You may be wondering what a FICO score is. A FICO score is the number that lenders use to determine your creditworthiness. It’s a three-digit number between 300 and 850, with higher scores indicating better creditworthiness. A person with excellent credit can expect to have a score above 760; someone with poor or no credit will have scores in the low 500s. In Stratus, we require a FICO score not lower than 620.
Most people don’t know what their FICO score is, but if you do find out (it takes just a few minutes), you’ll have more power over your own financial destiny than you ever thought possible: it’s simple math—the higher your FICO score, the more likely it is that lenders will approve loans for you.
Stratus don’t just fund your education, we fund your future and more importantly we want to help you achieve success! So here are 5 tips to help you build your FICO score:
1. Pay your bills on time
● Pay your bills on time. When you pay your bills late, it shows up as a black mark on your credit report and affects your FICO score.
● Pay more than the minimum payment. You may be tempted to pay only the minimum amount due on a credit card or other loan, but doing so can be costly in the long run because it will take longer to pay off the debt and you’ll end up paying more in interest over time.
● If you can’t make full payments, at least make sure that everyone is made on time by setting up automatic bill payments through each creditor’s website or calling them directly to set up an automatic payment plan for whatever amount that works best for you
2. Keep your balances low
The single most important factor that goes into calculating your credit score is your credit utilization, which is the amount of debt you have compared to the amount of credit you have available. You should aim for a utilization rate of less than 30%. This means that if you have $5,000 in available credit and carry a balance of $1,500 on two cards, your overall balance would be around 25% ($1,500 divided by $5,000). The lower this percentage is relative to the total amount of your available credit line(s), the better it will look to lenders when they review your account.
As long as you make payments on time (and don’t go over their limits), opening new accounts will help increase scores over time as well because it shows lenders that they can trust you with more money while still being responsible with what’s already been given to them.
3. Start off with a credit card
In order to build your credit history and FICO score, it’s recommended that you startwith a credit card that is easy to get and responsible. Even if you don’t plan on using it frequently, having a card can be beneficial in the long run.
● Use it responsibly: While this may seem like common sense, many people use their cards irresponsibly—and consequently damage their FICO scores. If you’re going to obtain a new credit card or open up an existing one, make sure that you use it responsibly by paying off each month’s balance in full and on time (doing so will prevent late fees). If your paymentis late even once, this could negatively affect your score—which brings us back around to why we recommend starting with an easy-to-get card in the first place!
● Build credit history: In addition to showing lenders how easily they can count on you when they lend money or provide other services, a positive payment history also helps build trust among financial institutions–which translates into higher FICO scores for those who consistently pay off their bills as agreed upon in writing by both parties involved (lender/customer).
4. Don’t apply for more credit than you need.
Applying for too much credit at once can negatively impact your FICO score. Instead of applying for more than one card in a six-month period, apply for one or two at a time and wait about six months before applying again. If you’re trying to build up your credit history and history of on-time payments, then this is especially important since it shows that you can manage multiple accounts over time.
5. Keep an eye on your FICO.
In this internet age, there has been a lot of cases of fraud and one of the most popular is identity theft. That’s why it is important to keep an eye on your FICO score for any suspicious transaction that you yourself know you didn’t loan, as this will save you from being robbed of your identity.
To know how much you FICO score is, you can access it here. It’s based on information from your credit report, which includes the following:
●Your name, address and age
●Whether you’ve ever been sued for debt collection
●Whether anyone has filed for bankruptcy protection against you in the past seven years (if so, when)
●How many accounts are listed on your credit report (including mortgages)
With these tips, you’ll know the best way to build your FICO score.
If you’re interested in building your FICO score, here are the five tips you need to know.
●Pay off debts
●Pay bills on time
●Maintain a low balance ratio on credit cards and loans
●Keep an active credit history for at least 7 years (or 2 accounts for 5 years
●Don’t apply for too many new credit accounts