Credit Facts

What is a credit score?

  • A credit score is a number generated by a mathematical formula that is meant to predict credit worthiness.

  • Credit scores range from 300-850.

    • The higher your score is, the more likely you are to get a loan.

    • The lower your score is, the less likely you are to get a loan.

  • If you have a low credit score and you do manage to get approved for credit, your interest rate will be much higher than someone who had a great credit score and also borrowed money.

  • Therefore, having a high credit score can save many thousands of dollars over the life of your mortgage, auto loan, or credit card.

What affects your credit score?

This image shows what makes up a credit score.

What can I do to improve my score myself?

  • Pay all of your bills on time, every time.
    • This includes your utility bills, mortgage and auto payments, and all of your revolving lines of credit like credit cards. 
  • Check your credit report at least once a year
  • Never charge more than 30% of the available balance on any of your credit cards
    • For example: if your credit card balance is $1,000, never let more than a $300 balance report ​
    • If you are carrying high balances on your credit cards, then make paying them down below 30% a priority
  • Keep your accounts open as long as possible
    • Try not to close out a credit card. this can drop your score
    • Unless you are paying annual fee's, we recommend to not close out any cards
    • Keep them open and put a very small charge on them every 6 months to keep activity on the account
      • If you have cards that you are not using, a creditor is likely to close it due to inactivity ​
      • Using a card at least once or twice a year will help to ensure that it remains open
  • Have patience!
    • ​Remember that this all takes time
    •  Following the above steps consistently over a long period of time will increase your credit score and allow you to qualify for better loans and lower interest rates
  • These are all habits that you will want to maintain throughout your life, as they will help you to keep your finances and lines of credit under control.
  • Improving your credit score does not happen overnight, so if you do these things for a few months and do not see a large increase in your score, do not give up
    • Review what needs to be improved​ again and go from there
    • If you still need help, reach out to us!

How long does information stay on my report?

  • Delinquencies (30- 180 days):
    • A delinquency may remain on file for seven years; from the date of the initial missed payment.
  • Collection Accounts/Charge Off's:
    • ​Collections will remain on your report seven years from the date of the initial missed payment that led to the collection (the original delinquency date).
    • When a collection account is paid in full, it will be marked as a "paid collection" on the credit report. 
    • A paid collection normally does not come off of your report
    • Paying a collection may not improve your score. It can, in some instances, drop your score
  • Closed Accounts:
    • ​Closed accounts are no longer available for further use and may or may not have a zero balance.
    • Closed accounts with delinquencies remain for seven years from the date they are reported closed, whether closed by the creditor or by the consumer.
    • However, the delinquency notation will be removed seven years after the delinquency occurred when pertaining to late payments.
    • Positive closed accounts continue to be reported for ten years from the closing date.
    • Once these fall off, your score may drop, so be prepared
  • Bankruptcy: Chapters 7, 11, and 12:
    • ​Chapters 7,11 & 12 will remain on one's credit report for ten years from the filing date.
    • Chapter 13 bankruptcy is reported for seven years from the filing date.
    • Accounts included in a bankruptcy will remain for seven years from the date reported, and should report as included in the bankruptcy.
  • Inquiries:
    • ​Most inquiries listed on one's credit report will remain for two years.
    • All inquiries must remain for a minimum of one year from the date the inquiry was made.
    • Some inquiries, such as employment or pre-approved offers of credit, will show only on a personal credit report pulled by you and may be a "soft" inquiry
    • While inquiries will be listed on the report for up to 2 years, they will only affect the score for 1 year. 

Information that cannot be in a credit report

  • Notice of bankruptcy (Chapter 11) more than ten years old

  • Judgements no longer appear on credit reports

  • Debts (including delinquent child support payments) more than seven years old

  • Age, marital status, or race (if requested from a current or prospective employer)​

  • The same collection by more than 1 collection company

    • The original creditor and a collection agency can both report the same debt, but 2 collection agencies cannot​

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