CAN I IMPROVE MY FICO SCORE?

If you have had some financial woes in the past, your FICO score may be suffering as a result. Having a good FICO score can save you thousands of dollars in interest on credit cards, car loans and mortgages. There are very simple steps you can take to improve your FICO score.

• Pay your payments on time every month. Late payments are one of the most common culprits negatively affecting FICO scores. So if you want to make your score higher, don't take chances. Pay your bills before they are due.

• Pay credit cards down to below 50% of the credit limit. If your credit limit is $1,000 you should not owe more than $500 on the account. One of the faster ways to achieve this is to focus on paying down one card at a time. Pay only the minimum payment on the rest of your cards and put the rest of the money toward the card you want to pay down. Then repeat this process with each credit card.

• Don't apply for any new credit. Having a lot of new credit can hurt your score. FICO scores are higher when the credit accounts are older and established. New accounts with maxed out limits have a negative impact on your FICO score. If you have no established credit or just completed a bankruptcy, then certainly apply for new credit so you can begin to build a credit profile. Just don't go overboard and don't borrow money you cannot afford to pay back.

• Pay off any collection accounts. Once the collection is paid, your credit score will begin to improve as that paid collection gets older and older.

• Try to clean up any false, negative information still being reported on your credit report. Often if a person has gone through a bankruptcy, the creditors have not updated their information and still report that the account is delinquent. A simple letter to the credit bureaus with proof the account was discharged through bankruptcy will help improve your credit rating. This is also true with other accounts that are being incorrectly reported as derogatory. Do not be thwarted in your efforts to have your credit information corrected. It takes tenacity and focus just like dieting.

• Pay special attention to your credit to be sure all information is being reported correctly. Check your credit report annually and more often if you are working to improve it. You can get a free credit report every year at www.annualcreditreport.com. You can also obtain your credit reports for a fee from the three bureaus, Trans Union, Experian and Equifax.

Raising a low FICO score will take time and effort, but it can be done. Negative items can immediately and significantly affect your FICO score so you have to pay close attention. It may take 6 months to 2 years of paying your bills on time to reverse the damage. You will need to demonstrate that you can handle your debt responsibly. Once you have achieved that, you can begin to reap the benefits of having a good FICO score.