With credit more of an  issue than ever, confusion and questions abound about how a score is established and what to do to help a credit challenged client make some repairs below. Some quick tips below, and do remind your clients that there is a federal law that everyone is entitled to an annual credit report. Please share this link with them www.AnnualCreditReport.com.

Key Points to a Credit Report

Personal Data

Trade Lines

Payment History

Recent Inquiries

Public Records

What Goes Into a Credit Score

Number of bankcards or trade lines

Number of finance/mortgage/ loan trade lines

Number of months in file

Number of months since most recent bankcard opening

Number of months since the most recent derogatory credit

Number of months since the most recent derogatory public record

Four Areas of Credit Scoring

Payment history (35%)

30 days late in last 12 months can lower score 70-100 points

Public record and collection items

Severity. recentness and frequency of delinquencies

Categories that Lower Credit Score

Delinquency- Trade Line and Public Record

Overextended Credit or Usage

Lack of credit Accounts and Age of Credit

Steps for Improving Credit Scores

Time

Payoff/Pay down existing debt

Don’t seek new credit

Pay Your Bills on Time

If you make a late payment one month, the plan starts all over again.

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