Your FICO score is a crucial part of your financial health and can greatly impact your ability to secure loans, mortgages, and even rent an apartment. You may think you are doing everything right to maintain a good credit score, but there are several factors that can lower your FICO score without you even realizing it. In this article, we will discuss some of these factors and how you can work towards FICO score improvement.
One of the main culprits that can lower your FICO score without you knowing is late or missed payments. Even just one missed payment can significantly impact your score, so it is important to always pay your bills on time. Set up automatic payments or reminders to ensure you never miss a payment again.
Another factor that can lower your FICO score is carrying high balances on your credit cards. Your credit utilization ratio, which is the amount of credit you are using compared to your total available credit, plays a big role in determining your score. Aim to keep your credit utilization below 30% to avoid any negative impact on your FICO score.
Closing old credit accounts can also lower your FICO score without you realizing it. The length of your credit history is an important factor in determining your score, so closing old accounts can shorten your credit history and lower your score. Instead of closing old accounts, consider keeping them open and using them occasionally to keep them active.
Applying for multiple credit accounts within a short period of time can also lower your FICO score. Each time you apply for credit, a hard inquiry is made on your credit report, which can lower your score. Try to limit the number of credit applications you make and only apply for credit when you really need it.
Having a mix of credit types can actually help improve your FICO score, so if you only have one type of credit account, such as a credit card, consider opening another type of account, such as a personal loan or mortgage. This can help diversify your credit profile and potentially improve your score.
In conclusion, there are several factors that can lower your FICO score without you knowing, but by being aware of these factors and taking steps towards FICO score improvement, you can work towards achieving a better credit score. Remember to always pay your bills on time, keep your credit utilization low, maintain old accounts, limit credit applications, and diversify your credit types to help improve your FICO score.
