Credit Repair – Credit Coaching To Repair Bad Credit - 1st Rate Financial

There are five categories that the FICO credit score takes into account in its calculations:
 Payment history – 35% of the score
 Amounts owed on accounts – 30% of the score
 Length of credit history – 15% of the score
 New credit inquiries – 10% of the score
 Types of credit used – 10% of the score

If you are seeking to improve your score, there are positive steps you can take in each of these categories to boost your score.

Credit history
 If you are applying for a mortgage, never pay off an old collection, judgment or tax lien until the close of escrow on the new house. Paying it before then will make it a “current event” and will lower your score, raising your interest on the mortgage.
 Pay your bills on time. If you have missed payments in the past, get current and keep it that way. The longer you pay your bills on time, the higher your score will be.

Amounts owed
 Even if you pay off your credit cards every month, your credit report may show that you have a balance. That is because creditors report on the previous month, and they may have reported it before they received your payment.
 If you have an account that you don’t use, but it is in good standing, do not close it. This will negatively affect your score.
 Avoid consolidating your cards onto one lower interest card. Although it will save you money on interest, it will bring the balance on that card closer to the limit, and this will make your credit score go down.

Length of credit history
 Don’t open up a lot of new credit accounts at once, especially if you are just getting started with credit. Even though you are improving the ratio between available credit and usage of credit, it could actually depress your score, because it lowers the average age of your accounts. It can also look risky if you are a new credit user.
 Remember, it can take up to a year for a new account to positively impact your credit.

New credit inquiries
 Don’t worry if you are shopping around for a car or home loan and making a lot of applications. All mortgage or home inquiries made within a 14-day period are counted as one inquiry. Make sure to make all of your applications within this time window.
 If you order your own credit report from the credit bureaus, it will not negatively effect your score, but if you ask a friend with a business to order it for you as if he were checking your credit, it will hurt your score.

Types of credit used
 Have and use credit cards, but be responsible. Credit cards and installment loans will raise your score as long as you have a good payment history. If you have no credit cards, creditors see you as a higher risk.
 Remember, if you close an account, it still stays on the credit report and may be used to calculate your score. Don’t close old accounts that were delinquent because it makes the date of last activity the day you closed it, giving it more impact on your score.

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