If you have a bad credit score, then you have made some financial missteps in the past. You should realize you’re not alone the average credit score in America is under 650. In other words bad credit.
We’re going to discuss the five factors that your credit score uses when it is calculated and how you can improve these areas. You don’t just have to live with bad credit for seven long years.
1. Payment History
Your payment history is, in other words, your credit record. This is going to weigh all the positive marks and all the negative marks, and this factor is about 40% of your overall credit score.
We would encourage you to keep watch on your credit report because you can get an inaccurate listing at any time. It is estimated that over 20% of all credit reports have a blatant error on them, this error could be the difference between approval and rejection for financing.
If you find an error or an item that you believe to be inaccurate, then you should file a credit dispute with the bureaus. To do this you must write a credit dispute letter and mail it to all three bureaus, upon receipt, they will investigate your dispute.
During their investigation, they will contact the lender or the business that created the mark on your credit report and asked them to verify the account. If the account cannot be verified, then the credit bureaus must remove the bad credit listing from your credit report.
2. Types Of Credit
This looks at what types of credit you have: credit card, mortgage, student loans, auto loan… However this is only about 10% of your overall credit score, and you should not worry about improving this.
3. Length Of Credit
This is exactly what it sounds like how long have you been using credit. For many people, they started using credit at 18 years old when you can legally get a credit card. This is also only 10% of your credit score.
4. Age Of Accounts
This is going to look at how old each one of your credit accounts is. For example how long have you been using your credit card? However this again is only 10% of your credit score, and you should not concern yourself with it.
5. Available Credit To Debt Ratio
Your available credit to debt looks at all the debts you have and compares it to how much available credit or money you can borrow. It is not going to hurt your score if you have large amounts of debt such as a student loan, mortgage, auto loan… However, it will hurt your score if you don’t have available credit to borrow.
For example on an unsecured credit card with a credit limit of one thousand dollars if you have a balance of $400, then you would have $600 of available credit. Experts say that it is best to keep your credit cards at roughly 30% of your credit limit, to show enough available credit when you’re score is calculated.
We can help you remove a bankruptcy from your credit record.
Don’t just live with bad credit take action and remove negative information and build positive marks. You can obtain an excellent credit score and the lifestyle that comes along with it such as financing at low-interest rates for many purchases.