What is a Good/Bad credit score?
Getting a handle on your credit score is not as hard as you think. Your goal is to remove negative items from your credit as quickly as possible. Then raise it with good credit habits.
An average credit score is between 600-750. Below 600 is a bad credit score. Above 800 is good. Regardless of your credit score, you can fix it and usually see improvement fast.
Six items that lenders pay attention to when considering your credit
- Payment History
- The total amount of used credit
- The Age of your accounts
- The mix of credit and any new credit
- Chapter 7 bankruptcy
- Chapter 13 bankruptcy
How Credit Scores Are Calculated
Credit scores are calculated using algorithms based on information from one of your credit reports. Lenders use several different methods and different algorithms to measure each score. The process is even more basic than it seems. Regardless of how your FICO score calculated, you can always improve it.
The difference between a credit score and the FICO score are that they are systems used by different credit services that created them. The credit score is a method created by Equifax, a service to determine credit risks. The FICO score was created by The Fair Isaac Corporation. They do the same job.
How to Improve Your Credit Score
- Pay your bills on time– Your credit score can improve by paying your bills ahead of time or on time. Late payments are looked upon at as bad habits that you acquired that future lenders are going to look at first.
- Pay off debts and keep balances low on credit cards– Always pay your credit cards on time or even better don’t use credit cards if you can’t pay them off. They are good to use when building your credit, but if you can’t afford them, then you could be doing more harm. If you do use your cards responsibly, then pay the whole amount owed every month.
- Dispute inaccurate credit reports– Once you have your credit reports in hand, there may be mistakes. These reports are rarely perfect. Scan them yourself. Even if there aren’t any mistakes, highlight what you might be able to fix with an easy phone call.
- Call the companies that you owe– The best thing you can do is call a company that you owe money to. Companies love this because then they do not have to spend money to chase you. You can work out an easy payment plan, and most companies will remove the charge off your credit just because you had the decency to call.
Improving your credit will enhance your financial confidence, help you get that mortgage, keep you away from bankruptcy and have peace of mind.
If you have good credit, that is awesome. If you do not have a good credit score right now and you still want to buy a house or a car, there are more options than you can take that will enhance your credit. Contact Missouri Bankruptcy & Criminal Law Attorneys at Bearden Law before you file a Chapter 7 Missouri Bankruptcy. Bearden Law will tell you exactly what to do in regards to your credit and how to help you raise your credit score.