
mix of various types of credit (10%)
Because new credit, length of credit history, and credit mix take
longer to fix to have an immediately (6months-1year) impact on your
credit it is important that you concentrate of paying your bills on
time (35%) and bringing down your usage (30%). If you have late
payments in the past don’t fret too much because your score is damaged
by the most recently reported derogatory information, so derogatory
information reported prior to 2 years does not highly impact your
score. As far as usage, just make sure that you are not spending more
than 30% of your allotted credit limit ie; if you have a $1,000 credit
card don’t spend more than $300… If you concentrate on those two
things you will be positively affecting your score by 65%….
If your score is not good enough to obtain new credit then apply for a
secured credit card or loan.. Those are great ways to build up your
For more information or questions on financial tips, check out his new book at www.askashcash.com.
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