The mere mention of the FICO Credit Score is enough to send some people into the credit worry zone of financial life. There is a good reason for more people to worry today than in the past. FICO has modified its scoring point system to more accurately, in FICO's mind, report the true score.

  FICO scoring can be debated forever but not with anyone who can change the scoring methodology. Much of FICO's process is a secret but we know more now than in the past. The best use of the FICO score by the consumer can be achieved by understanding as much as possible about what determines their FICO  score.

 The FICO score ranges from 350 -850 and is based on a number of  factors with the most weight given to your payment history and the amount you owe. A detailed explanantion of how your FICO score is computed can be found at www.myfico.com and this site is a must read for anyone who is concerned about their credit report. You can obtain your FICO score from this web site for $15.95. Explanations for the score is included along with suggestions on improving the score.

  Equifax and Trans Union credit reporting agencys also compute a credit score and each agnecys's credit score is independently based on the information from that credit reporting agency's Credit File. Experian uses a different scoring method but it is equally important.

   Mortgage lenders use a "tri-merge"  report which is the three credit reporting agencys' data in one report. Mortgage lenders typically use the middle credit score so it is important to keep all of your scores at the highest possible number.

 Alright, how do you do that. I refer you again to the above web site but there are some ideas that may not jump out at you from reading that site. Perhaps the most important factor is to pay your accounts, mortgaes, and car loans on time, all the time. One late payment can lower your score, but several late payments can result in a significantly lower score. If you think making two payments in one month exempts you from making the next month's payment, you are generally incorrect. Adnere to each creditors r processing time  for mail payments and adhere to it.

 Keep your debt to credit available at around 30%. If you have a credit card with $1,000 limit keep the balance that is reported to the credit bureaus at $300. You might be wondering why you have that $1,000 credit limit if it lowers your score to use it.  The answer is the credit card company would love to have you max the card because they make more money, but the credit scoring process doesn't like this. Incidentally, credit cards are happy if you make the minimum payment but they would rather you make much higher payments so you can use the credit available to you again and again because they make money off of the merchant sales in addition to your interest.

 Collection accounts lower the credit score and can lower it significantly depending on the type of collection action. If you do find that an account has gone to collections it is important to contact the collection agency immediately. You may find the agency difficult to talk with but your goal is to keep the collection off of your credit report. Not all collection agencys report accounts, but those that do can cause you a problem for seven years. One of the recent changes FICO made is not including the nickel and dime collection accounts or those from magazines or other inconsequential creditors. Regardless, if you rack up 10 of these accounts you may find your score impacted.

 The wise and dilligent consumer will review their credit report often to look for errors. Finding an error calls for disputing the item with the credit reporting agency.  You should first contact the source of the item in error and if that does not work then dispute it with the credit reporting agency. The Federal Fair Credit Reporting Act requires the agency to give you an answer within 30 days, or in 45 days in a some instances. If the agency cannot verify the accuracy the item must be deleted or amended.

 Credit Reporting Agencys, in my opinion, do an inadequate job of the verification process which generally includes contacting the creditor and asking if the data is correct. This is not much of an incentive for a creditor to make the change. There is a web site, www.creditinfocenter.com that provides valuable infromation on cleaning up your credit report. Beware, however, of some of the ads that are on the site.

Be aware of any negative public records because many of these are picked up by credit reporting agencys and they do imapct your credit score. The damaging public records are tax leins, bankruptcy, and debt judgements rendered by a court.

It is also wise to not submit several applications for credit at one time beacuse this will surely have a negative impact. If you ask a car dealer to obtain a loan for you tell the dealer that you do not want your application fanned out to more than one creditor. Pick the best and try that one. Car dealers often make money off of your car loan so many dealers will "shop you" to get the best deal for the dealer. Too many car loan applications will cause a problem beacause your credit report does not know that the creditor was consulted for a car loan. It's best to arrange your own loan ahead of time.

 While you cannot dispute your FICO score you can dispute the factors that influence the score. Remember, the higher your FICO score the  cheaper the loan will be.

For some people, one given factor may have a greater impact than for someone else with a different credit history. As the information in your credit report changes, so does the importance of any factor in determining your FICO score.  The most important consideration is the aggregate of information, which varies for any one person over time.

 The consumer must stay on top of their credit report and their FICO score as well as the independent scores developed by each credit reporting agency.