Credit Scores

Payment History

When a lender reviews your report, they will place massive focus on payment history and reliability. On-time payments are a predictor of your ability to maintain and manage this pattern. This goes beyond credit cards, and also includes bills like student loans, utilities, and car payments.

If you struggle to pay bills on-time, set up automatic payments or reminders to assist you in paying on time each month. Late or missed payments reflect negatively on your report for seven years, so it’s wise to use all tools available to you to prevent this from happening.

The road to credit recovery will take time, but will be well worth the work. A low credit score may run you tens of thousands and cause some serious stress in its wake. Understand that you’re not alone, and there are many ways to rebuild. Here area a few of many key areas of focus:

• Pay bills on-time each and every month
• Reduce your total owed balance
• Avoid applying for unnecessary credit lines

Lenders are looking for smart credit management over the long haul. Make an effort to keep up with bills and to maintain low account balances. The longer you do so, the better your credit score will be. Here are a few ways to achieve and maintain a high credit score:

• Leave unused accounts open, this will add to the total available credit, yielding a lower ratio
• Regularly check your credit report and clear up any inaccuracies immediately
• Utilize credit monitoring to be the first to know of identity theft or fraud

Unfortunately there is no quick fix when it comes to credit scores. Simply pay all bills on time, reduce your overall debt, and give it some time.

Delinquencies remain on your report for seven years, hard inquiries for two, while public records like bankruptcies or unpaid tax may remain for 10 or more.

Actions that seem simple may negatively affect your score. For example, closing unused accounts will lower the total amount of accounts, but will also decrease the amount of available credit, resulting in a higher utilization rate which typically lowers scores.

Scores are based only on what is found on your report. This report provides an overall risk assessment based on past and present credit actions, providing you with information on what is working and what is not.

Credit reporting companies or bureaus compile data about borrowing and repayment history and sell this information as a credit report. This information is pulled from a variety of sources including lenders, public records and collections agencies. The most common names you’ll see are Equifax, Experian and TransUnion. All are in competition with each other and do not share information. It is common to see a slight difference in your report from each one.

Lenders often report to different bureaus at different times, and do not generally report to more than one or two. If something seems off, it’s best to file a dispute with the credit bureau for resolution.