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FICO Just Released How Much Credit Scores Rise When Negative Marks Go Away
Gather around for today’s lesson, won’t you?
We’ll call it Credit Scores 101. Here are the basics:
Naturally, we know the best way to raise a low credit score is to strategically pay down your debts and to correct false information in your credit history.
Ah, but here’s what we don’t know: What about those black marks on your credit history you can’t do anything about? For example, do you have any late or missed payments on your credit cards or car loans?
Does that bad stuff come off your credit report after a while? And what happens to your credit score when it does?
Now FICO has the answer. The credit scoring company analyzed its own data to get the details.
Delinquencies, like late payments, typically get removed from your credit report after seven years, thanks to a federal law called the Fair Credit Reporting Act.
That improves your credit score. But by how much?
Here’s what FICO found out:
One of the key lessons here: It’s worth knowing what’s in your credit report.
As Money Talks News point out, “FICO’s research highlights the importance of your credit report — knowing what’s in it, checking it regularly and disputing errors and other negative information.”
An easy way to do that is to sign up with a free service like Credit Sesame. This tool shows your balance on any unpaid bills, credit cards or loans. It offers personalized tips on reducing your debt and raising your credit score.
It’s a good way to raise your credit score more than 14 points at a time.
So, just to sum up:
And a better credit score means a lot when it’s time to get a mortgage, a credit card or a car loan.
Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. His credit score isn’t quite as terrible as it used to be.
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