B credit-smart...

Whether you're buying a house, applying for a small business loan or simply hoping to get new cell phone service, your credit plays a major role. There are several ways to monitor your credit, but your FICO (Fair Isaac Corporation) score is among the most reliable.

FICO scores are used to assess the likelihood a person will honor their debt commitments and determine their overall credit-worthiness. The scores range from 300-850, but the majority of scores fall between 600-800.

How your score is calculated?

* Opening a lot of accounts (3 or more) may lower your score.
*Revolving credit and loans are better. Keep all credit cards below 30% of limit.

What does your credit score affect?
Whether you...
will be approved or declined.
are required to make a big deposit, little deposit, or no deposit.
are required to make a big down payment, little down payment, or no down payment.
are offered a high, moderate, or low interest rate.
can fund a project though this, that, or the other source of funding
are offered a black, platinum, gold, or basic credit card - or a polite (but embarrassing) refusal.

What is considered a "good score"?

720+: Excellent
660+: low-risk borrower
620 - 660: not horrible, but creditors may require more documentation/assets
-620: high-risk borrower

How to use credit?
Worst - perishables: food, gas, etc.
Better - non-perishables (don't appreciate): clothes, electronics, etc.
Best - non-perishables (do appreciate): financing a home, education., etc.


Ways to improve your FICO score?
-Check your credit report and score regularly.
-Carefully review your credit report and correct any errors or incomplete information.
-Make a habit of paying bills and other payments on time.
-Pay down balances of your debt. Keep your debt reasonable. One rule of thumb: for a good credit score, your account balances should be below 75% of your available credit. For example, if you have a $2000 credit limit, you should have a balance of no more than $1500.
-Maintain only a reasonable amount of unused credit. While it's good to have a cushion of credit available, having ready access to thousands of dollars of debt makes you a poorer credit risk. (i.e. having too many unused credit cards could be a problem)
-Avoid opening a lot of new accounts at once.
-Avoid too many inquiries. Inquiries are interpreted as a sign that you have been actively seeking credit, and may be in financial difficulties or in the process of overextending yourself.
*Some of these tips were pulled from www.consumerinfo.com. Check out their site for more suggestions.

Need more information?
The FACT Act (Fair and Accurate Credit Transactions Act) entitles U.S. residents to one free copy of his/her credit report from each credit reporting agency each year. Go to www.annualcreditreport.com or call 1.877.322.8228. Your report will not include your credit score, but it will be available for purchase.

If you need more advice about your credit score call FICO at 1.800.319.4433 or visit www.myfico.com.