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Improve Your FICO Rating

Interested in investing money properly and good credit When making big investments or life changes, make them carefully with your mate.


What Is a FICO Credit Score?

A credit score is a number that represents the creditworthiness of an individual. The three-digit number from 300 to 850 lets lenders decide how likely it is they’ll be paid on time. Obviously, the higher your number the more creditworthy lenders regard your requests. Lenders use your score along with other details when deciding whether to extend credit.

There are three well-known credit reporting agencies that will provide you with a copy of your report on an annual basis for no cost.

FICO is an acronym and the new name of Fair Isaac Corporation, a major analytic software company providing services and products to consumers and businesses around the world. Fair Isaac Corporation has developed a new method called 'NextGen FICO 2.0', which they say addresses important credit trends by improving score accuracy and maintaining predictive power.


FICO Criteria

The FICO standard score includes the following ranges:

  • Excellent - 750-850
  • Good - 660-749
  • Fair 620-659
  • Poor - 340-619

Credit Score Facts

The exact formula for your FICO credit score is unknown, but we do know several components, including:

  • Payment history makes up 35%
  • Debt burden is 30%
  • Length of your history is 15%
  • Types of credit is 10%
  • Recent credit searches is 10%

Your payment history is probably the most important thing, so paying your bills on time will improve your score. Your current revolving debt, such as the balances owed is considered. If you can pay off revolving debt it will lower the credit utilization ratio and increase your score. However, closing a revolving account will typically adversely affect the ratio, which will have a negative impact on your FICO credit score.

Your score can benefit from managing different types of credit, (i.e. installment, revolving, consumer finance and mortgage). Shopping for a mortgage or auto loan over a short period of time will probably not decrease your score as a result of these inquiries.

All credit inquiries are recorded and displayed on your credit report for a period of time. However, an individual doing self-checks, an inquiry by an employer for employee verification or companies initiating pre-screened offers of credit or insurance do not impact your credit score.

There are a couple of other special circumstances that can negatively impact your FICO score. Money that is owed because of a court judgment or a tax lien does carry an additional negative penalty, particularly when recent. Having one or more newly opened consumer finance credit accounts may also have a negative impact.

FICO Score vs Credit Score [What's the Difference?]

Check Your Credit Rating

FICO scores are between 300 and 850, and 60% of the scores are right between 650 and 799 with the median score of 723.

The three major credit agencies utilize the score generated with their data differently:



Raise Your Credit Score

There are ways to improve your FICO score. Get a copy of all three credit reports and your FICO credit score. This will clearly show you what you need to pay off first.

If you are paying on a collection account, there will be a negative impact on your score, and this is the first thing to pay off. Of course, delinquent accounts are listed on your credit report in a column called "Past Due". If you see anything in this column on your credit report, pay it off as soon as possible.

Charge-offs and liens within the past 24 months will severely damage your credit, so it's very important to pay these off also. However, if these are older than 24 months, it does not negatively impact your credit. Prioritize and pay your past due balances first, then pay any collection agencies, while asking them to remove all references listed by the credit bureau.

You can request a good faith adjustment from your creditor when you have late payments and ask them to remove the negative information from your credit report. Persistence usually pays off in case they refuse to remove these late payments. Remind them that you had been a good customer and would deeply appreciate their help. Most creditors receive calls at a call center, so if the representative you're speaking with refuses to make a courtesy adjustment, call back and try again with someone else as your persistence and politeness can often pay off.

Make sure your creditors report your credit limits to the credit bureaus. If they do not report the limit the software used by the credit agencies often shows your account has been “maxed out.” As an example, if you have a $10,000 credit card limit, which doesn't show on your credit report, your score can be damaged as severely as if you are carrying this whole balance. Ideally, you want to keep money owed under 70% of your total credit limit, and 50% is even better and 30% the best. If you are trying to increase your credit rating ask the credit card company to increase your limit.

Generally do not close your credit cards, as this will hurt your credit score ratings. For example, if you have credit card debt of $15,000 and your total credit is $30,000, you are using 50% of your total credit. If you close a card with a $10,000 limit, you change your ratio to using 66% of your credit, which will hurt your credit score. If you have more than six department store credit cards, you can close the newest account, but don't close the rest.

Keep your old credit cards current even if you're not using them anymore. Use them once or twice a year so the bank doesn't close them as this positively affects your long-term credit rating.

Establishing New Credit

If you don't have a credit card, you should get one to build your credit history, but if your credit is not adequate, try getting a secured card. A bank will typically charge $500 for a VISA card. The $500 sits in an account at the bank. Use the card each month, and pay it off in full. It is not necessary to carry a balance.

Another excellent way to improve your credit is to get an installment loan, which can consist of personal loans, automobile loans, mortgages and student loans. Be very careful when getting a new loan. The payment should be an amount that you can easily afford.

In Summary

I know many people are in bad shape financially, especially since COVID-19 has lasted so long. Some people have to resort to the use of credit cards for groceries and medicine. The most important thing is to at least make a payment every month.

You are entitled to a free credit report from one of the agencies annually. Your credit is something that you need to treasure, because once you ruin your credit it is a long process to regain a good credit score.


This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Pamela Oglesby


Pamela Oglesby (author) from Sunny Florida on November 27, 2020:

Hi Adrienne,

It is important to have a good score if possible. I appreciate your comments.

Adrienne Farricelli on November 27, 2020:

Those scores are so important for those times when somebody needs to borrow some money. You provide important tips and guidelines to achieve an maintain a good score.

Pamela Oglesby (author) from Sunny Florida on November 27, 2020:

Hi Devika,

I very much appreciate your very nice comments. Have a great day!

Devika Primić from Dubrovnik, Croatia on November 27, 2020:

Hi Pamela your hubs are informative and interesting, also your research is tops.

Pamela Oglesby (author) from Sunny Florida on November 26, 2020:

Hi Linda,

We also live exactly as you described. When I was young I wasn't as careful, but in the last few decades we pay all bills each month in full. We also paid our house off many years ago, which feels good.

It is good that you taught your daughter to do the same. I appreciate your comments. Have a wonderful Thanksgiving.

Linda Lum from Washington State, USA on November 26, 2020:

Pamela, this is very important, especially now as we head toward shopping (and overspending?). We have a really high score. We never carry a balance on our credit card. We pay it off every month. We are frugal and don't spend more than we have each month. I'm happy to say that our daughter does the same. It can be done but takes discipline.

Pamela Oglesby (author) from Sunny Florida on November 26, 2020:

Hi Devika,

I am glad you found this article informative. Protecting out credit is so important. Thank you so much for your comments. Have a good day!

Devika Primić from Dubrovnik, Croatia on November 26, 2020:

Hi Pamela an interesting hub and so much to learn from here. Informative about Fico and so glad to have stopped by to learn from one of your best hubs.

Pamela Oglesby (author) from Sunny Florida on November 26, 2020:

Hi Sp,

I am glad you found this article to be informative. I appreciatee your comments. Have a great day!

Pamela Oglesby (author) from Sunny Florida on November 26, 2020:

Hi Chitrangada,

I knew there was Experian in India, but I didn't know the name of the credit rating. Thank you for commenting. Have a great day!

Sp Greaney from Ireland on November 26, 2020:

Good article with some good advise on how to keep your score in a good range. We have a similar type of report here and you can request it to see your score. It's always interesting to read.

Chitrangada Sharan from New Delhi, India on November 26, 2020:

Important information about Fico rating. We have something similar to this, which is called Credit score. Most people are not aware about this. It’s important to consult an expert to calculate it.

Thanks for sharing this useful article, which I am sure, will benefit many.

Pamela Oglesby (author) from Sunny Florida on November 26, 2020:

Hi Rosina,

I am glad you found this article to have important information for all of us. Thank you for your comments.

Pamela Oglesby (author) from Sunny Florida on November 26, 2020:

Hi linda,

I am glad you found the article informative. I appreciate your comments. Happy Thanksgiving!

Rosina S Khan on November 25, 2020:

This article is important in that it shows how to improve the credit score. It is helpful for all of us. Thanks for sharing, Pamela.

Linda Crampton from British Columbia, Canada on November 25, 2020:

You've including a lot of interesting and useful advice in this article. The information is important to think about.

Pamela Oglesby (author) from Sunny Florida on November 25, 2020:

Hi Liz,

I did note the Experien was in England, India and Australia, so I assumed it was in most countries. I am glad you liked this article. Thanks for your comments, Liz.

Liz Westwood from UK on November 25, 2020:

We have a similar system in the UK. This article gives good advice. Experian and Equifax are well known in this area.

Pamela Oglesby (author) from Sunny Florida on November 25, 2020:

Hi Mantita,

I did see that Experian had offices in England, but I didn't see what the credit rating was called. I know many are struggling now thanks to the COVID 19 virus.

You have certainly traveled and I am sure your learned so much from the various countries. I appreciate your comments, as always. God bless you, Manatita.

manatita44 from london on November 25, 2020:

A very thorough and probably useful article right now. You are becoming very versatile, my Dear. Kudos to you!

In my 38 years of humanitarian and spiritual service, I have travelled 300 times across 45 countries and yes, the card was a plus. I believe I got rid of them 1994, started the practice again in 1996 and finally stopped age 60, God's Grace.

Yes, so many debts now and so many homes at risk with so many jobs gone. Alas! Wonderful Hub! Note: We do not call it FICO here, but the principle is the same.

Pamela Oglesby (author) from Sunny Florida on November 25, 2020:

Hi Bill,

We are in the excellent range also, but a few decades back I wasn't. I want to keep it there and we use the Quiken program to track everything. I like being orgnized. Thank you for your comments, Bill.

Happy Thanksgiving!

Pamela Oglesby (author) from Sunny Florida on November 25, 2020:

Hi Peggy,

I came across an article about credit and I thought this would be a nice change, then probably back to my medicl articles. I appreciate your comments. I hope you have a nice Thanksgiving, Peggy.

Bill Holland from Olympia, WA on November 25, 2020:

All good advice. Our credit scores are in the excellent range, which is most likely where they will end up for our remaining years, cross our fingers and hope to God. :)

Happy Thanksgiving, my friend!

Peggy Woods from Houston, Texas on November 25, 2020:

This is good information to know and to share with others. Pinning this to my Do You Know This? board. Happy Thanksgiving, Pamela.

Pamela Oglesby (author) from Sunny Florida on November 25, 2020:

Hi Eric,

I think are exactly right. Life is tough for many right now. Thanks for commenting. I hope you have a wonderful Thanksgiving.

Eric Dierker from Spring Valley, CA. U.S.A. on November 25, 2020:

So well done. A smooth read. I have gone down a bit since March. We shall see I suppose. So many will lose so much here. Prime will only be for the few who kept their jobs.