Three Simple Methods To Improve FICO Scores Quickly

By: Joseph Crutchfield Click author's name for more of his/her articles

You may feel a little disturbed these days if you have been watching your credit scores steadily decline. Even though that may be expected if you've had financial difficulty recently, you may be surprised to learn that your low credit scores may not be entirely your fault.

Fair Isaac decided to alter their FICO scoring system recently for the first time in decades. A bleak economy may have affected your employer to the point that raises, bonuses, or overtime hours have become a distant memory. The credit card companies are currently cutting credit limits and closing accounts to limit their exposure during uncertain economic times.

All of these factors have commonality when it comes to your individual credit. They can all drastically affect your credit scores and there is absolutely nothing you can do about them.

However, you should know that improving your scores, while challenging, still revolves around decent money management and paying attention to your credit history (something any motivated person can accomplish). Of course, you first step should be to get a copy of your credit report to see precisely where you stand. Your personal report is available any time from the 3 major credit bureaus or their joint website, annualcreditreport.com. But, in fact, there are 3 ways you can use right now to improve FICO scores and repair your credit even without your report:

Improve Your Payment History

Your payment history or how well you pay your bills is the #1 factor in calculating your scores and comprises a whopping 35% of your total creditworthiness. In other words, you are almost guaranteed to be rejected for future loans if your credit history contains several late payment listings, even if you list pages of good credit references on your loan application. So, you can begin improving your FICO scores now by simply making your monthly bill payments on time. Don't forget, even some of your utilities may report to the credit bureaus these days, so you'll want to concentrate on prompt payments each month. No excuses.

Start Improving Your Debt To Credit Ratio

You can improve your FICO scores by almost one-third (30%) just by keeping the amount of debt you hold at lower levels compared to your credit limits. If you use credit moderately and responsibly by not exceeding 10%-30% of your overall credit limits, potential lenders will pay attention. For example, on a credit card with a $10,000 limit, you should never use more than $3,000 in any given month. In general, potential lenders look for activity without a reliance on credit. So, if you can teach yourself to use credit sparingly but often, you'll have a better chance at keeping those accounts open and constantly improving your credit history.

Improve Your Credit History

We've just discussed using credit in moderation to improve your credit history, as well as making prompt bill payments. However, this last method to improve FICO scores may be a little surprising. Don't close your old accounts. That's right, keep them open. If you have older accounts you are still paying on, leave them be even if you have had a few problems with them in the past. Your credit score will drop almost immediately when you close several older accounts as it shortens your credit history. So, hands off.

Your personal credit history is around 15% of your total credit score, so it also deserves your full attention. In a nutshell, it is best to go ahead and get a copy of your report. Then sit down and make an educated, comprehensive plan of attack before blindly jumping into credit repair.

Working to improve FICO scores may not be as simple or straight-forward to do as it once was, but you can accomplish it in less time than you may think if you remain determined. And gaining control over your credit, finally qualifying for the home and auto loans you need, and being able to call your own shots financially can bring you a much different and infinitely more successful life in the long run.