When you apply for credit, your prospective lender assesses the risk you pose as a borrower. Risk assessment is important to lenders because it helps them determine whether applicants are likely to pay them back as agreed.
Factors that Make up your Credit Score
There are 5 primary factors that affect your credit score include. Each factor is weighted differently in your score.
Amount of debt you owe
Length of your credit history
New or recent credit
Types of credit used
FICO scores range from 300 to 850 points. Typically, a score more than 620 is considered "fair," a score more than 700 is considered "good" and a score more than 750 is considered "excellent."
It is important that you check your credit report every year. This can help protect your credit history from errors and help you spot signs of identity theft. If you find mistakes on your credit report, contact the credit bureaus and the business that supplied the information to get the mistakes removed from your report.
The bureaus accept disputes online or by phone:
Experian (888) 397-3742
Transunion (800) 916-8800
Equifax (866) 349-5191
Free Annual Credit Report
You are entitled to one free credit report every 12 months. The three nationwide credit bureaus — Equifax, Experian, and TransUnion — have a centralized website, toll-free telephone number, and mailing address so you can order your free annual reports in one place. Do not contact the three credit bureaus individually. These are the only ways to order your free annual credit reports:
call 1-877-322-8228, or
complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
*Only one website — AnnualCreditReport.com — is authorized to fill orders for the free annual credit reports you are entitled to by law.
Credit Repair Resources
Credit Report Check
There are various ways to improve your credit score, but it all takes patience as there is no quick fix. You should always start by reviewing your credit report and checking for any errors. You can dispute any errors on your own or you can chose to pay a company to help with your credit repair. Make sure you do your research and select a reputable company you know you can trust.
Other things you can do to improve your score:
Bring your accounts current. Setting up automatic payments can help ensure you don't miss a payment.
Create a budget and start paying down your account balances.
Ask if you can raise your credit limit without a hard inquiry, which will further impact your credit.
Keep older accounts open even if you don’t use them anymore to maintain a higher credit limit and increase your credit utilization. Only close unused accounts if they have an annual fee.
If your bill due dates hit at an inconvenient time—say, before your paycheck is deposited—you can call and ask your creditor to change your due dates.
Consider requesting a pay for delete letter. It is a negotiation attempt from you to the creditor where you ask a business or collections agency to remove accurate negative information from your credit report in exchange for payment. There are pros and cons to this strategy. So do your research first.
*The information provided on this page does not, and is not intended to constitute financial advice. Instead all information and content on this page is for general informational purposes only. This page contains links to third-party websites. Such links are only for the convenience of the reader or browser. We do not endorse the third-party websites.