Very often people get to realize that they need to take up credit repair steps when their application for a loan is turned down. This is not quite desirable. We need to dispel our ignorance and learn up about our credit position and credit score for managing our credit better. We need to safeguard ourselves against the sudden setbacks like being refused a loan on grounds of poor credit. For this firstly we need to understand what FICO scores are and how they indicate the need for credit repair.

FICO scores are a rating of Fair Isaac and Company. An analysis is carried out of your credit report as supplied by the tri bureaus - Experian, Equifax and Trans Union.

Your financial history, records of payment, all debts and bankruptcies as presented in this report are used to work out the FICO score. This is a composite number and a numerical rating of your credit worthiness.

The FICO scores may lie in the range of 300 and 900. However, most people's score lie between 550 and 700. Higher credit scores (above 700, say) make the holders of such score more appealing in the eyes of lenders as it indicates greater credit worthiness. Below average scores i.e. those lying below 550 are considered as indications of poor or bad credit holding. While possessing high FICO scores will

fetch you better rates of interest and superior loan terms and conditions from lenders the holders of below average FICO scores are likely even to get their applications turned down by most lenders. Such persons having a below average FICO score need to extend special credit repair efforts.

The FICO scores are dependent on a number of factors. The length of time credit has been held, outstanding credit, methods to repay outstanding credit and nearness to credit limits are important. The problems with credit which are being faced like late payments, bankruptcies etc. and the number and frequency of delinquencies are other significant factors affecting the FICO score. A significant fact is that around 80% of credit reports may contain errors of some kind in them so getting hold of a credit report beforehand and reporting errors timely do enhance the prospects of obtaining a better score.

If even after taking sufficient steps there is the indication of poor credit by the score then credit repair measures are to be resorted to. Credit cards not used anymore and the accounts corresponding to them are to be closed, outstanding accounts are to be settled, bills are to be paid and timely debt payments are to be made to improve credit. These measures are expected to improve credit scores over a period of time.