· 35% Payment history
· 35% Amounts owed
· 15% Length of credit history
· 10% New credit
· 10% Type of credit
– Stay away from small department store cards; they have a low limit and tend to bring down your overall score.
– You must use credit in order for it to report to the bureaus.
– If you do not use a card it may be cancelled by the bank – this WILL hurt your score.
– Never use more than ½ of your available credit line.
– Ask for line increases.
How Do They Calculate a Credit Score?
Different credit bureaus calculate your Fico or Beacon Score slightly different. Each credit bureau makes the score their own and gives it a different name. Equifax calls the score a Beacon Score, Experian calls it a Fair Isaac Score and Transunion calls it an Empirica Score. Every time something changes on your bureau, your score will change. A lot of information is used to calculate your score; however, there is no formula that has ever been given to the public. Lenders will look at your score along with your income and the kind of loan you are applying for to determine interest rates.
Improving Your Credit Score
Here are some suggestions on how you can begin making some changes.
· Pay your bills on time. This sounds simple, but this is the biggest thing you can do to keep your score high. Delinquent payments and collections have a major negative impact on your score.
· Keep your balances low on unsecured revolving debt like credit cards. High balances still owed can affect a score.
· The amount of unused credit is an important factor in calculating your score. You should only apply for credit you need.
· Make sure the information on your credit report is correct. If it is not, dispute it with the Bureau Company or lender directly.
· Removing negative accounts on your credit report has the biggest impact on your score.
Credit Repair – Some Common Questions And A Few Myths
How long does information remain on my report?
Generally negative things can stay on your credit for 7 to 10 years. But you can hire a professional credit repair service to do it for you.
Credit bureaus report credit information for a period of seven (7) years. Some states have special provisions for collections and paid liens. Chapter 7, Chapter 11 and Chapter 13 Bankruptcies are each reported for 10 years and the date is measured from the date of the filing.
Does paying off my bills repair my credit?
The credit reporting system doesn’t work that way. When you pay an old debt, the negative credit listing doesn’t disappear. In fact, it re-ages and the seven year clock begins again with that negative listing. The most ironic thing is that a paid, current negative listing is not any better than an unpaid negative listing.
How does a Credit Bureau make money?
A credit bureau is a commercial business. It makes money by selling your credit report to others. A person with bad credit means more business for them as such a person applies for credit about ten (10) times more than a person with good credit.
Why do Credit Bureaus not want me to use a Credit Repair Company?
The credit bureaus will tell you that it is easier and less expensive to do it yourself. While it may be true that you have the right to repair your credit yourself, many individuals do not have the time, experience and organizational savvy necessary to deal with bureaucracies. You must also spend hours of study to gain a working knowledge of the consumer laws available to you. Many who start repairing their credit turn to a credit repair company after months of work.
What can you take off of my credit bureau report? Aren’t these items impossible to remove?
We can take off unpaid collections, charge-offs, repossessions, bankruptcies, medical bills, foreclosures, tax liens, civil liens, judgments, student loans, credit card debt, inquiries, slow pays, old addresses and all incorrect names.
How does TRW Credit Group do this legally?
Disputing your credit report is your right. Credit restoration is as legal as pleading “not guilty” in a court of law. The Federal Trade Commission and The Consumer Credit Protection Act have enacted 100’s of regulations that the reporting and collection agencies have to adhere to in order for an item to remain on credit reports. The Fair Credit Reporting Act gives you the legal right to dispute items on your credit reports that may be inaccurate, out of date, incomplete or unverifiable.
We challenge the credit agencies how they posted the information. Are they in compliance with all of these laws? And more often than not, they are not in compliance and we have them remove the negative information.
How much does a low score cost you?
Having a low score can cost you thousands of dollars. The higher score you have, the lower interest rate you will have. The lower interest rate that you have… the less money you will pay!
$100,000 mortgage over 30 years
•• Category Interest Rate Payment Total Cost After 30 Yrs
•• Prime 6.50% $632 $228,625
•• Alternative A 7.50% $699 $251,715
•• Subprime 10% $877 $315,925