Tuesday, June 3, 2008

5 steps to analyze your credit score

Credit history plays a vital role in building credit score. The exact way that your FICO score is calculated is a secret--it's proprietary knowledge of the Fair Isaac Corporation. Never mind but if you analyze your credit history you can get a good idea of why your credit score is in a particular range. So here’s are important tips to make it done:

Step1
Always remember to analyze the potential problems section on your credit report. These are the issues that can pull down 30 percent of your FICO score very easily. Potential problems can include bankruptcies, debts that have been given over to collection agencies and other delinquent accounts.

Step2
Keep a track of your accounts in good standing. If the companies holding these accounts have reported your current balances, this section is about 30 percent of your FICO score--the 30 percent based on your outstanding debt. Outstanding debt isn't necessarily bad. Debt is considered in terms of your ability to pay it back and how much credit you still have available.

Step3
Make a check over your history of account balances. This section combined with the potential problem section makes up as much as 35 percent of your FICO score because it tells lenders about your payment history.

Step4
Read carefully the listed requests for your credit history. This information can affect up to 10 percent of your FICO score, because your applications for new credit can drive down your score. However, only inquiries that you requested by asking for credit should be provided as part of your credit report for new creditors.

Step5
Try to know how your credit history contributes to your credit score. If you have a history of paying off your credit on time, limiting your problems and not abusing your credit, you will have a very strong credit score.

All these steps are followed by me first and then are recommended to you as there is a huge benefit after using them in real life.

3 comments:

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