Credit scores are one of the measures that banking institutions and lenders use to determine a consumer’s credit-worthiness. The score usually affects the interest on your loan, as well as the ability to secure a loan. Credit score is used by landlords and by employers as a determination of an applicant’s authenticity.
The following five categories determine credit scores:
● Payment History (35%)
● The Amount of Money Owed to Creditors (30%)
● Length of Credit History (15%)
● New Credit (10%)
● Types of Credit Used (10%)
Credit scores can vary from 300 to 850, with a higher number illustrating a better score. Consumers with high credit scores may be able to obtain loans more comfortably and may be granted lower interest rates on those loans.
How to Repair Your Credit?
The initial step to credit repair is to order a copy of one’s credit score. The report not only shows the score, but it also lists all of the debts owed and the payment history. Obtaining this report allows an individual to look for mistakes or outdated information that may be harming the credit score. Consumers can have access to this report once a year or, if the company has taken a conflicting action against the individual such as denying a loan or employment because of a low credit score.
If any mistakes are found on the credit report, the consumer can have them removed by sending a letter to the reporting companies with legal documentation that shows the mistake. Consumers will be required to send proof to the creditor that is reporting the report.
If there are no mistakes on the credit report, then a low score is a result of an individual’s actions. In that case, the individual will have to correct the conduct that caused the low score. One must be certain to make relative payments on time since payment history accounts for 35% of the credit score.
More ways to repair bad credit include keeping low balances on credit cards, paying off any loans, and always keeping credit vacant.
Note that fixing mistakes on a credit report is the only way to speedily correct and improve a credit score. Alternative factors affect a consumer’s credit score for at least seven years. Bankruptcy shows on a credit report for 10 years.
Credit repair can become a profuse process; many people tempted to turn to companies for help. It is vital that consumers look for genuine companies when getting credit repair help. If you need assistance with your credit repair, call United Financial Counselors today. Our affiliate United Credit Advisors offers both professional services as well as Do It Yourself Software. Contact us for more information.