What is a credit score?
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the right resources.
Who and what is a credit bureau?
What makes up a credit report?
A credit score is a number generated by a mathematical formula that is meant to predict creditworthiness. Credit scores range from 300-850. The higher your score is, the more likely you are to get a loan. The lower your score is, the less likely you are to get a loan. If you have a low credit score and manage to get approved for credit, your interest rate will be much higher than someone who had a good credit score. So, having a high credit score will save you many thousands of dollars.
Your credit history is made up of several components. Each component has a certain amount of weight that can influence your overall credit score. Payment history shows how often you make or miss a payment on a loan or line of credit. Capacity is how much you can spend on your current lines of credit. Length of credit is important since it shows lenders how long you've held good or bad practices. New credit can show up on your reports as positive or negative, depending on how recent that account was added. Types of credit used can help your credit by showing lenders that you have a diverse amount of options when acquiring a loan or line of credit.
A credit bureau is a company that collects and maintains your credit information and sells it to lenders, creditors and consumers in the form of a credit report. There are dozens of credit bureaus, we're most concerned with the big three: Equifax, Experian, and TransUnion.
A credit report provides an overview of your credit as potential lenders see it today. It lists the items that are negatively and positively affecting your score and a short explanation of what the item is.
While we can’t offer legal advice, we can recommend what has worked for us before. From our own employees we’ve helped grow to our valued client family, we’d like to share what we’ve learned. This is what makes our consultants different.
Let’s start this journey and make an IMPACT on your life.
Stop applying for new lines of credit and loans that won’t help your credit grow. Some lenders will lend to those with questionable credit with a very large interest rate or other obstructive elements. Make sure that whatever you apply for is within scope of your credit forecast.
Sign up for Secured Credit cards. The difference between a normal credit card and a secured card is that the secured card is backed by an initial deposit that the individual makes. If someone wanted a $500 line of credit, they would have to deposit $500 to open the card. After this initial deposit, you have access to the $500. You’ll make payments like normal to pay the balance back down. This adds protection for the credit provider despite the credit situation of the individual. While the interest rate on these is higher than normal cards, they report on your credit every month. You’ll have to figure out what is appropriate with your situation.
Credit scores are made up of positive and negative items that show lenders how creditworthy the applicant is. We recommend not only working on removing negative items but eventually starting to add positive items that will show reliability and credit responsibly.
Establishing or repairing credit will take time. One of the factors is ‘Length of Account’ and takes years to accrue. Credit providers like seeing long periods of active credit because it shows them your habits over a longer period of time.
Have different types of loans on your credit report. This shows those same lenders that you can handle multiple types of accounts responsibly.
If you’re going to be late on a payment, call and schedule a late-payment or payment plan. When reported that a payment was late, it can take even longer to address issues related to that account. Late payments can be removed but it can take more money.