About Credit Scoring
What are Credit Scores?
A credit score is a “grading” system that help lenders determine how well your history of payments have been. The grades are a number based on your repayment to your debts (e.g. credit cards, medical bills, and current loans). The range is 300, equivalent to an “F”, up to 850, equivalent to an “A”. To keep or improve your credit score one of the most important factors is to make payments on time and in full. Late payments create negative marks on your credit report, thus decreasing your score. If you don’t have any credit, this is the same as having bad credit. There is no evidence to show you make your payments, simply because you don’t have any payments to make. The best way to start or repair credit is open a credit card and use it to buy gas, groceries, etc… then pay off the balance at the end of the month.
What makes up your Credit Score?
The strongest influence on your score is payment history. Did you make all your payments on time and in full? Next is the balance of your debts on credit. How many credit cards, car loans, mortgages, or private loans have a large balance, and therefore require a greater payment each month? Then your Length of History refers to how long you have had that account open. The longer the better, it shows you can be trusted with credit for a longer amount of time. Finally Type of Credit and New Credit, have the same amount of influence on your score. Is the debt you hold mostly credit cards or is a healthy mix of credit cards, car loans, and private loans? Did you just open several credit cards with in the last month? These can both be bad for your credit or good for it when combined with the other influences that make up your credit score.
How do credit reporting agencies get my information? The credit report companies receive their information from national credit repositories including Experian, Trans Union, Equifax, and public records search firms.
What if I disagree with the information on my credit report? The information reported to the repositories is only as current and accurate as the information reported by the Creditors. Information should be disputed by contacting the creditors directly and it should be completed in writing. The names, addresses, and phone numbers of most creditors are listed on the last pages of your pre-qualifying credit report and are listed as Direct Check Addresses. Once you have settled the disputed accounts the information is then provided to the repositories that will then make the appropriate changes. This can still take up to several months to achieve. We have some useful materials available to assist you repair and build credit, upon request.
What if I cannot contact the creditor? You may dispute the account directly with the repository. Creditors have 30 days to document your credit history or the credit repositories must remove it. The credit repositories may be reached as follows.
Experian (Formerly TRW)
PO Box 949
Allen TX 75013-0949
Trans Union Corporation
Consumer Disclosure Center
PO Box 390
Springfield PA 19064-0390
Fax number (714) 680-7292
PO Box 740241
Atlanta GA 30374-0241