FICO Score

Factors affecting FICO Score: 

The FICO score is calculated by considering various factors and parameters such as payment history, credit mix, length of the credit history, etc. The below listed are some of the factors that have an impact on FICO score: 

1. Credit mix: The various credit products on your account, such as credit cards, mortgages, and loans, and your ability to manage them have an impact on your FICO score. 

1. Length of credit history: A longer credit history, with timely settled dues, has a positive impact on your FICO score.  

1. Amounts owed: A high number of debts or missed payments have a negative effect on your FICO score. 

1. New credit: Applying for multiple new credits, such as loans, mortgages and credit cards, within a short span of time can affect your FICO score. 

1. History of the payments: Whether you repay your credit card balances on time, missed payments, timely loan installments, defaults, etc., everything has an impact on your FICO score. 

Ways to improve your FICO score: 

With consistent efforts and taking simple measures like making timely payments, you can boost your FICO score. Read on to know more about the ways to improve your FICO score. 

1. Timely bill payments: Paying your credit card bills on time is one of the simplest ways to boost your credit score. Moreover, do ensure that you are repaying your loans and other credits on time as well. 

1. Do not close old accounts: Having a long credit history has a positive impact on your FICO score. So, avoid closing your credit card, even if you are not using it. 

1. Reduce debt accounts: Repay the debts as soon as possible. It has a negative impact on your FICO score. 

1. Avoid new credit requests: Try to avoid applying for multiple credit cards in a short span of time. This can negatively affect your FICO score.  

1. Diversified portfolio: It is important to have a variety of credit mixes in your portfolio. A well-rounded credit mix shows your ability to manage different types of credit and can help improve your score. 

1. Lower your credit utilisation ratio: A high credit utilisation ratio shows that you are too dependent on credit. It has negative impact on your FICO score, thus should be reduced.