PROUD CREDIT, LLC
1-844-776-8312
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Credit Repair Bowie, MD
Credit Education
What you need to know about credit!
UNDERSTANDING THE FACTORS
THAT MAKES UP
YOUR CREDIT SCORE
HOW TO GET A 800
CREDIT SCORE
USING ETHICAL METHODS,
STRATEGIES & TECHNIQUES!
WHAT IS A FICO CREDIT SCORE?
A credit score is a three-digit number that ranges anywhere between 300 and 850, which is calculated by the credit bureaus to represent your past credit history and is utilized by credit grantors when evaluating your credit for approval. The formulas the three credit reporting bureaus (Equifax, Experian, and Trans Union) use to determine your credit score is not exactly the same, although their methods are very similar. Your credit score indicates your payment history to potential lenders, banks, landlords, insurance companies, and even to some employers. The bottom line is, by using your credit score, a lender can make decisions about the risk of extending credit to you.
IMPROVING YOUR CREDIT SCORE
There are many different ways to improve your credit score. Don’t be deceived by people telling you it takes 2 and 3 years to begin seeing significant results on your credit report. At Proud Credit, we believe the art to repairing your credit score is to focus our attention on restoring the sections of your credit that will generate the highest possible score increase.
UNDERSTANDING FICO CREDIT SCORING
5 CREDIT SCORE FACTORS
PAYMENT HISTORY
AMOUNT OWED
LENTH OF CREDIT HISTORY
TYPE OF CREDIT
NEW CREDIT
35%
30%
15%
10%
10%
PAYMENT HISTORY - 35%
Your payment history is 35% of your overall credit score. So, paying your bills on time over a period of time is the most effective way to build perfect credit. Your payment history is the most significant factor in determining your credit score. When you prove that you are responsible with using credit and also paying your bills on time, it can be the best indicator that your credit worthiness is solid.
AMOUNT OWED - 30%
The next most important factor of your credit score is your debt to credit ratio which simply provides the lenders with an outlook on the total amount you owe on open account balances relevant to the amount of credit extended. Paying down your debt to obtain a credit ratio of 25% to 30% should be your goal. This strategy has the second greatest impact on your overall credit score as it shows lenders that you are capable of managing credit. 30% of your credit score is based on your amounts owed.
LENGTH OF CREDIT HISTORY - 15%
The next factor that determines your credit score is based on your length of credit history. Your credit history accounts for 15% of your credit score as it displays the length of time your credit accounts have existed. Now keep in mind, the longer your credit history, the better for you and your credit score. For example: if you are able to pay off your oldest credit card to a zero balance, be sure not to close that account as it shows your longevity of managing credit well over time.
TYPE OF CREDIT - 10%
Another interesting factor that is calculated into your credit score is the types of credit you have which represents 10% of your credit score. Your credit score is marginally factored by the type of credit cards, installment loans, mortgage loans, retail credit accounts and finance company accounts you possess. It has been stated that borrowers with a good mix of revolving credit and installment loans generally represent less risk for lenders. In an effort to increase your credit score, be sure to manage your credit cards responsibly. Having credit cards is one thing, but properly managing them will raise your credit score. However, for people that do not have credit cards, the lenders tend to consider them more of a risk than people who have managed credit cards responsibly.
NEW CREDIT - 10%
The number of new open credit accounts and credit report inquiries that appear on your credit report has a 10 percent effect on your credit score. The lender places a hard inquiry on your credit file when you apply for new credit. A hard inquiry means a lender reviewed your credit report after you applied for credit directly with them. A soft inquiry occurs when a person or company checks your credit report as part of a background check. For example, when an employer checks your background, checking your own credit score, receiving “pre-approved” credit card offers. The good thing is, the soft inquiry does not negatively impact your credit score, however having too many hard inquiries within a short period of time will lower your score because it is interpreted as excessively shopping for credit.
ARE YOU WATCHING YOUR CREDIT SCORE?
HOW OFTEN SHOULD I PULL MY CREDIT REPORT?
Each credit factor regardless of its weight of percentage should be maintained in good standings because each factor makes up a portion of your overall credit score. So let’s say you applied for credit and the qualifying credit score is 640 to get approved but your credit score is 600. Your credit report has 2 recent late payments within the last year which has decreased your credit score by a whopping 50 points! Without the 2 negative late payment items on your report, you possibly would have been approved for the loan given the fact that your credit score would have been well over the qualifying score of 640. Always set your goals to reach the excellent credit score range of 760 - 850 to ensure you qualify for any type of loan.
COULD I HAVE MISTAKES ON MY CREDIT REPORT?
WHY WAS MY APPLICATION FOR A LOAN DENIED?
Lenders use credit scores to determine who qualifies for a loan, at what interest rate, and what credit limits. If your application for a personal loan is denied, you're entitled to find out why. Under the Equal Credit Opportunity Act, a lender is required to tell you the specific reason it denied your loan application, or tell you that you have the right to find out if you ask within 60 days. A low credit score, lack of income, excessive debt and inadequate documentation are a few reasons why loan applications are denied.
WHAT CREDIT SCORE SHOULD I SET AS A GOAL?
Pull your credit report often, at least every 4 months to ensure all the information on it is accurate and up to date. Unfortunately, often times there are items on your credit report that are pass the Statute of Limitations (SOL), depending on what state you live in, and should not be listed on your credit report. You should work to remove all negative items from your credit report that can possibly be damaging your credit profile. Checking your credit scores is a great way to engage with your credit, and learn how certain behaviors can help or hurt your scores.
If you take the time to pull your credit report and review everything that is being reported, there is a 79% chance that something on your report is incorrect. The worst thing about it is, the information the credit bureaus are reporting on you as inaccurate is most likely damaging your credit score. You can pull your credit report by going to www.annualcreditreport.com and get a free copy of your credit report every 12 months from each credit reporting company.
KEEP LOOKING FORWARD, YOUR FUTURE LOOKS BRIGHT!
As soon as you enroll in one of our credit repair programs, we will provide you with a user name and password that you can use to track the progress of your case and access our database of information related to your credit, with tips and more. To receive your FREE Consultation call: 844-776-8312.