Get the Credit Score You Deserve
A high credit score can save you thousands of dollars a year in interest, allow you to access to new credit sources, and prevent prospective employers and service providers, such as insurance agencies, from legally discriminating against you for having a low credit score. However, many consumers don’t have the high credit score they deserve because their credit files have inaccurate or incomplete information. The major credit bureaus have procedures that allow consumers to challenge and correct credit file data, but it’s not easy.
Beware of Fraudulent Credit Repair Schemes
As with debt settlement con artists, there are people just waiting to take advantage of vulnerable consumers. If you are desperate to secure a car or home loan and lack the credit score to qualify at rates you can afford, beware of fraudulent credit repair cons that promise results that simply cannot be delivered – by legal means anyway. If the offer sounds too good to be true, it almost certainly is.
If the con artist doesn’t just abscond with any fee you pre-paid, he may submit false information to the credit bureaus on your behalf, which is not legal and could cause you more serious problems. While it’s possible to dispute a credit reference in your file, legitimate reports cannot be ethically deleted. Instead, we recommend other measures that boost your credit score as much as possible until bad items can expire.
Do It Yourself
Don’t risk being scammed by the con artists. With our guidance, you can repair your credit file by yourself. Find out more about the Global Debt Systems Credit eCourse.
What is a Credit Score?
One’s credit score is calculated statistically from information reported to credit bureaus by lenders and represents the potential risk and likelihood that a debt will be paid.
Two credit scores, the FICO and Vantage, are used by more lenders. While neither provides details of its proprietary assessment methodologies, both have published the general categories that comprise their scores, and they are very similar in description and weighting. FICO was the original provider and is still the market leader. Here are its five statistics:
1. Payment history – Late loan payments can cause a FICO score to drop; paying loans on time will improve the FICO score over time. (35%)
2. Credit utilization – The ratio of current revolving debt (credit card balances) to the total available credit. Paying off debt or increasing one’s available credit improves FICO scores; increasing debt or reducing available credit lowers it. (30%)
3. Length of credit history – An older credit history can have a positive impact on the FICO score. (15%)
4. Types of credit used — a history of managing different types of credit (installment, revolving, consumer finance, mortgage) can improve a FICO score. (10%)
5. Recent search for credit – credit inquiries by lenders can hurt the FICO score. (10%)
A FICO score ranges between 300 and 850, with 60% of scores ranging between 650 and 799. According to FICO the median score is 723. The Vantage score will fall between 501 and 990.