A credit score, simply put, is a numerical number that measures the extent to which you are a trusted borrower of financial money. Simply put, it rates you according to how worthy of the trust you are, or how much creditworthy financial institutions should trust you with. Credit scores are typically calculated based on your previous behavior with credit cards, loans, and similar financial products. It is for this reason that most lenders when considering you for a loan or line of credit will ask for your credit score. If you have poor credit, then chances are good that your credit will be considered risky by those in the financial lending industry.
Your credit report contains information about your history with credit and how you have managed it over the years. Over time, these various accounts will impact your overall scores. Your current scores will be influenced by the number of accounts that you have open, your repayment behavior, any derogatory information that may exist on your credit reports, and the VantageScore that is calculated for your account. You can improve your current scores by improving your history with such financial entities. These can range from the amount that you owe to different creditors, to the total amount that you currently owe them.
The next section that you need to focus on when attempting to improve your score, is the open accounts that you currently have. Each month, credit bureaus pull your information for available credit from many different financial entities. They will look at your open accounts to see what percentage of your available credit is actually being used. This section will have a major impact on your overall score.
By reviewing your credit report for accounts that are in good standing, you can begin to identify those that are hurting your score the most. Review all of the accounts that are not being used, as well as the accounts that have the highest balances or open balances. Examine all of the account information carefully. Look to make sure that the balance owed is correct, the date of the account is correct, and that the types of payments that have been made are also accurate. If there are some odd items found, there is no need to panic.
If the items on your summary section of the report do not apply to your situation, then chances are, they were not included in your credit history. You can easily see related information through the Annual Credit Report that is obtained from Equifax once a year. If you notice that one of the items on the summary is severely impacting your score, call a representative as soon as possible. Explain the situation to the person who is helping you, and let them know that you want to get the problem fixed so that you can once again see a significant improvement in your score.
In conclusion, you want to review all of your open accounts. Remember, the accounts that are the most negatively impacting your credit score are those that you have not accessed in a long period of time. If you want to successfully fix your credit utilization ratio, you will need to begin to increase your revolving credit. After you do that, you will see a dramatic improvement in your credit score within just a few months.
This post was written by Kristian D’An, owner of Lux Credit LLC and CCA board certified credit repair specialist. Lux Credit offers credit repair services for those looking to improve their credit!
