Credit Score Protection

A: My FICO score was 775 in August. At that time, I had $12,000 in credit card debt. Now my total credit card debt is $25,000. Will my FICO score go down? I always pay my credit card on time. Please advise.
– T. Dacanay, Via the Internet

Q: Creditors look at several factors to determine your FICO score, also known as the Fair Isaacs Credit Score. Those factors include payment history, mix of credit, account balances, length of time with credit, credit inquiries, and new credit. Payment history and account balances are hefty variables, accounting for 35% and 30%, respectively, of your credit score.

Without knowing your full credit situation, it’s tough to tell if your score will go down, or by how much. If this is your only debt, your score may decrease, but you should review your debt-to-income ratio. If it’s higher than 35%, you may be headed toward financial ruin.

For more details on how creditors assess scores, read “Perfect Score” (November 2004). Also, learn about credit mishaps with Stephen Snyder, author of Do You Make These 38 Mistakes with Your Credit? (Bellwether Inc.; $29.95), who says “the truth of the matter is, you will get the highest FICO score if you pay off the entire balance each month.”

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