CREDIT

What is Credit? Credit is directly tied to a various number of Credit Bureau's scoring systems. Credit influence 'Terms' (limit, loan amount, interest rate, etc.) that lenders may offer. It’s a vital part of credit health. When a consumer applies for credit, whether for a credit card, an auto loan, or a mortgage, lenders want to know what risk they'd take by loaning money and make a decision, based on your Credit.	What is a Credit Score? A credit score is a number that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time. Scores give lenders a fast, objective estimate of your credit risk. Before the use of scoring, the credit granting process could be slow, inconsistent and unfairly biased. Scores can be delivered almost instantaneously, helping lenders speed up loan approvals. This means that when you apply for credit, you’ll get an answer more quickly.	Credit Report Lenders can also buy a credit score that’s based on the information in the report. A credit score helps lenders evaluate a credit report because it is a number that summarizes credit risk, based on a snapshot of a credit report at a particular point in time.
What is 'Good Credit' anyways? Excellent 720-850 ................ 700-719 Moderate 675-699 ................. 620-674 Bad 560-619 ................ 500-599	When you’re Applying for Credit Whether it’s a credit card, a car loan, a personal loan or a mortgage... lenders want to know your 'Credit Risk' level. In other words, “If I give this person a loan or credit card, how likely is it that I will get paid back on time??”	3 major Credit Reporting Agencies Equifax, Experian and TransUnion are the 3 largest Bureaus in the United States that maintain records of your use of credit and other information about you. These records are called Credit Reports, and lenders will want to check your credit report when you Apply for Credit. In most cases, lenders will also want to know your Credit Score.
'Older' Credit Problems If you have had poor credit performance in the past... Credit Scores WILL NOT haunt you forever. The impact of past credit problems on your Score fades over time. As recent good payment patterns show up on your credit report, the good outweigh the bad and your Credit Scores begin to rise. They older a negative item, the easier it is to permanently delete. Once it's gone, it can no longer hold down your score.	The Impact of Inquiries For most people, one additional credit inquiry will take less than five points off their Credit Score. However, inquiries can have a greater impact if you have few accounts, especially if you have a short or poor credit history. Large numbers of inquiries also mean greater risk. People with six inquiries or more on their credit reports are considered a higher risk than people with no inquiries on their reports.	Been turned down? So you're bubble's been burst as you came to find out you've been turned down for credit. The Equal Credit Opportunity Act (ECOA) gives you the right to obtain the reasons why within 30 days. Even if you've already requested your one free annual credit report from annualcreditreport.com... you are still entitled to a another free copy of your credit report within 60 days from the denial date, which you can request from the credit reporting agencies.
Credit Utilization (30%) Are you barely floating? How much you owe makes up 30% of your credit score, and your credit utilization ratio heavily influences that factor. Using too much of your available credit hurts your credit score. There is much speculation, but the common thread is keep your balances below 30% of your credit card 'limits'. According to FICO surveys, credit scoring "high achievers... "Those with a score north of 750, use an average of 7% of their available credit".	Request a Credit Line Increase If you want your Credit Utilization Ratio below 10 or 20 percent of your credit line, one way to make the math work is to increase the credit line. This will decrease your Credit Utilization allowing you to stay below the 20% Utilization Ratio. Many talk about the 30% Utilization Rule, but our findings show that people who've earned a 750 score and above, carry as little as 7% on average.	Payment History (35%) The first thing any lender wants to know is whether you’ve paid past credit accounts ‘ON TIME, ALL THE TIME’. This is the most important factor in a Credit Score. An overall good credit picture can outweigh one or two instances of late credit card payments. A few late payments are not an automatic "score-killer", but avoid them like the plague. A few bad decisions can create years of regret. No matter what… ALWAYS pay your minimums, 'IF' you cannot pay your account down.
Length of Credit History (15%) In general, a longer credit history will increase your Credit Scores. However, even people who haven't been using credit long may have high Credit Scores, depending on how the rest of the credit report looks. • How long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts • How long specific credit accounts have been established • How long it has been since you used certain accounts	Credit 'Mix' (10%) If you want a to Credit Scores, the kind that gets you the best rates, the highest limits and the sweetest deals… you're going to have to “mix it up" a bit. That's because FICO says having a variety of loans is necessary for earning a perfect credit score. 1) Auto Loans 2) Student Loans 3) Home Equity Loans 4) Home Equity Loans 5) Signature Loans	New credit (10%) If you don’t have credit, not many places are willing to give you credit. Start first by researching ‘low limit’ credit cards that approve individuals with little to no credit. Once you’ve been approved keep your balances between 10-20% and make 2-4 small payments a month, instead of one large payment. This trick get’s our client’s credit limit’s increased 3X faster and with an increase nearly every 45-60 days.