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12 Days Winner: Robert KiyosakiCREDIT SCORES
Current Rates, News & Information
There is a new FICO scoring system in town that brings with it some improvements that potential borrowers just might enjoy. While it doesn’t come with a fortress of bells and whistles, it does have a few benefits that can help your FICO score improve some.
Why Make Changes? 
In these trying times of reduced credit and liquidity, consumers are becoming increasingly aware of how important their credit reports are. Credit scores are often considered the gauge of your financial health – and this affects the willingness of financial institutions to provide you with a low rate loan. If you are fully invested in improving your credit score, you need to know that a negative item on your credit report can follow you around for more than seven years!
On average, negative credit information should automatically drop off your credit report after seven years time, and after you’ve payed off the debt. However, that is not always the case. Consumer reporting companies can a tap into:
While the new FICO scoring system comes with some notable improvements, there are some who believe that there may be some disadvantages. To get a better idea of both the disadvantages and advantages that could have an effect on your FICO score, let’s take a closer look at both ends of the spectrum.
The Disadvantages
Some people are happy about the new FICO system but others may be a little displeased. No matter what the reaction is, it seems it will take some adjusting to get used to. Because so many of the changes affect a wide group of individuals, it’s important to understand just what the new system means and how it can affect your FICO score.
The Purpose of the New FICO System
In the past money was tight, tough choices had to be made and bills were often neglected for long stretches of time. Because of your past behavior, you now have a dismal credit score and are having difficulty qualifying for any type of lines of credit. You are considering securing a credit card for those with a history of bad credit, but there are some risks associated with those types of cards you need to be aware of.
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The housing market is calling and you want to get ready to answer. You have already worked on building a sizeable down payment, have crunched numbers to know exactly what you can afford and now need to work on improving your credit score in order to get your lowest mortgage rate possible. Improving your credit score takes financial discipline and that will ultimately affect the amount of time it takes to raise your credit rating. You should give yourself several months to thoroughly address the task at hand.
Like Rome, credit ratings were not built in a day. To understand how to improve your credit score and why the process may take several months, you need to grasp the core system that establishes your credit score in the first place:
The Fair Isaac Corporation responsible for developing and implementing FICO scores boldly proclaim “Don’t close unused credit cards as a short-term strategy to raise your score,” as that action may actually damage and lower your credit score. It is important to realize that by closing a credit card account, you do not make your bad credit history vanish. Instead that act of closure can result in a lowered credit score.
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If you have a bad credit rating – or think you do – then it’s always a good idea to look at what determines your credit score to decide what made it bad and how to fix it. This is especially important in times that rely so heavily on these ratings to determine where you can live, what you can drive, and ultimately, how you can live your life.
What Determines Your Credit Score?
The FICO score has recently undergone a revised system that is predicted to help some borrowers and hurt others. The specific details inherent in the revisions have yet to be revealed; however, some basic information has been released to give potential borrowers an idea of what they can expect.
The Good
Credit consumers today are more aware than ever before of the necessity of checking their credit reports regularly and monitoring their accounts to guard against identity theft. To assist them, a number of credit monitoring service companies have sprung up, claiming to offer some protection against identity theft and help you keep track of your credit report and credit score. For their services, credit monitoring services usually charge a monthly fee, which could be anywhere from $15 to $130 in some cases.