FICO. Why is it so important? Is it possible to trade your 1st born for it? We'll get to that later.



First off, do you feel stripped naked when someone asks for your SSN to run your credit? Do you feel as though you've been violated? You should be if your FICO is low....or maybe it just feels like it.

Buying a House: This is the first step in everyone's dreams. You've found the right house and then guess what? Whamm!! A taste of reality hits. Boy, does it taste bitter and sour. When you apply for a mortgage loan, the lender will pull a credit report and look at whether you've made your payments on time on a consistent basis. Many consumers are not aware that many companies who are about to lend you credit to purchase something are very focused on your credit scores.

What does FICO stand for? No, it does not stand for Feeling It Coming Out. It stands for Fair Isaac Corporation, which is the company that is used by the national credit bureaus to compute the credit scores. Whenever your credit report is pulled, your report is run through a computer program with a built-in scorecard. At this time, points are awarded or deducted based on certain items.

The questions you may come across are the following:

• How long have you had your Visa/Mastercard/Discover/AmericanExpress cards?

• How timely are your payments'Do you make the required payments each month? If not, what is your problem?! j/k

• Are your credit balances maxed out?

• Have you recently taken out new lines of credit?

These are the negative items that would pull down your score:

• Delinquencies – Do you make late payments?

• Short Credit history - Did you just start having credit?

• Too many recent credit inquiries - Not good if you have too many

• Balances near the maximum limit - Don't do this because it will lower your score

• Many credit cards, loans, lines of credit open at the same time - You can go crazy one day and max everything out

• Tax liens and bankruptcies - Enough said. these will really ding your credit

Lenders have found that the higher the credit score, the better the chance payments will be made on time. So, keep this in mind! The scores range from 300 to 850 and a score above 700 is usually considered "very good." Credit scores are an important factor in approving mortgage loans. When you have scores that are below average, most lenders will scrutinize your credit application and it will result in you paying higher interest rates on the loan.

Despite what I’ve shared with you, all hope is not gone. We wouldn’t lead you down this dark and confusing path and abandon you, now would I? There are ways to fix your credit. There are two options. The first option is you can improve your credit yourself. Take it one step at a time—eliminating your debts, paying off some of it, discussing with your creditors to payoff any collections at a discount, staying away from opening any new credit lines, etc.

The services of a credit repair company can also come in handy for an occasion such as this. My advice is that if you choose this route, make sure you research the credit repair company well to confirm that they will produce results for you. It is sad to say, but as in any business, there are credit repair companies out there that promise you the world, but they don’t actually deliver the results. This is one time when you will want to double-check and complete your investigation on the credit company and ask for references of clients they’ve worked with.

With some focus on the goal to improve your credit score, you can make a difference that you will be able to see in your pocketbook and wallets. Having higher credit scores does save you money. Oh, I almost forgot, the third option for improving your credit score is.... ummmm..... trading in your first born. I would not recommend this though....