Low FICO Score: How To Increase Your Score

If you have found it difficult recently either to get credit or buy or rent a property, then this may well be because you have a low FICO score. Most lenders run a check on a potential borrower's FICO score as this provides them with some sign of how credit worthy that person is. Often people with a low score are likely to be a high credit risk and decision makers in the credit industry cannot rely on them to fulfill their duty as borrowers.

Typically, lenders calculate that a low FICO score comes in around 600 or less points. But you can also expect that some lenders will give the same weight to a score of 650 points. In fact, this bottom rung score varies from lender to lender and swings with the demand for credit at any given time. This means lenders who want to increase their lending portfolio will lean toward the bottom of a low score, or 600 points. On the other hand, if they have all the business they want, could get FICO scores that measure your credit standing using the more severe 650 points.

Of course, lenders use other data to decide if you are a good risk for credit. And these factors also vary from lender to lender. Some lenders give their lending representatives full control over the lending process, while others keep central control over all lending decisions. That is why even if after getting your credit report for your FICO score, and see it is not that low, they can still reject your application. There is a mountain of factors that any specific lender can use against you, so you need to shop around to see where you can get the best loan. You can also talk with your friends and coworkers about their experience with various lenders. This also means that if one lender denies your application, go to the next one on your list.

However, even if you do have a low score, there is no need to despair as it is easy to improve your rating. To improve your rating you will need to learn a little bit about your financial situation and learn to restrain yourself when it comes to taking out credit. Just by paying your bills can help to improve your score quickly. Paying on time is even better, because late payments do reduce your rating. The same goes for legal judgments or collection actions for one of your creditors. All of these can reduce your FICO score by between 15 and 40 points for each one.

So it is important that you pay your bills regularly, and keep the lender informed. If you are having any difficulties with your payments contact the lenders immediately. Work with your lenders to reschedule your payments or to do whatever will help you solve your financial problems.

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