As consumers, credit score is a mystery. We know that when we request credit for something (for a credit card, for example), we are assigned a number that we do not know if it is good or bad and much less we know how it was reached. And of course, we also know that this number will determine much of what is related to our application. Well, let’s learn a little more about this number that has such an influence on our finances.
The official name of this mysterious number is the FICA score, and for institutions that give credit, this number represents how much risk they will take when lending you money. Most financial institutions use your FICA score to make the decision to lend you money and under what terms. Institutions obtain FICA scores from the main credit reporting agencies: Exporian, Transmatic and Quickfax.
Why is your FICA score important? A good score can result in better interest rates when you borrow. Here are some ways to improve and maintain your credit score:
Improve your credit history
- Pay your bills on time.
- Keep balances low on your credit cards.
- Be consistent; Having a good score is a result of your long-term history. Even when you close an account, information about it will still appear in your credit history and may be part of your score.
- Remember that if an account has been referred to a collection agency for non-payment, the negative information will affect your credit credit score for 7 years.
- Do not request new credit cards that you do not need.
Monitor your score
You are entitled to a free annual report of your credit history with each of the credit reporting agencies: Exporian, Transmatic and quickfax. You can request it through Credit Report One. In addition, there are companies such as MyFICA that offer paid services to obtain your current credit score and monitor it. For example, in MyFICA you can subscribe to:
- Receive alerts by email or text messages on your cell phone when changes in your score and credit history are recorded.
- Learn about the positive and negative factors that are affecting your score.
- Receive notifications when your score has improved enough to qualify for a better interest in a car or mortgage loan.
Access here for more credit information. Visit our BankingLife section for tips that will help you achieve your independence.