Frequently Asked Questions
What is a credit report, and why is it important?
Your credit report is a snapshot of your payment history for all credit transactions that you have from age 18 until now. When you applied for credit, it detailed how many positive and negative accounts you have, who has viewed your credit report, and all your personal information. Reviewing your credit report every four to six months gives you a chance to check for identity theft, inaccurate accounts, and incorrect information. It allows you to manage your financial situation before applying for a credit card, auto loan, bank loan, mortgage loan, employment, or insurance. For example, if you check your credit and notice a few negative items on your report, you will have a chance to fix those items before applying for credit. By doing this, you avoid embarrassment and several inquiries, which lowers your credit score.
What is a FICO score?
A FICO score is a three-digit number that is built from the information contained in your credit report. It summarizes information like your negative accounts, payment history, the amount of debt you carry, the length of your credit history, the amount of new credit you applied for, and the type of tradelines you have in your report.
What is a good score?
Lenders say that with a 720-760 score, you get the best prime rates. With a 620, you get the sub-prime, riskier rates.
● 750-850 - Excellent.
● 660-749 – Good.
● 620-659 – Fair.
● 350-619 – Poor.
How is my score calculated?
Your payment history calculates your credit score, the amount you owe, the length of your credit, what new credit you have applied for, and the type of tradelines you have.
How can I improve my credit score?
Remove inaccurate information from your credit report.
You can start by removing errors from your credit report. While scanning your credit report, look for any hard inquiries that you did not authorize. Hard inquiries could lower your score by as much as five points per inquiry. Get the creditor to prove that you permitted them to pull your credit report, and if they can’t prove it, then the inquiry must be deleted according to the law.
Did you contact a creditor?
When disputing an item on your credit report, you should contact the credit bureaus and the creditor. Make the creditor prove that you were late, as they are reporting it to the credit bureaus. If they can’t prove that you were late, ask them to delete the negative item. This can improve your score.
How can I pay my bills on time?
Please make a list of all your debts and their due dates. Then, type the due dates into your computer and cell phone calendars with active reminders. Use an internet banking program and your online credit card site to send email reminders regarding when your bills are due. You can also set up your accounts to have money automatically taken out at the due date. When paying your bills, you can pay them as they come in using online banking or bill pay or through your financial institution website. Using the various methods mentioned above will help you pay your debts on time. Making each payment on time raises your credit score and keeps you in good standing with your creditors if you request a credit increase.
How can I pay down my debt?
Put your debts in order from the card with the highest balance to the lowest. Pay each account down to 7 to 10% and keep it there to increase your score. Finding money to help you pay down your debt may be difficult, but there are numerous ways to raise extra cash. You can have a garage sale, sell items on eBay, get an extra job, pull from your savings, borrow from friends, and cut your expenses. Any of these are an option.
Should I close old accounts?
Closing trade lines won’t help. In fact, it will hurt your score by reducing your total available credit, and it will make your balances seem higher. It also makes your total credit history look young, and the FICO model likes to see age on accounts because of payment history. Lastly, you want to keep the cards active by having a monthly bill debited from your card at the end of the month to avoid the creditor closing your account due to lack of use. Most lenders will close inactive accounts after 18 months of not using the card.
Should I ask for a credit increase?
Ask your creditor to raise your credit limit to reduce your balance. This will help raise your score slightly. Only do this if your balances are low with your other credit cards.
How often should I apply for credit?
If you apply for several accounts in a short period of time because the credit bureaus will send a Trans Alert to the creditors informing them that you have applied for multiple accounts.