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Boosting Your FICO Credit Score
Let's talk about how you can boost that almighty FICO credit score. Your FICO score is a critical three-digit number that tells people a heck of a lot about you from a financial perspective. Your FICO score ranges from 300 to 850; the higher your score, the better a lending risk you're deemed. In my life, I have only known one person who had a perfect 850 FICO credit score. This is something that is so rare that even most loan officers and bankers say they're never seen a perfect 850 FICO score.
While you don't need to achieve absolute perfection, I do think that having a FICO score in the range of "perfect credit" is a good and worthwhile goal. When I say perfect credit, I'm really referring to a FICO score in the 760 to 850 point range. With a score in this upper tier, you are golden in the financial universe. Lenders will fall all themselves trying to compete for your business.
You'll get practically all the credit you could ever want, and at the best rates possible. I'm talking the most attractive rates and terms on everything from mortgages, to auto loans, to small business loans, to personal loans, home equity, credit cards, you name it. If you have a 760 to 850 FICO score, you are a favored customer in the eyes of all lenders. So what does it takes to boost your FICO credit score and get in into the top range? Certainly, one of the things to do is to fix any mistakes that might be on your credit report. Beyond that, though, the best way to raise that FICO score is to take some advice straight from the horse's mouth.
The folks at Fair Isaac say that five different elements are considered when they calculate your FICO score. You should know that the whole process of credit scoring used to be completely shrouded in mystery. People had no clue about what it took to increase their credit score or why it was, in fact, that their FICO score was a 580, 680, or 780.
Several years ago, however, Fair Isaac disclosed to the public the five different components that go into computing your FICO score. They are as follows:
About 35%, the biggest part of your FICO score, is based on your payment history. In other words, how well you have paid your bills. This demonstrates your track record of honoring your obligations in a timely, agreed-upon fashion.
About 30% of your FICO score is based on the amount of debt that you have outstanding. How much you owe others shows whether or not you can manage credit and debt well, or whether you overdose on debt.
About 15% of your FICO score it is based on the length of your credit history. Generally, the longer your credit history, the more positively that weighs on your FICO credit score.
About 10% of your FICO score is based on new credit that you establish. This is where inquiries and new applications for credit come into play.
And then the final 10% of your FICO score has to do with the type of credit that you have in use. The mix of credit that you are currently using as a consumer is gauged by the variety of accounts you have, such as mortgage, major credit cards, retail cards, and so forth.
So, what does all this tell you in terms of being able to boost your FICO score? Well, it tells you a lot. First, the most heavily weighted areas pertain to your debts outstanding (30%), and to your ability to simply make your payments on time (35%). Other strategies can obviously help. But over time, let's say for six months or a year, if you literally did nothing else (that is, you didn't apply for any new credit, you didn't close any accounts, etc.) your credit score would increase over time merely by you making timely monthly payments.
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.