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There are five factors that contribute to determining your credit score:

Payment History
Amount Owed (ratio)
Length of Credit History
Taking on More Debt (Inquiries)
Types of Credit in Use

1. How you pay your bills – Your credit history (35 percent of the score)
This is the most important factor; how you’ve paid your bills in the past, with the strongest emphasis on recent activity (2 years or less.) Paying all your bills on time is good. Paying them late is not, and particularly on a consistent basis. Few things hurt your score as heavily as past due payments. Having accounts that were sent to collections is even worse. Declaring bankruptcy is the worst. Think long and hard before filing for bankruptcy. It most cases, it simply isn’t worth it.

2. Your debt to your available credit ratio (30 percent)
The second most important area is your outstanding debt — how much money you owe on unsecured and secured loans, with emphasis on revolving credit. Revolving credit is credit cards, and lines of credit. Installment loans include car loans, personal loans, mortgages, etc.). The ratio of available credit to debt (account balance) is an important ratio. Try to keep the ratio of available credit to credit used, also called utilization ratio, below 30%.

Some underwriters place importance on the total amount of credit you have available. If you have 10 credit cards that each have $5,000 credit limits, that’s $50,000 of available credit. Statistically, people who have a lot of credit available tend to use it, which makes them a less attractive credit risk. However, please note, this is less important to FICO’s credit score algorithm.

3. Length of credit history (15 percent)
The third consideration is the length of your credit history. The longer you’ve had credit — particularly if it’s with the same credit issuers — the more points you’ll get.

4. Types/Mix of credit (10 percent)
The best scores will have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans. “Statistically, consumers with a richer variety of experiences are better credit risks,” Watts says. “They know how to handle money.”

5. New credit applications – Also called inquiries (10 percent)
The final category is how many credit applications you’re filling out, called intquiries. The scoring model compensates for people who are rate shopping for the best mortgage or car loan rates, but not for revolving type loans, payday loans, etc. The only time shopping really hurts your score is when you have previous recent credit stumbles, such as late payments or bills sent to collections.

It is our greatest desire that our blog posts are helpful to you. Your comments and thoughts are welcome.

By Blair Warner
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It seems like a new business networking group springs up every week. This last week, I was asked to join a new group by the name of Cup of Coffee Networkers. From what I can tell, it is primarily an online group, so I am still trying to figure out how this avid coffee-drinking connoisseur is going to get his cup of coffee. Actually, I think the goal is to start online and then organize groups offline step by step. Are they going to meet at coffee shops?

All humor aside, it is a fact that business networking groups are the in thing these days. A popular one that I personally attend is Netweavers– SAKM Netweavers (South Arlington, Kennedale, Mansfield) . You are probably asking “what does this have to do with the title ‘What is credit repair anyway?'” Well, I am glad you asked. One of the key components of any networking group is to meet with other members one-on-one in order to get to know each other and their respective businesses better. Without fail, whenever I do a one-on-one with someone they either ask “what is credit repair anyway?” or, “so, how does credit repair work?”. That is the question I am waiting for them to ask. I love to answer it.

Credit repair in a nutshell:

The first step is to obtain your credit reports and get them to us. Once we’ve received your credit reports, we will analyze your credit history to identify items that are responsible for bringing your credit score down – including not having enough current positive credit.

We will recommend and provide ways to increase your score, as well as draft letters to dispute the negative items on your behalf. Upgrade My Credit’s letters are expertly designed such that credit bureaus will accept the dispute and conduct an investigation.

A disputed credit listing must be verified as accurate and within the correct time constraints for it to remain on the credit report. If the credit listings contain an error, the credit bureau may simply correct the item, but, very often, disputed credit items cannot be verified because either the creditor no longer possesses necessary information or does not to go to the effort of verifying it. Furthermore, the investigation must be completed within 30 days or the listing must be removed. For these reasons, properly disputed credit listings are removed from your credit report with remarkable frequency.

At the conclusion of the credit bureau’s investigation, a new copy of the credit report is sent to you along with any deletions or improvements. You then provide us with a copy of the new credit report and the cycle repeats itself at strategic intervals and according to a personalized plan for reaching your goals.

The above process can be done DIY (Do it yourself), as the laws used by Upgrade My Credit and all credit restoration companies were written for the consumer. However, for some reason, the government did not write the laws consumer-user friendly. And, just like we need a CPA or even have someone mow the lawn for us, often times, it is more efficient and quicker to let a professional help.

In addition to credit repair, Upgrade My Credit offers many more financial and credit services to help you build and manage your financial future well, such as personal budgeting help, debt reduction programs, classes and workshops, bankruptcy counseling, etc.

Well, that is it in a nutshell. Hope it has answered the question “what is credit repair?”.

Here’s to your financial future!

Blair Warner – Founder and Sr. Credit Consultant

I met with a past client the other day whose story inspired me, and I want to share it with you toward that same end — that you will be inspired. At the beginning of this story this person was in her late 30’s, had 3 children (not 2.3) and a hard-working, devoted husband. Things were rolling along uneventful, so to speak, when her husband was suddenly killed, almost instantly, when hit by a speeding car while checking the mail. Needless to say, her life was turned upside down and very challenging on many fronts for a while. Fortunately, Spring comes after Winter, and she is well on her way to a happy ending.

continue story           Click “return to original post” to return here..

Everyone has a story. In fact, it is your story that makes you unique. Stories offer the listener a new perspective, new experience, even a new adventure of sorts, while at the same time often sounding a ring of familiarity to each one of us as a common member of the human race. That’s why it is said “everyone LOVES a story” — and stories are not just for children. Look at how many movies and novels are pumped out every year. It is also said that “‘everyone has a story”. What is your story? Have you thought about what you would share with someone if you had 5-10 min to share a story of your life in a way that would leave the listeners …… kind of a “Personal Chicken Soup”? Of course, there are stories of the personal, private nature. I am not asking for stories reserved for those closest to us, but for those that if shared will inspire and encourage. Inspire us! Share it as a comment.

At Upgrade My Credit we get to hear, and be a part of many people’s stories as they come to us with credit, debt and budget problems affecting their financial lives and futures. It is our privilege to help.

Cheers,

By Blair Warner