Many people don’t know or understand how their credit score is calculated which can lead to not understanding why their credit score is where its at. You can be a person with no collection accounts, no late payments and still have a poor credit score. There are so many factors that surround credit that it is good to be aware of the different components that make up your credit score. Understanding this is very important as you want to know what to do or what to look for to be able to maintain an excellent credit score to make it easier for you to get approved for any new credit you are looking to apply for.
A FICO credit score in the range of 300-850. You want to be at least in the 720-850 range to not only get the better approval odds but also the lower interest rates which can save you THOUSANDS in the long run.
Here is how your credit score is calculated:
The most important category is payment history which has a total overall 35% of the score. This means making sure that your payments are made on time! We have seen a single late payment drop a score up to 115 points! Next, 30% of your score comes from the amounts that you owe. This is known as debt ratio which means the percentage of the credit limit that is owed. In order to have good credit DO NOT go over our recommended 10% debt ratio as it will lower your score significantly. Third, 15% of your score is based on the length of time that you’ve had an account open. In order to maintain positive credit, it is imperative to keep your accounts open for at least a year with no late payments. (Tip: Don’t wait for your billing cycle to end before you make a payment It’s recommended a payment is processed before the billing cycle closes; this will keep you in the green!) Fourth, 10% of your score is made up of New Credit. That’s if your score is already good. If your credit is not good, we recommend that you don’t apply for new credit. It is very likely that you’ll be denied and to make things worse, it’ll hurt your credit even further because now you’ll have an inquiry on your report which lowers your score an average of 2-5 points and they stay on your report history for 2 years. The last 10% is types of credit used. For a strong credit score it is recommended that you have at least 1-2 installment loans such as a car or home loan and 3 or more revolving accounts meaning credit cards.
If you know you’re struggling with your credit or constantly getting denied credit. It is very likely that you are struggling in one of these areas of your credit score and needs your immediate attention. Here at Credit Services of America we review your credit report with you and come up with a personalized plan to help you not only better your credit overall but ensure you have a very good understanding of what you can do on your end to maintain a good credit score. Call us now at 84-349-8727 to help schedule your completely FREE credit consultation. Whatever your own situation is, we can help as we are the ONLY company in the region to offer 4 different services under one roof; Credit Repair, Debt Settlement, Student Loan Consolidation, and Credit Trade Lines to help increase your credit score.
A Goal without a Plan is just a Wish. Give us a call TODAY at 844-FIX-URCR or click on the following link creditservicesofamerica.com to schedule your FREE consultation and create your personalize plan to achieve your credit and debt GOALS!
*Individual results may vary. Please call for more details and to discuss your own individual situation. We are not a law firm and we do not give legal advice.