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Your Credit Report and Credit Score Repair

A credit report seems complicated, but it’s really a snapshot of you who are, where you’ve lived, your track record in meeting your financial obligations, and other personal information. For example, a credit report lists the payments you’ve made on credit cards, mortgages, and car loans, and whether those payments have been on time or have been late. A bankruptcy will be included in your credit report, as will arrest records and lawsuits filed against you. When you’re going through the credit score repair process, it’s important to understand the information you’re dealing with.

The three largest credit bureaus (also called credit reporting agencies) are Experian, Equifax, and TransUnion). They sell your credit report to businesses that use it to evaluate your creditworthiness or your character. So, for example, if you apply for a mortgage, a car loan, or a credit card, those lenders will examine your credit report. Similarly, a potential employer, insurer or landlord may look at your credit report.

Your Credit Report Score

If you’re undertaking credit score repair, you’re undoubtedly familiar with your FICO score. FICO is the Fair Isaac Corporation, and it uses a statistical model to evaluate the various elements of your credit report and produce a score that predicts how creditworthy you are. A FICO score ranges from 300 to 850, and is weighted according to a number of factors. Your payment history is weighted at 35%, you debt-to-credit ratio (how much you owe vs. your credit limits) is weighted at 30%, how far back your credit records go (longer is better) is weighted at 15%, the different kinds of credit you have (such as installment payments and revolving credit card payments) is weighted at 10%, and the number of credit inquiries and new lines of credit opened is weighted at 10%. This variety of factors can make credit score repair a complex process.

Each of the major credit bureaus also has its own scoring system, so you probably have three different credit scores based on each agency’s own statistical models and unique information that they may have.

Negative Credit Report Information

If you’ve had financial difficulties, chances are good that your credit report contains some negative information, which is exactly why you’re undertaking credit score repair. Some of that information may be false, but if the information is correct, it could stay on your record for seven years or more. For example, a criminal conviction can be included forever, while bankruptcy information can be included for 10 years. If a credit report was issued in conjunction with a job application that paid more than $75,000 per year, or in conjunction with an application for credit or life insurance for more than $150,000, there is no time limit. Tax liens can stick to your record for seven years after you’ve paid the bill, while information about legal actions or unpaid judgments can hang on for seven years or until your state’s statute of limitations runs out, whichever is longer.

Because your credit score can make a tremendous difference in the amount you pay (in terms of interest rates) for credit – or whether you can obtain credit at all – credit report repair is essential to making sure that your credit report reflects the facts of your situation. Research estimates that between 70% and 80% of credit reports contain errors, 25% to 30% of which are serious enough to influence a person’s ability to get credit or get decent interest rates. The Federal Trade Commission found that 20 percent of folks who found errors on their credit reports and were able to engage in credit score repair increased their credit score and decrease their credit risk tier, resulting in lower interest rates for car loans.

We hope that you find this information useful, and urge you to contact us at 203-529-5100 if you need help with credit score repair.