While most Arizona residents understand that their credit is tracked and reported by the credit reporting agencies, many don’t realize that their entire credit history is boiled down into just one number – called a “credit score” or “FICO score.” This single number will dictate whether or not you get a loan as well as the interest rate you will pay. Since recovering from bankruptcy means working to raise your credit score, it’s important to understand how scoring works – and what you can do to raise yours.
Your FICO score (named after the company that invented it), is a single number between 300 and 850. You can get your FICO score at myfico.com. Lenders believe that the higher the number, the better chance that you will pay your loans back on schedule. That’s why you’re more likely to get a loan at a better interest rate with a higher score. The number to hit? 720 or above is considered a safe risk by most lending institutions – there is really no need to work hard to raise your score if it is already 720 or higher.
Luckily, FICO gives more weight to recent activity, so you can give a real boost to your credit score in about six months. What are the fastest ways to improve your score?
Pay off balances: The less available credit you use, the better. Experts suggest staying under 50%.
Make your payments on time: Enough said.
Avoid “credit seeking” behavior: Attempting to open or opening a lot of accounts in a short period of time makes lenders nervous – and drops your score.
Don’t have too many accounts: If you have more than five credit cards, it is best to cancel some, but be sure to cancel the newest ones first – the length of time you have an account impacts your score, too.
Use all of your cards: Dormant accounts do not help your score, so use each of your cards on a regular basis – just be sure it is an amount you can afford.
Knowing your FICO score and working to improve it can help you become a good credit risk again and let you take full advantage of the fresh start your bankruptcy has given you.
At The Pew Law Center, PPLC, we believe that your life shouldn’t be defined by debt. We have helped hundreds of people just like you find the relief they deserve from harassing bill collectors, paycheck garnishment, foreclosures proceedings, and – most importantly – the constant worry about money and what to do about your debts.
We are a dedicated debt relief law firm. We help people from Phoenix, Mesa, Gilbert, Queen Creek, Chandler, Scottsdale, Apache Junction, Tempe and throughout Arizona file for bankruptcy or work through tough tax problems every day. We can help stop the debt cycle and give you relief from your overwhelming, burdensome, and crushing debt. Please don’t wait another moment. Call us right away – our attorneys will help get you the fresh start you deserve.