More often than not, checking one’s credit report from any of the credit bureaus comes as a knee jerk reaction when there’s an unexpected refusal to approve the loan or credit card application.  Despite the many online ads that promise to repair bad credit, it’s often too late to do anything once negative information appears to lower your FICO rating.

It could be wrong information, but even if you have the documentation to disprove it, it’s not going to disappear in a matter of weeks, so that by the time it clears, you won’t need to take the loan anymore.

Planning is critical. If you have plans to buy a property and go into mortgage, it’s a good idea to check your credit standing at least 90 days before you start applying for the mortgage.  That’s often long enough for you to do something if there’s a negative report you can dispute.

You could get a free copy of your credit history online but if you already had one 8 months back, you’d need to wait another 4 months as this report only gets handed out free once in 12 months.  A complete credit report costs about $50 from any of the three credit bureaus and you may have to get one from all three.   GP

There are several factors than can bring your FICO score down and the most common cited is your payment history.  Miss a payment and your score goes down a few points.  We are not privy on the exact formula as to how many points are taken out, but if sure will make a dent on the score.

Another factor is the length of time you’ve had a good credit.  The longer it is, the higher your FICO score gets.  This is the reason why you should never lose or give up your oldest or your first credit card.

If you think paying off the entire amount owed to your credit card bills on time can improve your score, you could be in for a surprise.  It all depends on the amount you paid off.   Even if you paid in full, if the amount owed takes a large percentage of your credit limit, your FICO score gets adversely affected.

Large credit card balances are often frowned at by creditors. In general, keeping your charges below 30% of your credit limit can bring your FICO score up.  GP

It’s interesting to note that if a person is debt-free, he/she can’t get a good FICO score.  If you don’t have a home mortgage, a car loan or a revolving credit line such as what a credit card gives, it is unlikely that your FICO score would be high enough to get you easily approved when applying for a loan.

How can the credit bureaus rate you if you never proved your payment ability?  It doesn’t matter whether you have a high paying job or even pay your rent, telephone and utility bills on time, if you have no payment record of a loan, you won’t get a high FICO score.

This is why immigrants and some fresh graduates just starting out their lives in the US consumer landscape often get difficulty applying for a credit card as there’s no record that banks and creditors can have to approve their application. GP

Every US resident consumer with a credit card should not fail to get a copy of his/her credit report. The Fair Credit Reporting Act mandates that the three credit bureaus Equifax, Experian and TransUnion provide a credit report at most once a year when so requested.

You can do that by accessing AnnualCreditReport.com and file your request for a copy online. This website has been created by the three credit bureaus and is the only one authorized to provide a free credit report annually and no other.

But can you expect a complete report from the site?  No, you only get a portion of it, notably your credit history for the last 12 month period, no FICO score.  But this is often enough for anyone wishing to check why they have been recently refused a loan or a new credit card.

The FICO score hinges on the credit history and if consumers review the report, they can always bring any error to the attention of reporting bank or the credit bureau which they believe has dented their credit standing.   There are dispute forms available from the same site.  GP

Does anyone know what FICO means?  It’s not a fruit, it’s a mathematical model that gauges a person’s creditworthiness as developed by the company carrying its acronym – Fair Isaac Corporation, the creators of FICO.

Thus, you often hear FICO score when talking about a person’s credit standing.  It is your credit score.  It is not a credit report but is a substantial part of it.  Lenders, banks and creditors use this to assess an applicant for a loan or credit instrument (card).

FICO scores range from 300, the most unworthy of credit, to the highest 850, the most creditworthy.  Most creditworthy people have scores starting at 620 and a score below that will often give headaches to people applying for a loan or credit card.

They may still get a loan but the financing cost or interest rates would not be the lowest that they could have gotten had their FICO scores been higher.  That’s where you now enter what is technically called sub-prime lending or high risk lending.  GP

Credit bureaus are only interested in whether you pay your bills on time. They’re not interested in how or where you get the money to pay them.  That means even crooks and gangsters can enjoy high credit marks.

You can lose your job, but for as long as you have the money to pay your credit card bills, home mortgages and personal loans, your credit score is in good shape, never mind if you receive unemployment checks from your insurance, beg on the streets, steal from your neighbors or borrow from relatives.

You can get a divorce and your FICO score remains in tact, so long as the alimony payments can cover your credit card bills.  You can even go on overdrafts in your checking account, but this won’t affect your credit score.

You can get arrested for drunk driving or double parking and still your credit score won’t badge.  But apply for personal bankruptcy and your credit score goes out the window.  GP