Analyzing your FICO Score

Now that you have your magic number, what do you do with it? Here’s a general breakdown of how your FICO score is interpreted by lenders:

Excellent: Over 750
Very Good: 720 or more
Acceptable: 660 to 720
Uncertain: 620 to 660
Risky: less than 620
Poor: Less than 590
Very Poor: Less than 550

Most Americans have FICO scores in the 600s and 700s. The boundary between a standard loan and a higher cost loan, also known as a subprime loan, is generally considered to be a credit score of 620. Any score less than 500 will generally mean you’re declined for any type of credit.

Re-Negotiate Rates
If your FICO score is 720 and above, you may be able to re-negotiate your credit card rates. Don’t waste any more money on interest than you have to. Grab your credit card statements and call lenders to re-negotiate lower rates.

Fix Inaccuracies
The FCRA (Fair Credit Reporting Act) protects your right to have inaccuracies in your credit report removed. http://www.ftc.gov/os/statutes/031224fcra.pdf
If you do find something suspicious or inaccurate on your report, notify both the credit bureau who provided the report and also the company where it came from. Include relevant information to support your claims such as cancelled checks and send them via certified mail or another shipping method that requires a signature and delivery confirmation.

Get Your FICO Score Up
Since your FICO score is heavily weighted towards recent activity (the prior 6 months) you can get it up in a relatively short period of time. Focus on the steps outlined here:
· Open a savings account if you don’t have one
· Settle any debts in collection
· Correct inaccuracies
· Keep credit card balances low instead of maxing out your accounts (balances kept over 75% of the limit are considered high).
· Keep accounts open instead of closing them once debt has been paid off
· Avoid checking your FICO score too frequently. Anything more than once or twice a year could raise red flags and impact your score.

Don’t fall victim to scams that promise they will lower your credit score for a fee. Anything that they can do, you can also do on your own – and at no cost to you. Raising your credit simply takes time and effort.

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Just a small FYI and yet another reason to get that score up.... When it comes to homebuying: A FICO above 680 requires very little review or underwriting and will get through faster. There has been recent chatter about making 680 the new standard for mortgages, so if you don't have 20% down or your debt to income ration is too high (45%) and you're under 680, you may fall into a subprime catagory.

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Thanks, 2bearsmom! That's a great point.

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Even though I havn't been able to get my FICO score for free yet and don't think that I am in a place right now to spend the money to get it (on modified spending freeze)... I am taking the steps to get my score up. I had no accounts in bad standing but I figure that it can't hurt and I'm keeping up with you guys.

I don't want to get behind again. This is too good for me to slack off.

Don't pay! Here's how to get it for free:

You’re entitled to one free report from each agency during the year. The three credit reporting bureaus have a website and toll-free telephone number through which you can order your free annual report.
Online: www.annualcreditreport.com
Via Phone: 877-322-8228
Via the Mail: http://www.ftc.gov/bcp/conline/include/requestformfinal.pdf

To obtain that report, you must go to www.annualcreditreport.com. Free report requires enrollment in a trial of Triple AdvantageSM. Cancel anytime during the 7-day trial period and pay nothing. Otherwise, you will be billed just $14.95 for each month that you continue your membership.

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I have a not so awesome credit score and i'm happy to know that i took the right steps as you outlined them above!!

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Forget the Joneses Blog

Why is it that all three credit bureas, TransUnion, Experian and the other (can't remember) have 3 different scores? I was a 750 with Transunion but 705 and 706 with the others?

They each have a slightly different way to calculate your score. This explains it pretty well:
Credit Scores - Why You Have Different Credit Scores

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