Credit Education

Credit can be intimidating…

Why does it exist? How much of it do I need? What’s even on there?

We get it. Credit is confusing. Thankfully, we are not. We’ll teach you everything you need to know about credit.

What exactly is ‘credit’?

Your credit is comprised of two main parts:

YOUR CREDIT SCORE

What is a credit score? Your primary credit score, also known as myFICO®, is a 3-digit number between 300 – 850 and is a reflection of your five credit factors. It’s almost like a financial reputation of sorts, and lenders use it to determine what kind of loans or credit cards you qualify for.

YOUR CREDIT REPORT

Your credit report contains things like your name and address, your loan information, credit limits, account names, credit history, credit inquiries, public record, collections, late payment information and of course, your credit score. It’s basically your entire financial history.

What’s considered a GOOD credit score or a POOR credit score?

Excellent

800 to 850

Very Good

740 to 799

Good

670 to 739

Fair

580 to 669

Very Good

300 to 579

As you can see from the scale, a good score is anything over 670. That means anything below 670 is not good. Let me repeat that: having a ‘fair’ score is not good. Sure, fair is better than poor, but there’s a huge difference between a good score and a fair score. We’re talking ‘get-the-home-of-your-dreams’ or ‘save-thousands-in-interest-rates’ kind of difference. Even a few points could make or break your loan.

How is this score created?

Your credit score is actually generated from the information on your credit report. Five main credit factors are combined to form your score. Lenders and banks use this number to gauge how likely you are to repay them. Or do your dishes. They’re weird like that.

How do things get on my credit report?

Creditors like banks, credit card companies, cell phone providers and even hospitals, report your payments to the credit bureaus. These bureaus (Experian, Equifax and TransUnion) keep a record of everything reported to them by your creditors. That includes the time you paid your bills late. Also, when that one debt went to collections. Oh, and when you filed bankruptcy? That’s on there too. These are called negative items, and typically, they have a negative impact on your score (surprise, surprise).

How does my credit report affect my credit score?

Every item on your credit report is factored into your credit score.

They’re 100% connected.

That’s why with credit repair, we focus on making sure your reports are fair, accurate and substantiated, by challenging creditors and the bureaus to verify questionable items.

How can I improve my credit?

  • Work to get questionable, negative payment history removed from your credit report (that’s what we do!)
  • Pay down your debt to reduce your utilization ratio
  • Be older (sorry can’t help you there). The longer you’ve had credit, the better
  • Work to get any inaccurate hard inquiries removed from your credit report!
  • Diversify your credit to have a mix of revolving, installment and other types of accounts

What actions hurt my credit?

  • Paying bills late
  • Carrying large balances on your credit cards
  • Ignoring questionable negatives on your credit

What actions will positively affect my credit?

  • Paying down credit card balances
  • Getting inaccurate items from your credit reports (via CreditRepair.com)
  • Have a few more birthdays

Call us today to get your free consultation

and begin the process to financial freedom

407-504-7696