{"id":5051,"date":"2015-12-04T06:57:47","date_gmt":"2015-12-04T10:57:47","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=5051"},"modified":"2015-12-04T06:57:47","modified_gmt":"2015-12-04T10:57:47","slug":"how-to-boost-your-credit-score","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=5051","title":{"rendered":"How to Boost Your Credit Score"},"content":{"rendered":"
\"next-ave\"<\/a>Recently, I got an email from my Citibank Mastercard team urging me to view my updated FICO credit score<\/a>, along with \u201ckey factors which affected\u201d it. The note continued: \u201cYou can access your score for free each month. 24\/7 online access to your FICO Score \u2013 just another way Citi is on your side before, during and after your purchase.\u201d<\/header>\n
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Cringing at the attempt at such warm and fuzzy customer service, I nevertheless logged in. And now that growing numbers of card issuers are now providing free FICO scores \u2014 actual\u00a0<\/em>FICO scores, not FICO-like<\/em> ones \u2014 I encourage you to see if you can get yours, too.<\/p>\n

Why Credit Scores Matter<\/h3>\n

That\u2019s because this three-digit number (typically ranging from 300 to 850) plays a big role in whether you\u2019re approved for a mortgage, auto loan, home equity line, business loan or credit card \u2014 and the interest rate you\u2019ll pay. (In general, the higher your credit score, the lower your rate.)<\/p>\n

Now, let me tell you why it\u2019s becoming easier to get a free FICO score, the benefit of knowing that number versus another credit score<\/a> and, most important, how to boost your score once you learn what it is.<\/p>\n

MORE:\u00a0<\/span>The Truth About Those Free Credit Scores<\/span><\/a><\/p>\n

Click here to:\u00a0Read on Forbes.<\/a><\/strong><\/p>\n

Nearly two years ago, the Consumer Financial Protection Bureau (CFPB) called on the nation\u2019s top credit card issuers<\/a> to make credit scores freely available. FICO, a division of the Fair Isaac Corp. (the company behind FICO scores), had already launched the FICO Score Open Access <\/a>program to make it easier for them to do so.<\/p>\n

Who\u2019s Truly Offering Free FICO Scores<\/h3>\n

Slowly, big-name card issuers have been offering FICO scores gratis to some of their customers. In addition to Citibank, they include American Express, Bank of America, Barclays, Chase and Discover. Some banks make free FICO scores available to their checking account customers, too. Today, holders of 100 million accounts in the U.S. have regular access to FICO scores for free, up from 8 million two years ago, according to Jim Wehmann, FICO\u2019s executive vice president, Scores.<\/p>\n

To order a credit score from FICO<\/a> directly, by contrast, you\u2019d have to pay $19.95 for one, which would come with a credit report from one of the big three credit bureaus: Transunion, Equifax or Experian.<\/p>\n

But, you may be saying, haven\u2019t some consumer credit sites likeCreditKarma.com<\/a>, Credit.com<\/a>, CreditSesame.com<\/a> and Quizzle.com<\/a> been offering free scores for years? Well, yes, but not free FICO scores<\/em> and that\u2019s a difference with a distinction. The reason: \u201cFICO is the most commonly used credit scoring model,\u201d says Michael Schreiber, editor-in-chief of Credit.com.<\/p>\n

MORE:\u00a0<\/span>Secret Numbers As Important As Your Credit Score<\/span><\/a><\/p>\n

The Funny Thing About FICO<\/h3>\n

Now, onto FICO scores themselves and how to boost yours.<\/p>\n

The national average FICO score is now 695 \u2014 the highest it\u2019s been in at least a decade, according to Fair Isaac. That\u2019s a good sign for the U.S. economy and the public\u2019s finances. Better yet, nearly 20 percent of consumers today have FICO scores above 800. Impressive.<\/p>\n

But here\u2019s where things get messy: The new free FICO scores aren\u2019t identical from one card issuer to another. In other words, if you asked for your FICO score from, say, Citi and Discover, odds are you\u2019d get two different numbers.<\/p>\n

\u201cThere are dozens of types of FICO scores, which is why the FICO score that you\u2019re seeing from one bank may be different from the FICO score you\u2019re getting from another,\u201d says Schreiber.<\/p>\n

Each card issuer offering free FICO scores is partnering with just one of the credit bureaus and each bureau uses a somewhat different formula for arriving at a number.<\/p>\n

In my case, Citi uses data from Equifax with what\u2019s called a \u201cBankcard Score 8 model.\u201d And, wouldn\u2019t you know it, this <\/em>FICO score doesn\u2019t use the standard 300 to 850 range but 250 to 900. If you carry a Chase Slate card, you get access to a FICO score based on data from Experian, according to Rob Berger<\/a>, a Forbes contributor who also runs the personal-finance web site Dough Roller<\/a>. American Express cardholders get the privilege of FICO scores based on Experian data, too. Discover goes with TransUnion.<\/p>\n

Nevertheless, the card companies use similar criteria to gauge creditworthiness when calculating their scores \u2014 from your payment history to the amount of available credit you have available.<\/p>\n

4 Ways to Raise Your FICO Score<\/h3>\n

There\u2019s no magic formula for ramping up your credit score, and boosting your number can\u2019t be done over night. That said, it is<\/em> possible to raise your score in a few months with these four moves:<\/p>\n

1. Pay your bills on time<\/strong>. This is the No. 1 thing you can do to boost your credit score. Payment history accounts for 35 percent of a FICO score. So pay every card on time, every month.<\/p>\n

2. Double-up payments.<\/strong> The second-largest factor affecting a FICO score, accounting for 30 percent of the equation, is the amount you owe. So consider making two payments on your card in a given month if you\u2019re applying for credit. The balance used for your credit score is typically the last statement balance and people who run up a high balance on a single card may be punished \u2014 even if they pay that balance off in full each month.<\/p>\n

In other words, if you have $25,000 in credit available on three cards and owe a balance of $5,000 apiece on two of them during the month before paying them off, and a credit issuer pulls your credit score before the payment date, it may look like you\u2019re wildly tapping your available credit. Your score is, after all, a snapshot of a moment in time. It doesn\u2019t factor in that your balance is paid in full each month; it\u2019s the amount you owe right at that moment.<\/p>\n

3. Keep your oldest credit card account open.<\/strong> That\u2019s because the length of your credit history accounts for 15 percent of your FICO score.<\/p>\n

It can be tempting to jettison an old card you quit using because, say, it doesn\u2019t help you with frequent flier miles. But closing an account can shrink your total amount of available credit. Then, if you carry a balance on your other cards, the move will increase your credit utilization rate and lower your credit score.<\/p>\n

4. Review your credit report.<\/strong> One of the biggest factors influencing your credit score could be a mistake on your credit report<\/a>, including out-of-date information. Some 25 percent of consumers have mistakes on their credit reports that could affect their scores, according to Forbes\u2019 Laura Shin<\/a>.<\/p>\n

To check on the accuracy of your credit reports, go to AnnualCreditReport.com<\/a>every 12 months to request a free credit report from Experian, Equifax and TransUnion. Your credit score won\u2019t be included. But the credit bureaus will be happy to sell it to you \u2014 and that can get costly. At Experian, for instance, the seven-day trial membership for its $1 Credit Report & FICO Score can quickly turn into a $21.95 monthly fee unless you cancel before the trial ends.<\/p>\n

Should you have disputes about your report, you\u2019ll normally need to work with the individual credit agencies. That can be a slog: Errors can take up to six months to get fixed, assuming you get satisfaction. CreditKarma<\/a>,\u00a0 however, now lets its users file disputes from within its site for free through Direct Dispute. That\u2019s good, Karma.<\/p>\n

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