What About Your Fico Credit Scores

Do you and your spouse need to improve your FICO credit scores? According to the Fair Isaac Corporation, 60% of all Americans have credit scores less than 750. Fair Isaac's insurance scores run from the 100s to the 900s, with the higher the number, the better. To find out your score, you can get a free credit report from Equifax, TransUnion or Experian at www.AnnualCreditReport.com, which offers credit scores online. Once you know where you stand, you can develop a plan to recover your financial freedom.

First of all, pay your bills on time. This is the single-most important factor in improving credit scores. This means paying not only credit card bills on time, but also mortgage or rent payments, car loans, cell phone bills and utility bills. These accounts may not show up on an impeccable credit report, but if you're 30 days late on something, it'll show up as an unsightly blemish. It's imperative that you at least make the minimum monthly payments to remain in good standing. If you've missed a bunch of consecutive payments and your minimum has now exceeded what you can reasonably afford, then you may be able to transfer your balances to a new 0% interest card or you may need a credit counselor to help negotiate a plan for you. Also keep in mind that bounced checks will adversely affect your credit history too. Your overdraft bank account won't necessarily show up on your sample credit report, but the financial institutions can pull up this information using ChexSystems.

To keep healthy FICO credit scores, avoid allowing your accounts to go into collection. Your credit score will lower once these delinquent accounts appear, and surprisingly, paying them off will not improve your credit score one iota! When negotiating with collection agencies, you will need to request a letter of depletion that they'll submit to the credit bureau for you to try to wipe your slate clean again. Otherwise, paying off a long unpaid debt may actually hurt your credit score because it will show recent activity and increase the amount of time before the account disappears from your credit report! Also, if you ignore the collection agency and face a court judgment filed against you, then prepare to pay the full amount and see that stain on your score for another seven years! It's always best to negotiate directly with your lender.

Perhaps the best way to improve FICO credit scores is to haul in more money to pay off debts faster, for one. Of course this is easier said than done, but it's probably the most essential way to regain control of your financial future. Maybe this means more over-time, a stay-at-home spouse working part-time or striving for that bonus. In addition to using credit cards and paying them off in a timely fashion, it's even more important that you show you've made aggressive efforts to pay down your overall debt.

Related topics about fico credit scores
As of this year, there's a new credit rating model known as "FICO 08." The new model will be more forgiving of people who may have slipped on one payment but are otherwise in good standing. It also eliminates young students who wish to "piggyback" on their parents' good credit by appearing as an authorized user on a credit card.

"People tend to pull one credit score report and think everything is the same on all of them. That's not normally the case," says Howard Dvorkin, president of Consolidated Credit Counseling Services. He recommends reviewing credit reports from TransUnion, Equifax and Experian for the most accurate reading.

Whether you've foreclosed or opted for a short sale, your credit report can show a poor score of as low as 380. "This is a very humbling thing, when people are foreclosed on," says financial expert Ilyce R. Glick.