16 Mar 2019

My Credit Score: Answering Some Common Credit Questions


Here’s the thing about credit, it’s basically impossible to figure out unless you work with it all the time, as it’s always changing. Like a lot of things in life, it’s probably overly complicated, not taxes complicated (thank goodness), but pretty complicated. You don’t need to understand credit fully to be able to have good credit. A lot of it is common sense, and you probably don’t want to think about it too much as it can start to drive you a bit nuts. After all, institutions (like banks) you interact with give your data to a publicly traded company without your permission in order to judge your worthiness to lend money to. Does that mean that FICO and credit score is a scam? Not really. It’s the system we find ourselves in. There are plenty of infuriating things far worse. Not to get political, but take our two-party system we have in politics. Are the people we end up voting for really the best people qualified to run the country? Of course not, that’s why South Park did an episode about a giant douche vs a turd sandwich in an on-the-nose comparison. But we digress, if you’re here looking into tradelines or credit repair, then you’re probably thinking…”increasing my credit score” is a good idea. The first thing to realize, is what makes up your score


How is my credit score configured?

What makes up your credit score can be broken down into six categories: how you utilize revolving credit, number of times applied (inquiries), average age of credit history, number of accounts, derogatory marks (like collections, chargeoffs, etc), total accounts, and payment history. Having any one of these in a bad spot can seriously affect your credit, and each category has a different weight as far as how much it affects the total score. But let’s back up, how many digits are in a credit score? Well, three. The number goes from 350-850 in most algorithms for FICO models. People call us frequently asking how they can get an 800 credit score, which is generally considered the mark of supreme excellence culturally, but this number is not easy to hit, hence why it is so coveted. Our first piece of advice, pay everything you owe on time. If you can do that, then you will have decent credit until the end of your days. But we know you want more than that. Our next piece of advice would be: be responsible with the credit you have. That means not maxing out your cards and keeping the utilizations low. If you are in a position where you do have large balances and are wondering “will debt consolidation help my credit score?” It depends on how you consolidate. If you consolidate from revolving to revolving, you may not see much difference. Securing that unsecured debt to secured on the other hand, with collateral such as a home or a car, you will see a substantial increase in score, maybe even a 100 point credit score increase. So how else can you raise your credit?

How can I raise credit score in 3 months?

This is about the time frame you want to expect for truly seeing improvements in your credit scores. Sometimes it can be faster, but if you look at your reports and say “my credit score is 560” then a longer time frame should be expected. There are two ways to raise your score, taking off negative items, and adding positive items. The first thing you want to do (because it takes the longest), is take off negatives, because there’s no doubt: removing collections raise credit score better than almost any other activity you can engage in. We’ve had many customers call us up saying their reports are blank, but inevitably they have things they’ve forgotten about, like medical bills, that have now turned into collections. We know what you’re thinking: how many points will my credit score increase when a collection is removed? It depends on what you have as far as positives. Do you have multiple credit cards that you pay on time and utilize responsibly, a mortgage, a car loan? The more positive data you have on your reports, the more it will shoot up when you take a negative off…but here’s the question you should be asking: how many points will my credit score increase when collection accounts are removed from report? Because let’s face it, you might as well get them all off. Each negative mark carries a particular weight, and one may or may no be more heavily weighted than another so if you’re asking “how much will my credit score increase after a bankruptcy is removed?” The answer is difficult to say, as only the algorithm (and that’s a secret) knows. In a future article, we will discuss how adding positives can boost your score.