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How To Raise Your FICO Score For Free

Most consumers are interested in finding out what steps they can take to raise their FICO score for free. This is a common cause because a FICO score affects so many aspects of a consumers financial health since it determines the types of loans they can get to what interest rates they pay. There are many different ways to raise your FICO score but regardless of which one you use it will require dedication and discipline. If you can adhere to a course of action then the results will be worthwhile as your time and effort should be rewarded with a higher score resulting in more financial opportunities.

The quickest and easiest thing that can be done is to make on-time payments for all lines of credit. Regardless of whether or not it is a home mortgage, auto loan, student loan or credit card, making timely payments for the correct amounts is one of the single most important factors when raising your FICO score. On a credit report each line of credit has a grid broken out by months and years. If this entire grid is covered in green x's then that means the consumer has made on-time payments each month over a span of years. When a prospective lender or employer reviews this information they see instant confirmation of whether or not the consumer is financially responsible.

It may sound like common sense but it's kind of hard to have a FICO score if you have no credit to begin with. Establishing credit over an extended period of time is an important factor when trying to raise your FICO score for free. Many consumers establish their credit histories when they enter college or obtain their first job. This is important because establishing credit early allows time to prove your credit worthiness and financial responsibility prior to needing more important loans for a home or a vehicle. Starting small with a low limit credit card of between $500 and $1,000 allows you to get your feet wet without getting in over your head. By charging and then paying off the balance in full each month you will be establishing credit and showing future lenders you know how to manage your finances in a responsible manner.

If you already have established credit then another way to raise your FICO score for free is to lower your credit utilization ratio. All credit utilization means is what percentage of your overall available credit is currently being used. So if a consumer has $20,000 in available lines of credit and currently has outstanding debt of $5,000 then they will have a credit utilization of 25%. A high credit utilization ratio will be a red flag for current and potential lenders and often result in a lower FICO score. High credit utilization is considered dangerous because it increases the risk of default and warns other lenders not to issue additional credit. In conjunction with a lower credit utilization, if you have some credit cards which have no balance try to use them periodically to keep the account active. Closing credit card accounts can sometimes decrease your FICO score as it not only lowers available credit but also increases the credit utilization ratio.

The final and more time-consuming step to raise your FICO score is to review your annual credit reports from each of the three major credit or porting agencies and removed any inaccurate information. The three credit reporting bureaus, Experian, Equifax and TransUnion all have procedures in place for consumers to dispute inaccurate information on their credit report. Federal law requires that three credit reporting agencies to provide one free credit or annually to consumers. This provides an opportunity for individuals to not only keep an eye on suspicious activity which could be indicative of identity theft or fraud but also correct inaccurate information which may raise your FICO score. Most credit report disputes will need to be detailed and provided in writing to the agencies at which point they have 30 days to investigate. After 30 days they will determine the validity of your dispute and either remove the incorrect information or explain why it will be staying in place. If black marks can be removed from a credit report that will go a long way towards raising FICO score and will only cost you your time in the price of a stamp.

There are many different techniques to raise your FICO score for free but they require a consistent commitment to making on-time payments, paying down debt and correcting inaccurate information. However, the benefits far outweigh the costs because raising your FICO score has significant financial benefits. A high score impacts every aspect of the consumer's life from obtaining employment and renting an apartment to qualifying for various loans and paying low interest rates. Because of these benefits, taking some time to optimize your credit history will pay significant dividends in the future.