Credit Repair
How much money is your bad credit costing you?
Your FICO score or credit score as it’s commonly called is a very important calculation that can control whether or not you are eligible to receive credit, and if eligible the terms that you can receive credit under. Failure to understand the impact this score can have on you future purchasing power and lifestyle can be disastrous.
Your FICO score is a numerical score that is based on your financial history as collected in your credit report. Creditors can use this credit score number to evaluate whether or not they believe you are able to pay a loan back on time. The higher your credit score the more likely you are to pay off a loan on time and the less of a credit risk you pose. In this case your lender may offer a much lower interest rate, saving you hundreds of dollars on an auto loan and many thousands of dollars on a home loan.
The FICO or credit score ranges are broken down as follows:
- 760-850 – This represent the best score range
- 700-759 – Able to obtain favorable financing terms
- 660-699- This is still a decent score range
- 620-659– May have trouble obtaining favorable credit terms
- 580-619 – May have trouble obtaining credit
- 300-559 – Time to improve your score
Your credit score is broken down into 5 distinct categories each with their own importance based on a percentile. The 5 categories and the percentage they represent in relation to your credit score are as follows:
- Payment History – 35%
- Amounts Owed – 30%
- Length of Credit History – 15%
- New Credit – 10%
- Types of Credit Used – 10%
Your payment history contains information on credit cards, retail accounts, installment loans, finance company accounts and any mortgages you may have had. It also details any past due accounts and the amount owed on them. You will also find bankruptcy information as well as other adverse information in regards to your credit history. This is why it warrants a 35% piece of your overall credit reports total.
Your amount owed is the amount owed on any accounts you currently have and number of accounts with balances. Note that it has a large impact (30%) on your credit score. You should try to pay down all open lines of credit to under 30% of the available credit on each account that you have. The length of your credit history details when credit accounts were opened and the last activity on those accounts. New credit shows the number of recently opened accounts by the type of account and number of account inquiries. Finally the type of credit used is a snapshot of what types of financing you have held.
Other information that is included in your credit report but has no bearing on your FICO score includes your race, age, where you live and your sex and employment information. Although the FICO score doesn’t use these factors the employment information may be used by other companies and creditors to help in their decision making process. Auto, Homeowner, Life and Health Insurance companies use your credit score to determine the rates that you’ll pay.
There are three major credit-reporting agencies – Equifax, Experian and TransUnion. Each of these credit bureaus maintains their information separately, which can cause the financial data to be slightly different among the three of them. Most experts agree that in order to get the best snapshot of your financial history and credit worthiness it is a good idea to request a report from each of the reporting agencies. It is also highly recommended that you actually review your credit report once a year in order to identify and correct any errors before they cause any future potential problems when you apply for credit. Recent changes in the laws now allow for consumers to request 1 free credit report each year in order to look for any such errors. Go to www.annualcreditreport.com or call (877) 322-8228 to get your free credit report from all 3 credit bureaus.
As you can see your FICO Score is a very important number that represents your financial trustworthiness in the eyes of creditors. Failure to properly monitor it could cause you future headaches when it comes time to apply for any form of credit. Go to www.myfico.com to get your FICO scores or go to www.creditkarma.com to receive your TransUnion score for free.
Our promise to you is that we’ll guarantee to help you increase your credit score so that you can get the best interest rates possible when using credit. We’ll teach you the secrets to having great credit.
Two Ways to Get Started:
Call us now at 1-800-699-9740
Or submit our contact form for us to contact you for a free credit analysis. Stop paying high interest rates and give yourself some credit. This consultation is free and you are under no obligation to use our service.
