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  • Writer's pictureKCStark

Improving Your FICO Score: 6 Tips and Insights for Home Buyers

When I was young sounds like a good song title, but it also may come in handy for anyone shopping for homes, especially first time homebuyers.

6 Examples of the best practices for improving your FICO score after collections, bankruptcies and over usage of credit.

1. Pay off outstanding debts: One of the best ways to improve your FICO score is to pay off any outstanding debts as you can. This shows lenders that you are taking responsibility for your past financial mistakes and are committed to improving your creditworthiness.

2. Keep balances low on credit cards: High credit card balances can negatively impact your FICO score, so it's important to keep your balances low. This means making sure that you are not using more than 30% of your credit limit on any given card.

3. Be consistent with payments: Late or missed payments can have a significant impact on your FICO score, so it's important to be consistent with your payments. This means making sure that you pay all of your bills on time, every month. Use automatic drafts.

4. Dispute errors on your credit report: If you find errors on your credit report, it's important to dispute them as soon as possible. These errors can negatively impact your FICO score, so it's important to get them corrected.

5. Consider a secured credit card: If you have trouble getting approved for a traditional credit card, you may want to consider a secured credit card. This type of card requires a deposit, which is used as collateral in case you default on your payments.

6. Be patient: Improving your FICO score takes time, so it's important to be patient. It may take several months or even years to see a significant improvement, but if you follow the best practices outlined above, you will likely see your score start to improve over time.

How long does it take to raise the FICO scores? Good question!

It can take several months or even years to raise a FICO score, depending on the specific factors that are impacting the score.

For example, if you have a history of late or missed payments, it may take longer to raise your score than if you have a high balance on a credit card.

The length of time it takes to raise your FICO score also depends on the specific steps you take to improve your score.

For example, paying off outstanding debts and keeping balances low on credit cards can help improve your score more quickly than disputing errors on your credit report or waiting for a bankruptcy to age off your credit report.

How often do credit agencies update borrower's FICO scores?

Credit agencies typically update borrower's FICO scores on a monthly basis. However, lenders may access your credit report and score more frequently. This can depend on the type of loan or credit product you are applying for, as well as the lender's policies.

FICO score is not the only credit score available.

There are other credit scoring models like VantageScore, which can be updated more frequently. Also, you can check your credit score for free from some credit agencies like Credit Karma, but these score may not be the same as the score used by the lender.

What is the difference between the FICO score and VantageScore?

FICO and VantageScore are both credit scoring models that are used to evaluate an individual's creditworthiness.

The main difference between the two is that FICO is developed and maintained by the Fair Isaac Corporation, while VantageScore is developed by the three major credit reporting agencies: Equifax, Experian, and TransUnion.

FICO scores range from 300-850 and are based on a variety of factors, including:

  • Payment history.

  • Credit utilization.

  • Credit history length.

  • New credit.

  • Types of credit used.

The FICO score is used by the majority of lenders to make lending decisions, and is widely considered to be the most widely used credit scoring model.

What is a VantageScore?

VantageScore uses a slightly different set of factors to calculate a score. VantageScore considers payment history, credit utilization, credit age and type, balances, and recent credit behavior. The VantageScore model also uses a more comprehensive credit file, and uses a more predictive modeling approach.

This means that, even if a person has less credit history, they can still have a score.

While FICO and VantageScore are similar in many ways, there are some important differences between the two models.

For example, FICO places more emphasis on payment history and credit utilization, while VantageScore places more emphasis on credit age and type. Additionally, FICO scores may be more widely used by lenders, while VantageScore may be used more by credit card companies, and other non-traditional lenders.

Have questions about your FICO and your next home mortage? Let's talk. It can be more fun than a FICO donut.

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