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.

What are all these 5's after your posts..some kind of new signature? I would pay to get my score..when I know its worth paying to get

Mon, 10/13/2008 - 21:30 Permalink

GOODNATURED,.........I see your point. I ALREADY know it's low. I guess the only thing we can do is 'go up' on the credit score thing. Receive your CR's and 'go from there.'..ya know.

Sun, 10/26/2008 - 00:02 Permalink

I am not going to pay to get it. I think it would be rather senseless since I don't need it. Scores have a way of changing so I will just wait until I actually need to see it. are right ..the only place left is up and you will get there sooner or later..just takes a little time.

Sun, 10/26/2008 - 00:17 Permalink

Sometimes we ALL feel there is no where else to go. But...when you hit 'rock bottom' you can ONLY go up from there. Does seem like such a long time, though.

Sun, 10/26/2008 - 03:12 Permalink

Yes it may seem like a long time but hey you still will get there. Many people are finding theirselves in the same position lately. Some never speak of it and you would never kn ow but just keep your chin up...all things change eventually. Keep coming here and posting since that will take some of the stress off. In a few years this will all seem like a bad dream.

Sun, 10/26/2008 - 13:55 Permalink

Sometimes just 'letting it out' can greatly help. Also..knowing others, on this forum, have the same 'issues'. Comparing stories, etc.

Mon, 10/27/2008 - 01:42 Permalink

That is true, I always feel better once I get it out in the open and have it up for discussion, seems like others can see things more clearly than me when I am having the problem. I really do appreciate all the help and guidance that you guys give and thanks for lending an ear to me, lOL.

Tue, 10/28/2008 - 02:45 Permalink

Nothong can be scarier than getting behind on a debt and dealing with most collection agencies. It helped to come here and find out what they really could do and how to get them either off your back or to settle debts for less. I never even knew about debt validation or pay for deletes. Who would have thought all this was available when they first get behind? The talking part is the best part of the forum for me. I could have never talked to my family about all this and really needed to relieve the pressure by just getting it off my chest. This forum has been the best at helping me from all angles.

Tue, 10/28/2008 - 10:24 Permalink

True it is always good to have someone to share your stress with, I know with mine there are times that I can not even talk to my hubby about it. He will just say, why don't you pay it. For some reason he thinks I have this endless pot of money laying around that I can just send off money here and there.

Sun, 11/09/2008 - 02:02 Permalink

Oh believe me I know how you feel. Mine is not so much the creditor at this point but all the endless medical bills. He sees that some are down to a couple hundred or even below the hundred dollar mark and he will say "why not just pay it off?" I try to explain to him by the time I pay off one for $100 that would have paid how many monthly payments on ALL of them. Soemtimes they just do not get the overhead picture. I can sometimes see why they say girls mature faster than boys. They have to. What choice do they have? Someones got to use their head.

Sun, 11/09/2008 - 12:42 Permalink

Oh I know, I am hearing it now about coal and other things, like one thing at a time here pal, the regular monthly bills have to be paid. Especially when they start to go up, like electric. But no one wants to hear me say, shut off that light, don't leave the tv on if you are done watching it, shut the computer down, etc. They don't see the bill every month. At one time I had it done to like $45 a month, now it is always like $80 and will be knocking $100 as soon as winter comes with the furnace kicking on all the time.

Sun, 11/09/2008 - 15:40 Permalink

Yep no how that feels. I read my own meter and I would add on every month so that when it went I used more kilowatts in the winter I would actually be paid ahead and it wouldn't hurt as much. Just last month I used up some of my surplus. Don't think I am insane. I know you are probaly shaking your head right now but hey Its just like sending in extra money every month so if the bill gets high you can fall back on it.

Sun, 11/09/2008 - 23:39 Permalink

That makes sense fireyone, I always try to stay like 10 to 15 bucks a head a month so that I get a free month, it is about the same concept I guess. I see your point, works for me.

Tue, 11/11/2008 - 00:17 Permalink

It works for me...desperate times calls for desperate measures.

Tue, 11/11/2008 - 00:29 Permalink

I know, I wish I could stay disciplined enough to keep sending it like that every month but I can't.

Tue, 11/11/2008 - 01:13 Permalink

Well things will be different now that the bill will be higher with the weather getting colder and daylight savings time gone. The paychecks around here will be shrinking with all the holidays and stuff. Hubby gets paid for them just it will take over the overtime.

Tue, 11/11/2008 - 01:28 Permalink

I also 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.

Tue, 06/16/2009 - 09:33 Permalink

Hi sdchargers,

Are you looking for free credit report then you have to visit this site to get free annual credit report. ""

There you can get free annual credit report.

Thanks & Regards,
Secure Credit Card Will make credit score improving easiest.

Fri, 07/03/2009 - 04:55 Permalink
lauren wrght (not verified)

i need credit and i am on orange can sum one get me some pzz !!

Mon, 08/03/2009 - 13:24 Permalink
RoTimi Waddy (not verified)

Hi. I was browsing this site and noticed this post and wanted to mention a site that really does allow anyone to actually receive regular access to their real Transunion CREDIT SCORE.

The name of the site is: Credit Karma. Google search it and you'll find it. Apparently this site doesnt allow us to post links or else I would provide it , oh well.

Just sign up for a free account and you'll instant access to your credit score which can be updated daily if you'd like. Highly recommended!

I hope this helps.

Cheers to good credit and improving your credit if its not so good right now! It takes diligence, consistency, determination, and patience but believe me, you can do it! Anyone can! I did it.



Sun, 08/09/2009 - 01:26 Permalink

I don't think they are consistant, they can pull and use from either of the three sometimes, they will pull from more than to try and get you approved.

Sun, 08/23/2009 - 22:27 Permalink

Does this site ask for anything like a credit ard number or any thing personal along that line? I have read some posts where it was suppose to be free to sign up and later they attach your credit card and charged. It looked like a big hassle and alot of people were coming here to this site confusing it for the free credit site. They were being charged over ten dollars a month and could not get the fees from debiting each month.

Sun, 08/23/2009 - 23:34 Permalink

If you have bank accoutn with bank of America you cna use thier free credit report service. It is free for 30 days and you need cancel before that or you will get charged

Also if you have American Express credit card, theya slooffer simialr service free for 30 days and you will ahve to pay after 30 days

Both of them give your credit score alogn with yrou credit report

All is needed is, you need to be vigilant and cancel this before 30 days once you sign up

Thu, 09/24/2009 - 05:03 Permalink

Well, fireyone, I try my best to avoid any confusion whatsoever. My finance management skills are not good and I am really not interested in all those details and the only way I know to avoid these confusions is just to keep credit score over 700 and that's it.

Fri, 09/25/2009 - 06:27 Permalink
kelwllc (not verified)

Believe it or not, there are two sites that offer a free score with no credit card! It only took me 4 months to find them, lol. - Receive daily score from TransUnion (I verified this is the exact score TransUnion has; it's not one of those weird fabricated 'guestimate' scores) - Receive a FREE Experian report and score from Experian every 180 days

Unfortunately, I haven't found a freeby from Equifax yet. But I use the other 2 and have cross-referenced the info thru - it all checks out - pretty awesome!

Fri, 10/02/2009 - 21:27 Permalink

Thats really good information and really helpful information

Do they just gie you the score ot they also give you the full report

Sat, 10/03/2009 - 05:05 Permalink

some one else posted somewhere here creditkarma and another site quizzle. Both fo them are free and no hidden fee or ano credit card is needed

You cna free credit report and score and an update every 6 month with yoru credit score

try it, they look promising

Sun, 10/04/2009 - 18:23 Permalink

I just used credit quizzle to get my latest report and it was pretty good and easy

No credit card information needed nor your social security number

Some tiems it is scary that any one can pull a credit report with out even knowing the social security, but just need to be watchful

Sat, 10/10/2009 - 03:43 Permalink
Gina (not verified)

You can obtain a free credit score from creditkarma. It is free to sign up and you can update your score as often as you want. I am not sure of the accuracy, but have been told it is pretty accurate.

Sun, 10/11/2009 - 01:30 Permalink

I have not seen one yet that actually gives you a free score, I have seen them where they will provide you a free report, but the score always cost money. Have you actually gotten your score from this site??

Sun, 10/11/2009 - 04:20 Permalink

That is my question also. How can a person be sure that this site isn't some way attaching your information. If you can view it then maybe others, possibly the site owners, could also view it. I am not trying to say it isn't legit...I am just saying for all the more a score costs why take they chance in having someone steal your information? That could really lead to damages that can be unrepairable, it what you feel you want to do but I would just be a little wary.

Mon, 10/12/2009 - 01:08 Permalink

Yes fireyone, that is a real concern and you see it happening more and more. I work with a guy that just had his credit card heisted online, he had to shut it down, they charged two small items but tried a larger one from overseas and that is when the credit card company alerted him to the charges.

He is really preaching now about using your card online, I always use paypal to get the extra protection.

Identitiy theft is a real concern, great advice here.

Mon, 10/12/2009 - 01:51 Permalink

Paypal is an excellent source for purchasing items on line. I also stopped at Wal mart for money orders the other day and seen they had a bunch of pre paid cards for Visa and other companies. This would be another way of making secure on line payments. It is simple to just go purchase a prepaid card for the amount of what you plan on spending and then using it. This would be really helpful to those whom do not do a lot of on line purchases. It would help protect against fraud and prtect your identity.

Tue, 10/13/2009 - 10:17 Permalink

8) Hi, I do know that when you are denied credit, you can get one free. Also some banks will get you one if you ask and you are a regular customer. They usually don't charge for it either.

Thu, 10/15/2009 - 05:39 Permalink

Yes ruthie, normally they will send you a letter telling you exactly how to obtain it.

I am not sure if you can go online and get the copy as a result of a denial or not.

Sun, 10/18/2009 - 00:03 Permalink

Another thing is if you already used your free pulls and you got denied after using them you may not be qualified for a free look. I have seen those letters where they say you are denied, gotten them myself a long time ago. I just wonder if you have already used your free pulls and get a letter if you can get the extra views of your report since you were denied.

Mon, 10/19/2009 - 00:17 Permalink

If you are denied for any new credit, you have the right to get a copy of your credit report, regard less of if you pulled the free report ornot

Mon, 10/19/2009 - 01:23 Permalink

Yes, you are eligible for a certain amount of time after you are denied credit, I believe it is thirty days. You really should take a look at your credit at that point so you know what is going on.

Mon, 10/19/2009 - 02:11 Permalink

The compny which denies your a lon or credit card is laible tell you this information and provide necessary contact for this.

Mon, 10/19/2009 - 03:21 Permalink

Yes they usually do in letter form once you have been denied. You will usually recieve this information with your denial letter.

Mon, 10/19/2009 - 16:17 Permalink

That is good to know and, in my opinion a very fair way of doing this. I just had a collection company call me for a debt that was only listed in good standing and closed in 2003. I think we all need the extra checks we can get since some people can not get their facts straight.

Tue, 10/20/2009 - 23:37 Permalink every year you can get one free from all 3 agencies.

when getting your score, either go to FICO, or right from the credit bureaus.
You can find sights that will give it to you if you sign up for their free trial packages, but if you forget to cancel, they'll charge you and its hard to get them to stop..

Sat, 11/14/2009 - 02:48 Permalink

do any one knows if some body pay trough bk some credit cards way do the bank still sending letter for collection

Sat, 12/05/2009 - 00:03 Permalink

Not real sure, have you called them and try to straighten it out with them? They will explain it to you if you call them and ask them.

Mon, 12/07/2009 - 23:59 Permalink
Trisha (not verified)

I have managed to pay EVERY negative/collection account (which were all old) on my credit report over the past 8 weeks. I've noticed my score has come up 38 points thus far, but not nearly enough to be considered credit worthy. How can I drastically increase my credit score? I do have other credit on my report that is good and my credit to debt ratio is wonderful...4% debt to 96% credit available. How long will it take for my score to dramatically improve?

Thu, 02/11/2010 - 21:03 Permalink

Hi Trisha,

I am afraid that it is not possible to improve credit score drastically. It cannot improve in an overnight. Improving credit score needs a lot of patience. However maintaining the accounts that you are current on will help. Payment history plays the most important part in maintaining and improving credit score.

The only way to increase credit score drastically is piggybacking, that is lifting other people's score. However it is considered to be illegal by industry experts. Therefore never go for such drastic measures to increase your credit score.

Fri, 02/12/2010 - 10:57 Permalink

Hi Robin,

To improve credit score, you need to first pull a copy of your credit report. Then, you need to check if there are any wrong listings and negative listings on it. If you find any negative listings on it, then you should try to pay off those accounts on which you have been delinquent for some time. Along with the payments request the creditors to agree to a "Pay for delete" agreement (PFD).

Then you should dispute the wrong listings on your credit report with the credit bureaus or the creditors. Wrong listings are the wrong information on your report, which does not apply to you.

Open a savings account and put money into it each month. After you save quite an amount of money into it, make extra payments on your accounts, so that the debt goes off much faster.

Don't ever miss a payment, as payment history plays the most important role in maintaining and rebuilding one's credit score.



Thu, 02/25/2010 - 10:08 Permalink