Q&A: How to improve your FICO score

Dear Liz: My FICO score is just under 800. The reason given that it is not higher is that I don’t have any non-mortgage leases. What would be the cheapest way to remedy this without buying something expensive?

Answer: When you get your credit scores, you may be given sometimes-vague reasons for why they’re not higher or lower. The “reason code” you saw probably said something like “no recent non-mortgage balance information.” What that means is that you haven’t been using revolving accounts such as credit cards. To get higher scores, you’d need to dust off your plastic and use it once in a while. (You don’t need to carry a balance to get or keep good scores, however. You can and should pay credit card balances in full each month.)

Any improvement in your scores is likely to be modest, however. Your numbers are already high and the factor known as “mix of credit” — which means responsibly using both revolving and installment accounts — accounts for just 10% of your FICO scores. Plus, there’s no real point in having scores over 800, other than to brag about them. Once your scores exceed 760 or so, you’re already eligible for the best rates and terms.

Monday’s need-to-know money news

Credit report with score on a desk

Credit report with score on a desk

Today’s top story: Understanding your credit card’s free FICO score. Also in the news: The difference between a soft inquiry and a hard inquiry, surviving Social Security with a minor cost of living adjustment, and how apps can both help and hurt your finances.

To Understand Your Credit Card’s Free FICO Score, Get Your Credit Report
How your credit card use factors into scores.

What’s the Difference Between a Soft Inquiry and a Hard Inquiry on My Credit Report?
Which ones affect your credit score?

Social Security survival strategies with COLA only at 0.2%
Surving a stagnant cost of living increase adjustment.

How Apps Can Help (and Hurt) Your Finances
Could your apps lead you to spend more?

Thursday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: The best credit card tips for May. Also in the news: Tips to weather the financial storm of a layoff, what the new FICO score means for you, and carryovers to remember when doing your 2016 tax planning.

NerdWallet’s Best Credit Card Tips for May 2016
Time for some spring credit cleaning.

Laid Off? 3 Tips to Weather the Fiscal Storm
Don’t panic.

How to save $1,000 each month, and what the new FICO score means for you
FICO changes are afoot.

5 carryovers to remember when doing 2016 tax planning
It’s never too early to start planning next year’s taxes.

Thursday’s need-to-know money news

2Today’s top story: How the new advisor rule will effect your retirement investments. Also in the news: Why a better FICO score leads to a better retirement, how to avoid retirement rip-offs, and protecting your tax returns from criminals.

What the New Advisor Rule Means for You, Your Retirement Investments
Introducing the fiduciary rule.

How a Better FICO Score Leads to Better Retirement
What you save in interest could improve your retirement.

5 ways to avoid retirement rip-offs
Choose wisely.

How criminals could steal your tax return
Criminals are going tax phishing.