Law Office of Robert L. Firth - March 2020


MARCH 2020

Is Your Credit Keeping You Up at Night? Utilize These Tips for Optimal Credit Health


Having bad credit can mean the difference between buying your dream home or being relegated to renting a small apartment. The best way to know where you stand with your credit is to look at your FICO score, which is an overall assessment of your credit health that’s used by credit bureaus to assess credit risk to lenders. The Fair Isaac Corporation, the analytics firm that developed the FICO score, recently announced a forthcoming change to how it calculates these scores. Under this new algorithm, borrowers with a good rating — around 680 or better — will likely see an increase in their scores, while those with a lower rating are likely to see their score decrease. These changes can feel concerning, since your FICO score is used in virtually every credit decision. However, understanding how your score is calculated, and what you can do to improve it, will help you feel more prepared. The three major credit bureaus that compute your FICO score are Experian, TransUnion, and Equifax. Each one calculates your score a little differently, but they are all crucial to your credit score’s well-being. The first step to improving your credit is to know and track your score. But remember, by law you’re guaranteed one free credit report from each of the credit reporting agencies per year. To find your free reports, you can go to If you find something in the reports you disagree with, you can dispute it. On each of the three credit bureau websites, you’ll find a section for reporting errors or inaccuracies on your report. The credit bureau you are working with will contact the creditor related to the HOW TO TRACK YOUR FICO SCORE

disputed information. If the creditor doesn’t respond within 30 days, the debt will be taken off your credit report.

There are three easy ways to start improving your credit score. First, never miss a payment. At the very least, pay the minimum balance on your statements by the due date. Second, never carry a credit balance of more than 30% of the credit available to you. Third — and this is something they never tell you — make more than one payment a month. Every time you make a payment to your creditor, you decrease your balance and improve your credit utilization ratio, which can help increase your credit score. A good FICO score is essential to your success in borrowing money. By following these tips, you will be one step closer to getting that dream house you’ve always wanted.


Your FICO score is calculated based on five factors: your payment history, the amount of money you owe relative to the amount of credit you have available, your recent new credit, the length of your credit history (so the longer you’ve been using your credit cards, the better your scores will be), and your credit mix (mortgages, car payments, credit cards, etc.). The FICO formula uses these criteria in creating their scores, which range between 250 to 900. If you would like to see how your credit score compares to others, look at this chart.

The range of scores

Generally, the higher your score, the more likely you are to be offered better credit terms Scores range from a low of 250 to a high of 900.

How your score compares to the scores of other consumers















Score Range

-Robert L. Firth Helping clients with bankruptcy, estate planning, and tax resolution. | 1

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