Troubleshooting a Low Credit Report Score
How can I fix my credit report and repair my credit report score?
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There are two separate ways you can do something to fix your credit report and improve your credit report score. The things that you control is are the surest way to free credit repair. The other way to fix your credit report is by influencing other people to do the right thing to clean your credit report.
In the first part of this report we cover those things you can do that you have control over to fix your credit and raise your credit report score. There are even a couple things you can do that legitimately qualify as instant credit repair when done the right way.
The first step in credit help is understanding the credit scoring system and understanding your credit report score and how it fits into that system. Credit report repair secrets are hiding in the open once you know what to look for.
What is a credit report score?
Your credit report score is a statistical/mathematical calculation made by a computer that scales your credit history into a number between 300-850. The higher the number the better your credit report score. The only data the computer uses when it does your credit report score calculation is the information in your credit report – your credit history. Your credit report score is a snapshot in time that will change every time the information in your credit report changes. The key to managing your credit report score is knowing what kinds of changes in your credit reports will produce the biggest changes in your credit report scores – both positive and negative.
Your employment history, income, age, marital status, medical history and other personal information about you is not included in your credit report and has absolutely no impact on your credit report score. Thus it is not uncommon that a person with a blue collar job and an average income can have a credit report score hundreds of points higher than an executive making six figures. Lenders take income into consideration when making a loan but the credit report bureaus do not when making your credit report score calculation.
The credit report score formula is a secret but the effects are not
The exact formula for calculating your credit report score is a trade secret. Fair Isaac & Co., the company that invented credit scores and remains the leader in the credit reporting industry with its FICO Score, does provide some guidance about the factors that go into the calculation.
The median FICO credit report score in the USA is 723. Half the people have FICO scores higher than 723 and half have lower FICO credit scores. The average FICO score is about 687. There is no universal definition of “good” credit but this credit report score chart is good guidance for where different FICO credit scores fall on the scale between excellent and forget-about-it.
A person with a credit report score at the high end of the chart is just about guaranteed for approval at the lowest interest rate on a mortgage loan, a car loan, or any other credit purchase that their income could support. A person at the bottom end of the chart will have difficulty getting approved on any credit purchase – regardless of their income. Any loan they do get will be rated as a bad credit loan and charged high interest rates. The difference in total interest paid between a bad credit mortgage and a good credit mortgage is enormous – several $100,000 over the life of the loan.
In a tight credit environment the lowest bad credit categories could get completely shut out of the credit market and not be able to buy a home or a new car on reasonable terms.
FICO SCORE CHART
| 760-850 | EXCELLENT |
| 700-759 | VERY GOOD |
| 723 | MEDIAN FICO SCORE |
| 660-699 | GOOD |
| 687 | AVERAGE FICO SCORE |
| 620-659 | NOT GOOD |
| 580-619 | POOR |
| 500-579 | VERY POOR |
Just about everybody knows that the higher your FICO score the lower the interest rate you will pay on a bank loan or any financing. Perhaps less well known is that insurance companies set their premiums on a variation of FICO scores. Cell phone companies base deposit amounts or even the granting of service on FICO scores. Employers use FICO scores as a proxy for character. The list goes on and on. Your credit report score affects almost every aspect of your life and will either help or hurt your lifestyle choices even if you are not aware of it at the time.
Two things you can do today to raise you credit report score tomorrow…
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