Credit Report & Score

If you’re planning on applying for credit, whether you’re trying to get a car loan, getting a new mortgage or simply applying for a credit card, all lenders want to know what your credit score is before they’ll consider lending you money. The reason of course is because they need to know if you are a risk to them or whether you have a good credit report.

Taking Steps to Improve Your Credit Score

FICO scores are what most lenders use to determine your level of credit risk. Every person with a credit card has three FICO scores for each of the three credit bureaus, namely, Experian, Trans-Union and Equifax. The credit scores are based on the information on file about you, which includes how you make payments and whether you are late or on time when making payments. All of these reports impact on how much a lender will lend you and what loan terms will be implemented such as interest rates offered. If you improve your credit scores, you qualify for better rates from lenders.

Credit Score Calculations

Credit scores are calculated from credit information found in your credit report. The information is classified into 5 categories, each reflecting certain details of importance in the difference categories. For example: 35% of the credit report reflects on your payment history, which covers specific types of accounts such as credit cards, retail accounts, installment loans, finance company accounts and mortgages. This also covers any bankruptcy, judgments, liens, wage attachments, collection items and or past due items. If there is a delinquency, it will show how long it has been past due. The credit history also shows the number of past due items on file and the number of accounts paid as agree. The other percentages are broken down into the following:

• 30% reflects on how much is owed on various accounts. This category shows the amount owed on specific types of accounts, the lack of a specific type of balance, the number of accounts with balances, a proportion of credit lines used and the proportion of installment loan amounts that are still owed.
• 15% reflects on the length of your credit history, which shows how much time has passed since the account was opened, time since account activity, and time since specific types of accounts were opened.
• 10% reflects on new credit or the number of recently opened accounts, the proportion of accounts that were recently opened by the type of account. It also reflects the number of recent credit inquiries you’ve had and how much time has lapsed since you’ve made credit inquiries.

These percentages indicate whether you have a positive credit history following any past payment problems. Naturally, people who have used credit for longer periods of time in comparison to those who have not been using credit for very long will be different. Plus, no one piece of information will be the determining factor on your score.

A Lenders Credit Decision

Lenders today evaluate a number of things when deciding on whether to lend you money, which could include your income, how long you’ve been at your present job and the type of credit you are asking for. All information, both positive and negative is considered. If you’ve had late payments, it will probably lower your score. If you work towards establishing a good credit history by making payments on time, it will raise your credit score.

We are, as our name implies, Straight Credit Counseling, which means we have the straight answers about clear-cut credit improvement strategies that can provide prompt results! If you are ready to rebuild your credit, the team at Straight Credit Counseling is available to find you the perfect credit counselor. To arrange for a session by phone, please feel free to e-mail us at info@StraightCreditCounseling.com. Contact us today and rest in the knowledge that your credit debt will soon be a thing of the past.