The following factors go into the determination of your credit and FICO scores:

  • 35% – Bill payment history
  • 30% – Outstanding amounts owed
  • 15% – Length of credit history
  • 10% – New credit
  • 10% – Types of credit used

Given this, here are a few do's and don'ts for improving your FICO score:

  • Do pay your bills on time. A single late payment can drop your score by 100 points or more.
  • Do pay down large credit card balances. Try to keep your balances below 30% of the card's limit.
  • Don't consolidate credit card balances. It's usually better to have lower balances on several different cards than a high balance on one card.
  • Don't cancel multiple credit cards. It's a myth that this will help your score; in fact, it may actually hurt your score by lowering your available credit.

About a quarter of all Americans (27%) have a FICO score of 750-799, while 13% have a score that exceeds 800. 15% have a score between 650 and 699, 18% have a score between 700 and 749, and 27% have a score of 649 or lower.

FICO scores can have a huge impact on mortgage interest rates, changing the rate by as much as one-and-a-half percentage points. This can change the monthly payment on a $200,000 mortgage by as much as $200.

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