Lets spend a few minutes discussing FICO scores. I'm sure we have all heard of them but how many of us actually know what our FICO score is? Statistics show less than 1 in every 5 Americans have pulled their credit report in order to find out and this just amazes me. Are we so wrapped up in ourselves that we can't take an hour a month to monitor our scores, these scores do after all affect so much of our lives. Your FICO score can be a deciding factor in everything from where you work to where you live to what interest rate you will pay when you purchase a home or car.
There are many blogs out that will stress the importance of paying off credit cards as a way to become debt free but thats where opinions start to vary, many will tell you that after your balance is paid in full, close the account to resist the temptation of creating new debt. That is exactly what you don't want to do and here is why, somewhere around 30% of your FICO score is based on available credit, when you close an account, you lower your available credit thus lowering your FICO score.The right thing to do is to leave that paid in full account open and exercise some self control, even if it means you have to remove the card from your purse or wallet and hide it from yourself.
Another reason to pull your scores from all 3 credit reporting agencies is to insure you dispute all wrong entries. These should always be disputed in writing and sent by certified mail to the reporting agency. If a creditor can not provide proof you owe a debt, the entry must legally be removed from your report. Any entries you find to be accurate should be taken care of through negotiations with the original creditor. Often you can get them to agree to removing the entry for payment in full and even if you can't, failure to pay it just looks bad later when you need to apply for a home loan, car loan, or in many cases now, a job.
If you take time to learn what is in your credit report, there is no reason you can't do something to raise your FICO score. It may not all be corrected overnight and some of it may take years however Rome wasn't built in a day and if you are indeed serious about ever living debt free, this is a great place to start laying a good foundation.