Bad Credit Medics

You must be wondering had you taken right steps you would not see this day all your life. Take the right a step always makes your path, regardless of where you are and what you do, easier to tread. Steps to improving credit score is not outside of this purview. This takes a lot of introspection not just to understand what went wrong but also to see what steps you can take within your limits.

The ideal step to improve FICO score is to manage your credits prudently all through. Improving credit score takes an understanding of how they are calculated. The score is calculated by software developed by Fair Isaac Corporation, FICO by using data in your credit report. But the Credit Reporting Agencies may not be using the same method or software to calculate your credit score which my surprise you when you see different scores.

Each of your credit report entry is grouped under different heads and weighted. All credits fall in one group and carry a weightage of 10% and is important to have the right mix of credit when your history is short. Payment history carries the highest weightage of 35%. It considers
* Different payment histories like mortgage, vehicle loan, departmental stores’ bill and credit card payments. Here, better the payment consistency higher is the score you can expect.
* Foreclosures, bankruptcies, liens, judgments from public records. Lesser the cases here more the weightage and thus your score.
* Delayed, missed payments, number of delays/misses and how long overdue are considered here.

The amounts you owe carries 30% weightage. But it works in the reverse way. Lesser the amount every month higher is the score. Within this mix of your owing (mortgage, credit card, insurance etc), total available credit on your credit card, number of accounts and the original balances owed measure up here.

Length of your credit history counts positively only if you don’t have negative points. This means removing, not allowing negative points and holding credit accounts longer add up for better points. This section has a weightage of 10%.

Your recent history, new credit accounts, age of the new credit accounts will account for 10% weightage.

With such clarities with scoring methods, you can plan accordingly, like whether or not to open/close an account and how does any step affect the credit core etc. Now you know why owing credit card balance hits you harder than all else.

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