There are five pieces of information that are used when your credit score is calculated. However, the key two pieces are your payment history and your available credit to debt ratio.
These two items represent about 70% of your total score. This is where you should focus your effort, to raise your credit score.
1. Payment History
This is simply the accounts listed on your credit reports. It includes any derogatory information and positive accounts. If you’re working to fix your credit, it is important that you use your current accounts responsibly.
This will begin to create a record of positive payments. Many consumers will choose to get a credit card for building credit to help with this. Make sure that your account reports monthly to all three major credit bureaus and of course that you make your monthly payment on time.
Remove Derogatory Listings
You can not overlook removing negative information from your credit report. This is the information that is really dragging your credit score down. The Fair Credit Reporting Act, is a federal law that gives you the right to dispute any item you believe is in inaccurate on your credit reports.
Contrary to popular belief, there is no minimum amount of time a negative item must remain on your credit report. The law actually says the maximum amount of time is seven years. If you have any outstanding debt in collections, you can often negotiate a settlement for less. It is smart to get a binding agreement that in exchange the debt collector, will have the collections removed from credit report files.
2. Available Credit To Debt Ratio
This is how much debt you have compared to how much available or unused credit you have. The idea is if all your credit cards are maxed out, then you are not as deserving of credit. Simply, because it looks like you are in financial need.
In comparison, the individual that has $1,000 of available and unused credit does not appear to be in need. As long as you have unused credit, it will help your credit score. Avoid appearing that you need credit when you apply for any new type of account. It is suggested with a credit card, that you try to keep a monthly balance of roughly 30% of your credit limit.
If you have a credit limit of $1,000. Then you would try to keep a monthly balance of $300. This way it appears you are using your credit but using it responsibly. And therefore you will be seen as more creditworthy.
Many folks will run into brick walls trying to clean credit report inaccuracies. Often they give up and just live with the expense, embarrassment, and annoyance of bad credit. The credit bureaus are reluctant to remove items from any consumer’s credit report. This is because it costs the credit bureaus money.
They have to spend money to conduct an investigation. And these companies are private for-profit businesses. The credit laws in our country, have been passed by Congress to protect you and your rights. You can get good credit again and without waiting just waiting seven long expensive, embarrassing, and annoying years.
In sum, your credit score is akin to your Grade Point Average (GPA) in glory school days past. If you’re acing all your classes, but failing gym class, it’s going to decimate your overall GPA. This exact same principle applies to your credit score.
And this is why it’s so essential to clear credit report negatives, dings, and any derogatory items. It’s a lot like removing the F in gym class. We encourage our members to consider professional, legal, and legitimate credit repair companies to help.
Because in 2016 alone, over 9 million negative items were removed from consumer’s credit reports. One of the best firms is The Credit Pros. They’ve helped client’s successfully remove late payments, collections, charge offs, judgements, liens, and many more negative credit report items.
Get a free credit consultation with a certified FICO professional by calling toll-free 1-877-418-7596. And for more about how can I improve my credit score with Dan Willis, sign up for our free newsletter and join our congregation.
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