Credit Score (FICO) basics - How to improve credit scores

Submitted by markdeviz on Thu, 09/04/2008 - 10:01
Your credit score is a 3 digit number that tells creditors about your creditworthiness - how you've managed credit and bills in the past. This score helps lenders/creditors judge whether you're a potential borrower. Credit scores range from 300 to 850. In this article on credit scores, check out the topics below:

What is a good credit score?

A good credit score is the one that's above 700. Anyone having credit scores in the 700s and above can get credit at better interest rates than someone whose credit score is lower.

However, anyone with low credit scores, that is, in the range of 500-600 is considered as high risk to creditors. Those having low credit scores are usually charged high rates of interest. Depending upon the market scenario, they may not be able to get credit/loans due to low credit scores.

What is FICO Score?

The FICO score is the most common credit score used by creditors/lenders in order to evaluate a borrower's creditworthiness and is developed by Fair Isaac Corporation. However, scores offered by each credit reporting agency (CRA) or credit bureau may vary because not all creditors report information to every CRA. Moreover, the credit scoring models used by the bureaus differ slightly from one another.

FICO scores offered by Equifax and TransUnion are known as Beacon and Empirica. Consumers can get these scores online from MyFICO. Experian, another CRA also offers FICO score but consumers can't access it from MyFICO. Experian FICO scores are available only to lenders. However, Experian continues to provide its own scores on their website - ""

Your FICO score/credit score is calculated using the information available on your credit report. Credit bureaus can only calculate your FICO score if you have at least 1 account open for 6 months or more. Also, there should be at least 1 undisputed account reported to the bureaus within the past 6 months.

What factors affect credit (FICO) scores?

In general, there are 5 factors which affect your credit score calculation. The factors with their weightage of importance are given below:

  1. Payment history (35%): This includes information on -
    • How you've paid credit cards, installment loans, mortgages, etc.
    • Adverse public records such as bankruptcy, liens and collections.
    • How many and how long past due accounts and adverse public records have been on the report.
    • Accounts paid as agreed.
  2. Amount you owe (30%): This provides details on -
    • Number and type of accounts you owe.
    • Ratio of balance to total credit limit (revolving accounts)
    • Ratio of balance to original loan amount (installment loans)
  3. Length of credit history (15%): This includes the time period since you've opened different types of accounts.
  4. New credit (10%): This provides details on-
    • The accounts you've recently opened.
    • Number of recent credit inquiries.
    • Time since recent credit inquiries.
    • Time since accounts opened recently.
    • How you've rebuild credit after past credit problems.
  5. Credit/loan types used (10%): This factor includes the different types of credit/loans you've opted for.

What are the ways to improve credit score?

You can improve your credit scores if you're able to keep factors like payment history, the amount owed, the length of your credit history, etc in good shape. This is what credit score repair is all about. Below are 6 ways to improve credit scores/FICO scores:

  1. Avoid missed/late payments: A 30-day late payment may reduce your credit score by 50 points. Your account may be sent to collection due to repeated late/missed payments.

    Even if an account is in collection, pay it off and have the status updated on your credit report as "Paid collection". Alternatively, you can negotiate a "Pay for delete" agreement under which your negative listing will be removed from the credit report once you settle or pay off the debt in full. You should consult a credit counselor if you're unable to pay what the creditor is asking for. The counselor will prepare a budget for you so that you can allocate money to each debt payment.

    However, the best way to avoid late payment is to set up automatic bill pay through your bank. But make sure that the funds are being processed and sent to your creditors each month by checking your bank statement regularly.

  2. Pay off debt instead of moving it around: Maintain low balances (around 10% of the available credit) on your credit cards and revolving accounts. It's better to pay off your debt rather than transfer it from account to another. When you owe the same amount of debt but have fewer accounts open, it lowers your score further.

    Moreover, if you transfer debt and close unused accounts within a short time, it reduces your available credit limit while your debt balance becomes higher and the length of your credit history is reduced. This affects your debt-to-credit utilization ratio, which should be kept around 30% of your credit limit.

    However, if you don't close accounts, you need to keep them active. This can be done by making a purchase or two using the cards every 6 months. This will improve your credit utilization ratio and help you in repairing your credit score.

  3. How to shop for new credit: Try to shop for new credit/loan over a short period of time. This is because creditors/lenders may pull your credit report and generate inquiries which affect your credit scores.

    Usually, for mortgage and auto loans, all inquiries or credit pulls made within a 30-day period are treated as single inquiry. So, the sooner you complete shopping for new credit, the better it is for your score. And make sure that you don't open new accounts just to have a better mix of credit, because if you fail to manage your credit, it will have a negative effect on your credit scores.

    Moreover, too many new accounts opened at once will raise your available credit limit compared to the credit used, and thus reduce your score. New accounts will also lower the average account age and reduce your score if you have not taken other types of credit.

  4. Authorized users: When you add an authorized user to your credit card account, make sure that the user doesn't overspend. As the principal card holder, you'll have to make the payments, and if you can't afford it, your credit score would get the hit along with the authorized user’s score.

  5. Avoid store cards and small debts: Getting too many store cards isn't a good idea if you're trying for credit score repair. These cards are open lines of credit, and too many of them are considered risky by credit bureaus, especially if these are not affiliated with a national creditor (such as MasterCard, VISA, etc).

  6. Change in names: Let's say your name is Adriana J. Smith and that's how it's reflected on your credit report. If you change your name and drop the "J" when you apply for credit, then the credit bureau will prepare a separate credit report for you even though your address may remain the same. So, you need to notify the creditor as well as credit bureau if there's any name change.

Can you get credit scores free of cost?

Free credit scores or free FICO scores aren't available though you can get a free copy of your credit report once a year from each of the bureaus (as per Fair Credit Reporting Act or FCRA). One place you can purchase your credit score online is at or you can call their toll-free number - 877-322-8228.

Having a good credit score is important when applying for new credit or loans. The best way to maintain good credit is to paying on time, pay more than the minimum, and monitor your credit report at regular intervals for any inaccurate details.

or That is a really good one. You can write them or contact them online. They are really secure and I myself liked the measures of safety they take to protect the consumer. There you can also get a copy of all three reports for free. I suggest spreading them out over a period of time so that you have access all year long.

Thu, 09/04/2008 - 11:54 Permalink

Do you have to pay anything for the one that ends in online? It sounds like a name game doesn't it, where they have a similar name that is almost like another to cause confusion.

Thu, 09/04/2008 - 23:29 Permalink

I don't know but if there is another site out there that I can get extra checks on that would be really great. I have one more free pull through Trans Union but I am waiting until the end of sept. to pull it cause I have another that falls off. It isn't as big the one Capitol one debt. It is the old fingerhut.

Fri, 09/05/2008 - 00:07 Permalink

Yikes, fingerhut, who goes there???? LOL, I have a fingerhut account, just bought an inversion table when my back went out for the 50000th time.

Fri, 09/05/2008 - 01:27 Permalink

Hi Fireyone

As far as I know, provides only free credit report once a year for the three credit bureaus but they do not offer any free credit score. Credit score need to be purchased separately. Whenever you search for a company offering free credit score, you may find companies which offer you free score only if you sign up with them for some credit related services like credit counseling a new credit card.

Fri, 09/05/2008 - 03:16 Permalink

I agree with Anthony on the point that the companies that offer free credit score require their customers to sign up for some particular service they offer. As for example Washington Mutual ESPN credit card offers free credit score every month through Transunion if you have their Total access wamu credit card. Again Myfico offers a 30 day trial free trial for credit score through Equifax after that you need to pay annual fees if you want to receive monthly credit score. However, you need to cancel the service before the end of the free trial period to avoid getting billed.

Fri, 09/05/2008 - 03:35 Permalink

You can get one free one a year from each of the credit reporting agencies, so if you do it every four months and use a different one each time you can have the whole year covered. The three credit reporting agencies are transunion, experian and equifax. If you have any other questions feel free to stop back and ask.

Sat, 09/06/2008 - 01:35 Permalink

There is one more that I hear mentioned around here. It is a weird name that I can not remember. I never even heard of it before. You will find it listed on one of the posts.

Sat, 09/06/2008 - 01:44 Permalink

I don't know what you are talking about, now if you run across it, now you have to come here and post it.

Sat, 09/06/2008 - 19:42 Permalink

There is no such a thing as a free credit score. An provides you with one credit report from 3 CRA once a year without score.
Now be careful what score you buy. You can buy EQ FICO from and equifax itself, TU FICO score can be bought from and and EX FICO is available only on Each score at costs about $15 but you can find promotional codes (10-25% off)

Sat, 09/06/2008 - 23:56 Permalink

I think everyone is talking about a free credit report not a credit score, we have all been to annual credit report and have discussed it heavily here, so we know it is just the report not the score.

Sun, 09/07/2008 - 00:16 Permalink

Thanks 1002 thats the one I seen before. I have nevr heard of them before anre they new? What are all the differences in the scores and which ones are the bank more likely to look at?

Sun, 09/07/2008 - 00:17 Permalink

I don't know if there is any difference at all, your score is your score right.

Sun, 09/07/2008 - 00:19 Permalink

I have no clue. I believe they are different depending on what report you check becasue I hear alot about banks taking the medium score. Well they couldn't do this unless they had a few to go by.

Sun, 09/07/2008 - 00:23 Permalink

yeah, I used to think I knew which ones they use, but these days I am clueless, when you think they would use transunion, they use experian or equifax, I don't plan on borrowing any money for quite a while so I am not really concerned about which one they use.

Sun, 09/07/2008 - 01:15 Permalink

My hibby has really good credit thank goodness. Last time we took out a loan his credit score was like 680. I am sure since we aquired the large debt on the lowes card it has dropped. I wonder if they will consider that debt if we are getting the loan to pay it. I mean the bank.

Sun, 09/07/2008 - 01:17 Permalink

According to Fair Isaac, 90% of lenders use different variations of FICO score.

Sun, 09/07/2008 - 01:55 Permalink

If you tell them that you are getting the loan to pay off that debt they may be okay with it.

Sun, 09/07/2008 - 02:00 Permalink

I can call the lady at s&T that always does are loans. She knows us personally from years of being at the bank. I will ask.

Sun, 09/07/2008 - 02:08 Permalink

It would be nice to know, find out which one they are more likely to use.

Sun, 09/07/2008 - 02:33 Permalink

It would be nice to know I suppose, then you would know which one to keep a closer eye on.

Sun, 09/07/2008 - 13:07 Permalink

I believe our bank uses Experian and I can see why. They give alot more detail than the others. My experian had a bunch of crap listed even some med. bills but my trans union only listed a couple. Nice if they would use that one.

Sun, 09/07/2008 - 14:37 Permalink

I had trouble with late payments in the past. Once I found this site, things became much easier to understand. Now I've begun rebuilding credit. Try it for great info and tips on managing credit. :idea: [/u]

Tue, 09/09/2008 - 05:37 Permalink

What is this site all about? Soemtimes we have posters come on here and suggest a site that really is a waste of time. If it is legit maybe you can tell us a little more in detail what it is about. Is there fees associated with it?

Tue, 09/09/2008 - 23:41 Permalink

I guess getting your score would be really important if I were applying for a business card or even a personal card, I can see how knowing this ahead of time can save you alot of time and money. Does anyone know of any certain card that they choose or know enough about that you would recommend it to me?

I am looking for something with a descent rate and only need like a $1000 credit limit from the start, hopefully with out a bunch of err.

Wed, 09/10/2008 - 00:33 Permalink

Check out

BTW no fees.

You can also check on financialglobal but their info is very inaccurate.

Wed, 09/10/2008 - 00:39 Permalink

What type of site is this, is it privately owned or is it funded by some corporation? Could you please give me more detail on what I am going into? Are there reputable cards that will suit my needs?

I don't want to be rude, but I don't want to waste my time on a site that will run me in circles. I thought about the dicovery card that fireyone had suggested in another post. Is this card on the site?

Are there real live peoples experience on there? I know sometimes companies will pay people to put up testimonials that are somewhat geared toward the company in a positive many, I find these less than truthful.

what has your experience been with this page? Would you apply according to what is on it? Do you feel that it is truthful 1002543? thanks

Wed, 09/10/2008 - 01:30 Permalink


No need to be so agressive. I assume you had previous negative expirience, but please do not take it out on me.

Regarding The concept is that people post their applications to different credit products. It is accurate at the certain period of time. Site has been up since 2004, so you can not take data from 2004 and apply it to 2008. I, myself, posted over there my applications.

As Ihave mentioned finannce globe is inaccurate but educational.

Regarding Discover CC. If you post your TU/EX FICO scores, number of inq., lenghth of credit history and possible baddies maybe I'll be able to advise you.

Good Luck

Wed, 09/10/2008 - 02:35 Permalink

I did not mean to be offensive towards you at all, sometimes when we are typing it is taken in the wrong tone, I apologize if you took it that way, that was not my intention at all, please accept my apology.

I have been reading a bunch of posts on here and did end up in a few pages that were actually all advertisements for wanting to get people there to use there site.

Thank you for your input on this site, I will surely check it out and see what I can get out of it. I went and got a prepaid card and am going to use it until I figure out where I want to go with this.

I hope that you will accept my apology, I would feel terrible if I thought that someone took me as insultive, I did not mean it that way at all.

Sat, 09/13/2008 - 02:43 Permalink

Yes, the Federal law requires each of the three credit reporting agencies to provide a free credit report once a year, but not a free credit score. You cannot get a credit score absolutely free. However, as Justin said, if you go for some credit counseling services, or have credit cards of certain companies, you can get a fee credit score, but that too, for a limited period. Myfico provides the FICO scores of the three credit bureaus along with the three credit reports for $47.85.

Sat, 09/13/2008 - 09:35 Permalink


I do understand your frustration and no offense taken.

Let me suggest. Do not waste your time on prepaid card, it is not reported to CRA's and you do not get any benefit for good payment history which is 35% of your credit score. I'll take liberty to advise you to get secured credit card.
Bank of America offers secured card ( min is $300) which is graduated after 9 months of unblemished payment history. Also I am a big fan of credit unions, check out your local CU.
Some times BOA offers 99/500 card. It is partially secured card, which graduates to unsecured too. Secured cards are reported as trade line to CRA's and BOA is good, prime lender.


The only credit card company which provides free credit score is WAMU. They let you access your monthly TU PFICO score.

Sat, 09/13/2008 - 20:35 Permalink

I agree with 1002543 about the prepaid cards, they do not report your activity to the credit reporting agency, they will not help you build or maintain your credit score or rating.

Sat, 09/13/2008 - 21:42 Permalink

I am not real sure what I want to do with this, don't know if next year I will have fertile eggs or not, that is what would dictate what I will do. I do work fulltime so these birds are more or less a hobby of mine that I thought may lead into something that I could at least make pay for itself.

I know the prepaid card will not report to the credit reporting agencies, but it is safe to use for catalog and online purchases and that would satisfy me at this point until I see where I am this time next year.

Thank you for taking the time to answer my questions and make all your great suggestions. I will keep this forum posted on any future developments as I am sure that I will have more questions and you all have been great help.

Sun, 09/14/2008 - 02:24 Permalink

When you figure it all out, we are here, in the mean time you can still address other issues that you may have questions on here, we like having you.

Sun, 09/14/2008 - 16:05 Permalink

All this credit stuff is really confusing. I never even relized there was a thing such as graduated in the credit card world.

Mon, 09/15/2008 - 00:43 Permalink

I think that if you are not sure, stick with what you are doing.

Mon, 09/22/2008 - 02:56 Permalink

That is what I am going to do, as I said on another post I don't even know if my eggs will be fertile, still have my two males and with no separation, they would rather fight than breed, I am waiting for my sister to get a pen built to take one of my males off my hands, hopefully soon.

I did get a paypal business account open and it seems to have all the functions that I would need for now. I am doing a little crafting with the feathers, but just for myself for now. You know how it goes, get a crazy thought in your head and run with it. I did get some real good information about cards here though.

Tue, 09/23/2008 - 13:54 Permalink

Sounds like you have gotten somewhere since we last spoke. Did you google peacocks and see what came up? In your last post it sounded as if you meant the males would mate. I had to chuckle there. What is all this stuff about separation? It sounds like you are nearly new at this ranching thing. Have you done your resaearch to see if this business will prosper and give back to you finacially?

Tue, 09/23/2008 - 18:36 Permalink

Hi Peacockrancher
If you want only a $1000 credit limit, I think that you can go for personal credit cards instead of business credit cards. Business credit cards have normally higher interest rates than personal credit cards as they have generally higher credit limits which may range from 50000$ to several hundred thousand dollars. Moreover, with personal credit cards, you can avail zero APR balance transfer facility for upto 12 months and can even get low introductory interest rates, which are not generally available on business cards. Personal credit cards have interest rates from 9% upto 20% while business credit cards have interest rates ranging form 12% to 25%.

Thu, 09/25/2008 - 07:25 Permalink

Yep sure sounds as if he knows his stuff. I like seeing these people around here. Wonder how far peacock rancher has gotten i n the venture.

Sun, 09/28/2008 - 15:36 Permalink

we got approved for teh loan today. We went down and put the app on file so I am gonna call Lowes and get a def. date for the end of the 0% interest. I also want an exact payoff so teh bank can make the check out to them (removes temptation) . We don't have to take it. We have 30 days to decide if we need it before the app isn;t any good. I just thought we would get it in place so all we have to do is have them write it out when and if it is needed. This will give me a 30 day window for the interest and the payment.

Wed, 10/01/2008 - 23:56 Permalink

That what I am hoping too.. I have an appointment at the pain clinic on Monday to discuss further treatment options and I have to keep putting them off due to the medical part. I will call atty after that and let them know why it is crucial to get moving . It has been 48 days so far and the other side was suppose to get back to atty within 60. Whether they will or not I have no clue.

Wed, 10/08/2008 - 20:45 Permalink
sanshil (not verified)

Thats true, does offer you a free credit report. Under federal law you are entitled to receive a free copy of your credit report once every 12 months.
There are other websites also but most of the providers require sign up for the services like Identity theft protection, Credit monitor etc. Users must remember to cancel these services before the trial period ends.
You can also visit , this website provides the links to different providers of Free Credit Reports and Credit Scores and also gives the comparisons on offers from different providers.

Thu, 10/09/2008 - 14:43 Permalink

Can you also get your credit score for free there too/ I always heard that if you wanted your score it would cost money to get it.

Thu, 10/09/2008 - 15:44 Permalink