The Debt Management Expert

OVERVIEW
Here are 10 tips to help you increase your FICO score by using credit responsibly.

In order to keep your finances in great shape and increase your FICO score, it is important to use your credit responsibly.

Your FICO score is a score created by credit bureaus such as Experian, Equifax, and TransUnion. Institutions lend money based on the FICO score created by credit bureaus. Here are some tips for keeping the FICO score in good shape.

1. To Increase Your FICO Score, Pay Your Bills On Time
Late payments have a negative effect on your FICO score. Do your absolute best to make sure every payment arrives on time. If you have missed payments, get caught up. The longer you have a good record of paying your bills on time, the more your FICO score will increase.

2. To Increase Your FICO Score, Keep Balances Low on Revolving Accounts
Credit cards are a type of revolving credit. This means you can pay off the line of credit and then use it again. Keep balances low on this type of credit. Having high amounts of credit card debt will lower your FICO score.

3. To Increase Your FICO Score, Pay Off Credit – Don’t Just Move it Around
Moving credit around is not the same as paying it off. Your FICO score will increase if you consolidate your credit. If you have a balance, but fewer open accounts, your FICO score will increase.

4. To Increase Your FICO Score, Don’t Open Accounts Your Don’t Need
People will often open a number of accounts in order to try to increase the amount of available credit. This strategy can often backfire and lower your FICO score, instead of increasing it.

5. To Increase Your FICO Score, Avoid Collection Accounts
Be aware that any account that has gone to collection will stay on your credit report for seven years. These accounts will negatively affect your FICO score.

6. To Increase Your FICO Score, Open Accounts and Pay Responsibly
If you’ve had trouble in the past with credit, it pays to open a new account and use it responsibly. Establishing a pattern of responsible credit use will help to increase your FICO score over time.

7. To Increase Your FICO Score, Avoid Closing Accounts
Closing an account doesn’t make that account disappear from your credit history. Each account you’ve opened and closed will show up on your credit report and will affect your FICO score.

8. To Increase Your FICO Score, Use Credit Cards
People who have no credit history have a difficult time obtaining credit. It’s important to obtain credit early on and use it responsibly. People who do this have higher FICO scores than someone who never uses credit at all.

9. To Increase Your FICO Score, Seek Credit Counseling
If you are in trouble with debt and your FICO score is lower than you would like, it’s a good idea to seek the advice of a legitimate credit counselor. These counselors can help you navigate your credit report as well as help you make a concrete plan to help you increase your score.

10. To Increase Your FICO Score, Remember it Takes Time
Remember, there are no quick fixes for increasing your credit score. It takes time to establish a good credit history, or to repair damaged credit. If you look at it as a process, you’ll be able to create solid goals and to achieve them.

OVERVIEW
A credit bureau collects information from different sources about credit and payment information and then provides that information in an organized fashion to lenders. The three primary credit bureaus in the United States are Experian, Equifax, and TransUnion. Credit bureaus create credit reports for lenders that are basically a history of your borrowing and repayment habits. Companies who are trying to determine the creditworthiness of an individual typically request credit reports.

———————-

Who is a Credit Bureau?
A credit bureau collects information from different sources about credit and payment information and then provides that information in an organized fashion to lenders. The three primary credit bureaus in the United States are Experian, Equifax, and TransUnion.

What Information Do Credit Bureaus Collect?
Credit bureaus create credit reports for lenders that are basically a history of your borrowing and repayment habits. On these credit reports, you’ll find your personal information, information about your credit accounts, including your mortgage and your credit cards, any public information about negative events in your history, such as bankruptcies and tax liens, and inquiries that have been made about your credit history, by yourself and others.

Credit bureaus such as Experian, Equifax, and TransUnion take in credit information from companies called data furnishers. These data furnishers are usually lenders and creditors, utilities, debt collection agencies and the courts. Data furnishers report their data to the credit bureaus voluntarily. They might not report all data to all three bureaus, and some lending or credit companies might not report your data at all.

The information collected by the credit bureaus gets collected and stored in their files and databases. This information is then accessed when a credit report or credit assessment is created for an individual. Companies who are trying to determine the creditworthiness of an individual typically request credit reports.

How Do Credit Bureaus Create Credit Scores?
Credit bureaus collect information from data furnishers and they then create a credit score for their customers based on the information they have collected. The credit bureaus create these scores using a mathematical formula that calculates the likelihood that you’ll repay a loan based on comparing your information to others in a similar situation. This credit score helps lenders evaluate the risk associated with lending you money and helps them to assess interest rate on the money they may be willing to lend.

The three credit bureaus, Experian, Equifax, and TransUnion, do not all use the same scoring system and they do not have exactly the same data from the data furnishers. All three credit reports may contain different information. These bureaus are for-profit businesses and are not affiliated with the government, although they are subject to government rules and regulations. These credit bureaus, also known as consumer reporting agencies (CRA’s), are required to provide to consumers a free copy of each of their credit reports every 12 months.

Overview
Learn how to get a free credit report from each of the three credit bureaus every year and why it is important that you review your credit report on an annual basis.

————-

Under the Fair Credit Reporting Act, you are entitled to a free credit report from each of the credit bureaus (TransUnion, Equifax, and Experian) every 12 months.

As a responsible consumer, it’s important to review your credit report on a yearly basis. When you review your credit report, look for any derogatory information listed. Checking the information on your credit report on a regular basis can help in two ways. First, it can alert you to any fraudulent activity that has been taking place with your name or your accounts. Second, it can alert you to any mistakes that might have been made that need to be corrected. There are ways to work with the credit bureaus to correct any mistakes that might turn up on your credit report.

Agencies specializing in credit reports keep information about the borrowing and repayment habits of millions of Americans. The credit bureaus provide this information in a credit report to lenders who are trying to evaluate customer’s strengths and weaknesses. These credit bureaus, such as Experian and Equifax, provide information about the type of credit you use, and how long you’ve had each account. The credit bureaus will also provide information about your payment history.

When a lender looks at your credit report from a credit bureau such as Experian or Equifax, the lender will look at your credit score. Each credit bureau creates a unique credit score. Those credit scores are determined by looking at the information on your credit report, such as your payment history, the amount of credit you have available, and the amount of debt you currently have. A lender will look at your credit report to determine whether or not you are an acceptable credit risk.

To obtain the credit reports each year, you need to do the following:

1. Visit www.annualcreditreport.com. This is the official site to help consumers obtain their credit reports from each of the three credit bureaus, Equifax, Experian, and TransUnion.
2. Or call 1-877-322-8228. You can request your free credit report over the phone.
3. Or fill out the Annual Credit Report Request Form, which can be found at https://www.annualcreditreport.com/cra/requestformfinal.pdf, and mail the credit report to the address listed on the form.

You are entitled to a free credit report from each of the three bureaus each year. There are no hidden costs. If you are asked to pay for a credit report or join a subscription service, you are dealing with a fraudulent provider. There is no need to provide personal information to legitimately obtain any of these free credit reports.
You can obtain all three credit reports at the same time when you request them using the methods listed above. You can also request one credit report from each credit bureau at a time. A good way to monitor your credit report every few months is to request a credit report from Equifax and then request a credit report from Experian a few months later, followed in another few months by a credit report from TransUnion. This way, you can be assured that your credit information is correct and secure.