Personal Finance

Raising FICO and Experian Scores Made Easy

Raising FICO scores is important for anyone who intends to apply for credit now or in the future. This may be because you plan to apply for a new credit card or refinance your mortgage. Your FICO credit rating is now used by a number of leading insurers to determine premiums. This is because a correlation has been identified between the irresponsible handling of credit and the likelihood of a claim. Some employers will also perform a credit check before employing you, particularly in legal and financial services.

A bad FICO credit rating occurs as a result of failing to comply with the terms of one or more credit agreements. Credit transgressions range from as little as a late payment to more serious ‘offences’, such as filing for bankruptcy under chapter 7. Any time a borrower fails to meet their commitments, the matter is reported to all three major credit references agencies (Experian, Equifax and TransUnion). This makes applying for credit more difficult.

How Long Does an Adverse Credit History Show For?

Bad credit typically shows for up to 7 years if a debt relief program, such as a debt settlement program, is entered. This is also the case for mortgage repossession. The time period increases to as much as 10 years for chapter 7 bankruptcy. The severity of the credit indiscretion will ultimately determine how much a FICO credit score dips by. FICO Credit Scores

Lower Your Income-to-Debt Ratio

If you are in a debt relief program, you may worry about how this will affect your score. However, the majority of individuals who have entered one have already missed payments. Don’t forget that your income-to-debt ratio is a deciding factor in determining your rating. A debt settlement program will help to reduce this.

Don’t Pay for Credit Repair Services

Legally raising FICO scores takes time to achieve. Despite what you may read on certain websites, it is not possible to wave a magic wand in order to improve your FICO credit rating. Buying a new credit record amounts to fraud. Don’t waste your money paying for such services as there is nothing you cannot find at for free. The only genuine way to boost your score is by correcting errors and making punctual repayments both now and in the future.

Raising FICO Scores

You may be surprised to discover that making payments on a debt relief program is better than having a delinquent account. Making some payment to a creditor is correctly interpreted as more positive than offering nothing at all.

Rather than allowing the lender to foreclose on your home, arrange a short sale or get a mortgage modification. Some short sales will show on your credit report as ‘paid in full’ which means that your FICO credit rating won’t be damaged at all.

Make payments on all of your active credit agreements punctually. Whilst a Debt Management Plan may have been used to tackle unsecured debts, paying your mortgage on-time is of considerable benefit. Your FICO credit score can improve within a couple of years of bankruptcy by doing this.

If you have no further credit agreements because you declared bankruptcy, look for other ways to re-build your credit. Signing-up to a bad credit history unsecured credit card and making regular payments will help in terms of raising FICO scores. However, you should be very careful not to create a new mountain of high APR debt.

Don’t fall for any of the scams when raising FICO scores. The single most important thing is lowering your income-to-debt ratio and establishing affordability. Once this objective has been achieved, you are better placed to make your repayments and re-build your FICO credit rating.