With so many bills to pay and so little time, navigating the different types of credit scores seems like just another complicated financial issue you don’t have time to deal with. But having a high credit score, better loan terms and lower interest rates are possible. Specifically, a high FICO® Score is what you’re looking for, as over 90% of lenders measure a borrower’s potential abilities using FICO®. Don’t learn the lesson of having a good credit score the hard way – check out these to help with your credit score.

1. Pay Bills on time, every time

The easiest way to raise your credit score is to pay bills on time because payment history is the most significant factor in calculating your FICO® Score.  It sounds too good to be true, but consistent, timely payments will shift your score in as little as six months.

Tip: If you have the funds but have trouble remembering to pay up various accounts with different due dates, set up automatic payments.

2. Maintain low credit utilization

Low credit utilization means that you’re not using as much credit as you have – your cards aren’t maxed out and you aren’t taking out as many loans as possible. Lower utilization helps boost your credit scores.

Tip: Try to keep your balances relatively low compared to your credit limits as they can have a positive impact on your score over time. An approach like this will help with your creditworthiness.

3. Diversify credit accounts

Having a solid mix of credit types – like credit cards, loans, and more – can positively impact your FICO® Score. It shows that you can handle various forms of credit responsibly.

Tip: There are many kinds of credit, meaning that you can get creative with your credit portfolio. Think of an installment loan or a secured credit card, to name a few. Diversified credit applies to FICO® Scores and other credit score models, though FICO® Scores value installment loan history higher than certain competitors.

4. Maintain a long credit history

The longer one’s credit history, the better off they’ll be, as it demonstrates a borrower’s ability to manage their credit over an extended period of time.

Tip: Avoid closing old accounts, even if you don’t use them that often. They contribute to the length of your credit history and remember – the longer the better.

Types of FICO® Scores: Understanding the different versions

FICO® Scores are an umbrella of credit reports – they come in different versions tailored for specific types of credit. FICO® Score 8 is the most widely used version for general credit decisions, but there are other ones for specialized versions used for auto loans, mortgages, and credit cards.

• FICO® Score 8 – This is the most used FICO® Score by lenders, as it’s designed to judge general credit decisions.
• FICO® Auto Score – As stated in the title of the score, this is specifically used by auto lenders to evaluate your creditworthiness for car loans. It most heavily weighs on your payment history.
• FICO® Score 2, 4, 5 – These versions of the FICO® Score are used by mortgage lenders to determine eligibility for home loans.
• FICO® Bankcard Score – This score is used by credit card issuers, such as Citi, Discover, and Wells Fargo, to evaluate applicants.

For more detailed information on the various FICO® Score versions, including how they differ or weigh different credit history factors differently, you can refer to the FICO® Score Versions page on the official myFICO® website.

Contact Information:
Name: Sonakshi Murze
Email: sonakshi.murze@iquanti.com
Job Title: Manager