How to Fix a FICO Score

Stop using your credit cards if you want to fix your FICO score

You have applied for a new loan or credit card, only to find that you were denied credit. The problem is likely that your FICO credit score is too low. If you have a lot of debt and some bills that you did not pay on time, it will likely affect your ability to get a loan. Before you apply for more financing, you need to focus on fixing your FICO score. The good news is that it is entirely possible to fix your credit rating with a little bit of time, patience and hard work.

Instructions

1. Get a copy of your credit score and check it for errors. Correct any errors by sending a certified letter to the credit bureau and the lender in question.

2. Start paying your bills on time, no matter what. Late payments are one of the most harmful parts of your FICO credit score. Make any delinquent payments current as quickly as possible.

3. Pay off your credit card balances. Try to pay them so that each one has a balance that is less than a third of the total credit limit. This will improve your FICO score faster than paying your credit cards off completely one at a time, and your credit cards have the biggest impact on your FICO score.

4. Avoid opening any new credit accounts, unless absolutely necessary. The more credit cards and other forms of debt you have, the lower your credit score will be.

5. Close some unused credit cards or accounts, but choose them carefully. Only close a few at a time, and close newer cards rather than older ones. You can actually harm your creidt score by closing accounts you have had for many years.

Tips & Warnings

• Remember that it will take time to fix a FICO score. If you have errors removed, it will make a quick difference, but the other steps will take some time.

• Stop spending on your credit cards as you work to repair your credit score. The more debt you add to the problem, the worse your credit score will be.

• Avoid the temptation to consolidate your debts. This may make it easier for you to pay your bills each month, but it has a negative impact on your FICO score.

• Do not ask your creditors to lower your credit limits. Simply stop spending. Lowering your credit limits will make your debt to credit limit ratio higher, which will hurt your FICO score.

Resources

• FICO: Improve Your Score