Improving your CREDIT score is easier than you THINK

There are 3 major credit bureaus these include; Transunion, Experian and Equifax.

The first thing I would recommend you doing is to visit www.freecreditreport.com or each individual bureau and pull your credit.

There will be a fee involved in pulling you credit, which typically runs between $29.99 and $49.99.

Once you have your credit pulled you will now see your FICO score, (credit score), along with every agency you have ever owed money to or still owe.

At the very bottom of the screen you will see a listing of every creditor who has pulled you credit.

Now we are ready to start finding out what your score means and how to improve it.

You may be asking yourself, what is a FICO score? Your FICO score is your credit score.

The 3 digit number that determines rather you get a loan or not and your interest rate on the loan is the FICO number. This number will range anywhere between 300 and 850, with the high number being best.

Financial institutions have been using FICO score for many years but up until the past 3 years these scores where not made available to consumers.

The numbers are lumped into 5 different categories which are tagged with the letters A+, A, B, C, D and E. Naturally you want to have a grade of A+ to have the lenders kneeling at your feet.

Lets find out what makes up your FICO score.

Lets breakdown the different components to your FICO score.

* 35% of your score is made up of your PAYMENT HISTORY. One of the most important things lenders look for on you credit report is a long history of making payment on-time without missing any payments.

* 30% of the score is related to credit CAPACITY. An individual who has his/her credit accounts maxed out or close to being maxed out is deemed to be a high risk consumer, and is less likely to receive a loan.

* 15% is based on length of credit. The scoring matrix looks at the average length of time your credit accounts have been open. The longer the better. If you have a lot of accounts opened recently this will lower your score.

* 10% on how many times your credit has been pulled. If you have a lot of new credit or a lot of attempts to get new credit, this will damage your score.

* 10% is based on the type of credit your portfolio has. The mix between revolving accounts (credit cards) and installment accounts (loans). It is better to have more installment accounts than revolving.

Now that you know what your score is based off of we can work to start improving it.

The Web site www.MyFico.com Fico Scores/Reports
will sell you a comparison of your three credit reports from the three main companies: Experian, Equifax and TransUnion along with your FICO score for $40.

For this price you also gain access to a feature on the site that lets you create hypothetical situations, such as paying off a particular debt or paying credit card bills on time, etc., and see how such actions will affect your score.

I highly recommend doing this instead of pulling from each bureau. For 1 you will save money and this also has some very unique features that the individual bureaus don't offer.

Even though you can't boost your score incredibly overnight, you can do it quite rapidly. The scoring formulas give heavier weight to activity in the past 6 months, hence if you can show EXCELLENT payment history for that period of time than it will really increase your score.

There are also other techniques to improving your score such as paying down account balances. The more room (capacity) you have available the better it looks to lenders. It is best to keep card balances below 50% to get the maximized effect.

Also, avoid opening a lot of new lines of credit. Remember, the more new lines of credit you open the lower your average length of credit.

Rotate the use of your credit cards so that all are used on a consistent basis but make sure all are paid well and kept below the 50% capacity threshold.

Another solid way to improve your credit score quickly is to pull together your high interest credit cards and pay them off with a loan. This essentially turns revolving credit into installment credit which can increase your score by 10 points overnight.

One thing for you to remember is that lenders do not just look at your FICO score. Even though that is one of the most important things they look at they also have other factors they take into consideration, such as, age, income and employment history.

Having a HIGH FICO score will definitely pay off. you will get better interest rates from your lenders and they will always be more apt to lend you the money you want.

Your FICO score determines to Lending Institutions the risk level involved with lending you money. Of course higher numbers mean less risk and vice versa.

Now your FICO score carries more weight now with lenders than ever before. With the U.S. lending agencies going through a "credit crunch" new loans are fewer and harder to get.

The increased awareness on loan defaults and foreclosures banks are raising the bar on who they will lend to.

What does this mean for you? Unless you have a FICO score of at least 680 you may find difficulty aquiring new lines of credit.

With the government bailing lending giants Fannie Mae and Freddie Mac you will see a much different lending environment. For some time mortgage loans have been flowing freely into the hands of people who didn't need them, now lending agencies are reaping what they sowed.

What does the bailout mean for you? It depends on if you have a FRM (Fixed Rate Mortgage) or ARM (Adjustable Rate Mortgage). Debtors with a FRM will not have any different result than they already had. Your rates will stay the same. The people affected by the bailout are the ARM holders. This is an excellent opportunity for you!

The Government has no intentions to start foreclosing on all of these mortgages. This is your opportunity to work a deal with the government to get your loan moved to a FRM at a lower rate.

Mortgage interest rates should drop a little over the next few months as much as a quarter of a percent as things start to stabilize. This means IF you have excellent credit and are in the market for a mortgage loan now is the time to get in.