Credit: As Americans it seems that we can’t live with or without it.  If your credit is not up to par, start today to improve it.  The more you know about how your FICO is determined, the easier it will be to boost your scores.



According to a recent article at LA Times, five components comprise your credit (FICO) score:

Payment history (35%)
If you have late payments, contact the account holder and ask for them to be waived.  Tell them you are applying for a real estate loan and you can’t get approved…. Tell them “something”; be nice, if the answer is “no” ask for a supervisor.  Sometimes this works.  IF you are making a payment late call the account holder, let them know that the check is in the mail and to please not adversely affect your credit.

Debt level (30%)
If you are a heavy credit card user, call the account holders and ask for the maximum credit line to be increased.  Your current balance is compared against your maximum credit line, i.e.:
If your balance is $5,000 and your maximum credit line is $10,000 – the ratio is 50% which is good, the lower the ratio the better. 

Length of credit history (15%)
The sooner you apply and receive credit the better.  Parents take note; help your children establish credit early.  If you have had a bankruptcy, foreclosure or some other credit disaster, begin to reestablish your credit history immediately.  If you are having trouble obtaining credit, there are banks which will collateralize a credit card limit to your bank account. 

Diversity of credit accounts (10%)
I didn’t know about this, but it seems simple enough, all of your credit cards should not be the same type… not all bank cards, not all department stores and not all auto loans.

Number of new attempts at getting credit (10%).
Don’t go crazy and apply for five auto loans or department store cards at the same time.  If you have been declined for credit, prior to reapplying try to correct the cause of the declination.