A Solution to Credit Repair

Most lenders and creditors are going to rely primarily on your credit score to decide whether to give you a loan or what interest rate they will offer. While they will look at other factors, such as your income and your relationship with that lender your credit score is going to be very important.

What Impacts Your Credit Report?

While FICO keeps the algorithms to determine your credit score secret, we do know what influences your credit. Credit scores are 10% credit history, 10% credit mix, 15% length of credit history, 35% payment history, and 30% amounts owed.

What Is a Good Credit Score?

Every individual lender sets their own guidelines for what they consider a good score. However, there are industry averages. Credit scores range from 300 to 850. A very poor score is 300-499. A poor score is 500-600. A fair score is 601-660. A good score is 661-780. An excellent score is 781-850.

Way to Improve Your Credit Score?

There are several things you can do to improve your credit score. Avoid overutilization. Make all payments. Make your payments on time. Correct errors in your credit report. Open a variety of types of credit lines. Avoid closing older accounts.

Make All Payments

Missing payments is the easiest way to negatively impact your credit score. It is important to pay all of your payments on time to avoid “slow pays” and to pay them in full to avoid “no pays.”

If you cannot make all of your payments on time, it can be tempting to ignore the problem. That is a huge mistake! Instead, contact your creditors to see if you can negotiate a different payment schedule.

Watch Your Utilization

You are not penalized if you use too much credit. Instead, you are penalized if you use too much of a percentage of your credit. How much credit lenders are willing to extend depends on a combination of your credit score and your income. You want to utilize 30% or less of your available unsecured credit.

Use Your Credit

The only way to establish a good credit score is to use your credit. This can be tricky for people who prefer to have a cash-only purchase mentality. Instead of using cash to pay for everything, consider using credit cards to cover your daily bills and pay those expenses off monthly. Instead of purchasing automobiles or other high-ticket items in cash, use mostly cash to purchase them and finance a small amount of the purchase. You want to have a variety of different types of credit to improve your credit score.

Keep Old Accounts Open

If you are trying to improve your credit score, you may be tempted to close your old credit accounts. Do not do that! Part of your credit score depends on the age of your accounts.

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