In order to be successful in getting your credit fixed, it helps to know exactly what these FICO scores are telling you. Having knowledge of the technical workings of your credit score will prove to be essential in learning the force behind the scenes of a FICO score.
Many people make the mistake of thinking of their FICO score like a grade on a high school report card. These scores were never intended to be used by the general public in the first place. The company that created the idea of the FICO score, the Fair Isaac Corporation, intended for them to be used by credit lenders to make accurate assessments on how much of a risk a borrower poses to their business before lending out money to them. Having too low of a score will tell lenders to be wary and you probably won't get a loan. Having a high score says that you don't pose much of a risk at all to them and you will be more likely to get a loan.
There is far greater significance placed on credit cards by Fair Isaac because credit cards offer a unique way to get an inside look at your life. Credit card balances are constantly changing, going up as you buys things and have them put on your card, and going down as you pay those charges off. Having a high balance usually shows you have a stricter budget and can't pay the card off any quicker than you are. A lower balance shows you have extra money lying around to help pay off your card quickly. A higher credit card balance will cause FICO to lower your score as it shows you are more likely to default on a loan. So if you are looking to fix your credit, pay those credit cards off some and your score will reflect your effort.
Conversely though, having balances on such things as store cards or having a store loan with, say for example, a furniture store, these are seen by Fair Isaac as being inferior credit and it scores them that way too. Typically with this kind of consumer debt, there is usually a period of no interest, so people often wait before making any payments, which leaves them trying to pay it all off at once at the very end, killing their budget in the process. To Fair Isaac, consumer debt is seen as a precursor to money trouble and your score will be lowered in order to warn lenders before they give you any money. Keep this in mind before taking on any kind of consumer debt and think about how it will negatively affect your credit score. It helps to put yourself in the shoes of Fair Isaac and remember that anything you do with credit affects your score. Paying things off in a timely manner shows them that you are responsible and your financial situation can be deduced by the way your debt is managed.