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Make payments as early as possible. Late payments will negatively impact your FICO score. The longer you pay your bills on time, the better your credit score will be. Payment history is the single largest contributor to your score, accounting for 35% of a FICO score.

Reduce your revolving credit. FICO favors untapped credit lines. For example, if you have five cards with a credit limit of $10,000 on each, but you are carrying no debt, that helps your score. But if you use more than half of the credit on any of those cards--even if you are making your payments on time--it can result in a lower score. Amount owed and the proportion of credit used to what is available account for 30% of your FICO score.

Diverse lines of credit--like a car loan, a credit card and a mortgage--will typically help your score. About 10% of your FICO score is based on the diversity of your credit sources.

Payment performance and length of time you have had individual lines of credit represent 15% of your FICO score. Longtime accounts in good standing help your score, so don't close unused credit cards. But also don't open new accounts that you don't need just to increase your available credit. Such a strategy could backfire, as new accounts will lower your average account age, and rapid account buildup can look risky. These have a larger impact on your score if you don't have a lot of other credit information.

Check each of your three credit reports for errors before applying for a new mortgage or loan. Make sure everything in each report is accurate. Look for errors, misinformation or inaccurately reported information, such as a bad debt that was paid off years earlier. Just a 10- point swing can make the difference between not getting a loan and getting one at a good rate. Start checking reports from the three credit reporting agencies 60 days before applying for new credit, since it takes time for the reports to reflect changes. The Fair Credit Reporting Act requires each of the nationwide consumer reporting provide you with a free copy of your credit report, at your request, once a year. To order one, visit

Each time you apply for a loan or a new credit card, the issuer will request a copy of your credit report. This "inquiry" can knock a few points off your credit score, so if you are in the market for a mortgage or an auto loan, shop around before you apply for the loan to minimize the number of inquiries in your report. If your credit report gets hit by active inquiries for the same type of loan over a short enough period of time--30 days or less--it will count as one inquiry. Volume of inquiries accounts for 10% of your FICO score.

Lenders are lowering lines of credit, from credit cards to home equity lines. Your credit score may decline if you have already tapped a high percentage of your available credit. Say you have a balance owed of $35,000 with a total of $50,000 in credit available to you. If one or more of your lenders reduces the total available credit to you down to $35,000, your high credit utilization level will drag down your credit score.

Author: Carrie Coolidge transunion-fico-pf-ii-in_cc_1203creditscore_inl.html December 3, 2008