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Knowing the FICO Scoring and Your Credit Score

By Karen Anderson
Published: Saturday, October 24th, 2009

Did you know that 78% of American households had one or more credit cards in 2008? This was according to a Nilson Report that was released in April 2009. This is a proof of how Americans have become reliant to credit cards making it inevitable for information on credit report tips to be made available. This is to arm every credit card holder with knowledge on the advantages and disadvantages of holding a credit card.

Inasmuch as a credit card can be efficient, it can also be a way for others to steal your identity. Every penny that you have saved can be gone in a minute if you are not careful. Being careful entails that you find credit report tips that can help you gain a better understanding on how “credit” works. As you may already know, credit report refers to the all the details that would are used to evaluate your creditworthiness. Credit reports are prepared by credit bureaus and it includes personal information about you. Your credit report contains your credit history.

Credit history is among the most important points to consider when you are looking for credit report tips. Your credit history will be utilized to compute for your credit score. Your credit score is also known as your FICO score, the brainchild of Fair Isaac and Co., and it will show the probability that you are going to pay your bills. FICO will consider the number of accounts you have to your name, how old the accounts are, and the age of your most recent account. If your credit report will reflect a delinquency then FICO will try to find where this delinquency has been committed through the help of public records which will show records or bankruptcy or tax lien if you have them.

So what happens next? Credit report tips will tell you that after all information is gathered and evaluated, your credit record will be subjected to the FICO credit scoring system. There are ten score cards and you can fall under any of it. Basically, the score cards are the groups of borrowers that are according to their similarity in credit characteristics, history, and habits. You are at a low risk if you score 850 points, the highest possible you can get, and you are at high risk if you score 300 points.

You can avoid getting a low score if you check your credit report even before you execute any plans on applying for a credit card, for example. You should be as early as 90 days before the application in order to have time to correct any discrepancy in the report. However, negative records such as bankruptcy have nil chances to be removed but you can request for a re-investigation as a way of disputing the information. Saving the best among credit report tips for last: Reinvestigation is for free! If the reinvestigation does not resolve your dispute then have it included in your credit history for future references.

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