Tip Three on How to Improve Your FICO score
How much you owe is taken heavily account when figuring a FICO score. It equates to 30% of your FICO score and you need to understand how it is figured. Utilization is the method of measuring how much you owe. This is debt divided by your credit limits. The lower the better is always the rule. Each account will be judged on this.
It might seem simple that pay down your debt is an easy way to improve you FICO score. The truth is if you weren’t struggling with high debt you would pay it down. This method of improve you FICO score is a long term view. Paying off debt just doesn’t happen overnight. You need to get yourself of a budget and start dedicating all your extra income to paying down your debt.
If you are willing to commit to this plan this will also benefit your payment history because you want to pay and you will more than likely pay on time.Debt Consolidation in efforts to pay off your debts could actually hurt your FICO score. This is because each card is look at for utilization and moving all balances to one card will more than likely put it near its limit. If your goal is to improve your FICO score, you should start by paying off the account that is closest to its credit limit to reduce utilization.
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