How did you feel the last time you applied for a home or car loan, a new credit card, or a lease on an apartment? It can be a pretty vulnerable position, right? You know the person you’re speaking with is going to check your credit score. All that’s left to do is to hope that score is good enough to get your application approved or get you an interest rate you can afford.
Your credit score can make or break these applications and sometimes the outcomes can be life-changing; like having a car to get to work or not. Still, many people don’t know what goes into determining a credit score or even what one is.
So here are the basics: your credit score, also known as your FICO score, is a three-digit number that tells a lender how desirable you are as a borrower. A higher score generally means that you borrow responsibly and pay your bills on time. When lenders know that, they tend to be more willing to offer you low interest rates and even more credit.
Credit scores range from 300 to 850, but what is a good credit score? If you want to know how your score stacks up, there are a number of ways you can look it up.
- Buy access to your credit score from FICO at myfico.om or from one of the credit reporting agencies.
- Check your credit card or loan statement, by logging into your account online to see if it’s listed there. Often times, many lenders offer free credit scores.
- Sign up for an online credit score service. (If you go this route, make sure that you’re not signing up for a monthly subscription. Either that or schedule a reminder for yourself to cancel before the trial period expires.)
After receiving your score, you can find out more by requesting your credit report to see all the details regarding your credit history. You have the legal right to get one credit report per year from each of the three major credit reporting agencies: Equifax, Experian and TransUnion. You can get one or more of these by filling out a simple form at www.annualcreditreport.com.
Once you get your report, take a look to see where you can improve moving forward. Your credit score is basically a numerical representation of your credit report. FICO calculates it by weighing different aspects of your credit history. The typical breakdown is as follows:
- Payment history, 35% percent
- Amount of credit limit utilized (Debt Ratio)sed, 30% percent
- Borrowing history, overall and by account, 15% percent
- The mix of credit types used, 10% percent
- Amount of new credit, 10% percent
After taking a look, where could you make improvements? Did you miss a payment or two? A quick fix could be to set up automatic payments on your accounts, so that you don’t miss any more. Are you using too much of your credit? You can adjust your budget so you can pay it off quicker. There are some great budgeting tips here as well as a free budget spreadsheet available for download.
An option could be to contact a credit repair company and allow them to guide you through solutions in how to raise your overall score. However, as mentioned above, a large majority of your score is comprised of your debt utilization or debt ratio. So often times there isn’t a quick fix, but with that said, there are ways to fix your overall score in the long run.
In cases such as these where consumers have $7,500 or more in debt, with over 30% credit utilization, debt consolidation companies have the most experience to help consumers out of debt and raise credit scores. While this is the a long term solution, rather than a quick fix, it is often the best route when facing high amounts of debt ratios. This is because the only way to raise your score is to ultimately pay down the large amounts of debt owed to the lender.
Of course paying down debt is isn’t as easy as it sounds. The reason for this is high interest rates/ or high APRs and paying the minimum will keep your overall credit utilization at the same high utilization amount for years to come, ultimately affecting your credit score long term as well.
Credit consolidation companies have helped thousands in similar situations to pay down debt in as little as 12 months, with one fixed monthly payment so that you can eliminate the high interest and finally pay off the debt. Though this may seem too good to be true, these are programs that have been around for years to help consumers out of the vicious cycle of debt.
In the long run, your credit score will rise and buying that car or home with the affordable interest rate won’t seem so impossible any longer. To see if you qualify, fill out the simple form here.
*Please note that all calls with the company may be recorded or monitored for quality assurance and training purposes. *Clients who make all their monthly program deposits pay approximately 70-75% of their original enrolled debts over 12 to 60 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for various reasons, including their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Our service is not available in all states and our fees may vary from state to state. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. Depending on your state, we may be available to recommend a local tax professional and/or bankruptcy attorney. Read and understand all program materials prior to enrollment, including potential adverse impact on credit rating. The use of debt settlement services will likely adversely affect your creditworthiness, may result in you being subject to collections or being sued by creditors or collectors and may increase the outstanding balances of your enrolled accounts due to the accrual of fees and interest. However, negotiated settlements we obtain on your behalf resolve the entire account, including all accrued fees and interest.