Let us answer your frequently asked questions about Credit Repair
What is a credit score?
A credit score is a numerical representation of an individual’s creditworthiness. It is a three-digit number that is generated based on information from the person’s credit report. Lenders and financial institutions use credit scores to assess the risk of lending money or extending credit to an individual. In other words, it helps them evaluate how likely a person is to repay their debts on time.
The most commonly used credit scoring models in the United States are FICO® scores and VantageScore®. These scores range from 300 to 850, with higher scores indicating better creditworthiness and lower scores suggesting higher credit risk.
What is a credit score?
A good credit score typically falls within a specific range that depends on the scoring method used. The two most commonly used credit scoring models are FICO® scores and VantageScore®. Here are the general credit score ranges for both models:
FICO® Score:
Excellent: 800 and above
Very Good: 740 to 799
Good: 670 to 739
Fair: 580 to 669
Poor: 579 and below
VantageScore®: :
Excellent: 781 and above
Very Good: 661 to 780
Good: 601 to 660
Fair: 500 to 600
Poor: 499 and below
What does my credit score affect?
Your credit score can have a significant impact on various aspects of your financial life. Some key areas are:
Loan Approvals:
When you apply for a loan, such as a mortgage, car loan, personal loan, or student loan, lenders use your credit score to assess the risk of lending to you. A higher credit score increases your chances of loan approval and may lead to more favorable terms, including lower interest rates and better loan terms.
Insurance Premiums:
Some insurance companies may use credit-based insurance scores to determine your insurance premiums. A higher credit score may lead to lower insurance rates, while a lower score might result in higher premiums.
Credit Card Applications:
Credit card issuers use your credit score to determine your credit card eligibility and the credit limit you may receive. People with higher credit scores are more likely to qualify for credit cards with attractive rewards and benefits.
Utility Services:
When setting up utility services (e.g., electricity, gas, water) in your name, utility companies may review your credit history. A low credit score might lead to the need for a security deposit to secure these services.
Interest Rates:
A higher credit score can lead to lower interest rates on loans and credit cards, potentially saving you money over time. Conversely, a lower credit score may result in higher interest rates, increasing the overall cost of borrowing.
Cell Phone Plans:
Cell phone providers may check your credit score before approving you for a postpaid cell phone plan. A good credit score can increase your chances of getting approved without a security deposit.
Rental Applications:
Landlords and property managers often check the credit scores of prospective tenants to assess their reliability in paying rent on time. A good credit score can improve your chances of securing the rental property you desire.
Security Deposits:
For certain services like cable and internet, providers may require a security deposit if your credit score is low or if you have limited credit history.
Why is my credit score low?
There can be various reasons why your credit score is low. Understanding these reasons can help us take appropriate steps to improve your credit and increase your creditworthiness. Some common factors that may contribute to a low credit score include:
Payment History:
Late or missed payments on credit cards, loans, or other debts can significantly impact your credit score. Consistently paying bills on time is crucial for a good credit score.
Public Records and Bankruptcies:
Negative public records, like bankruptcies, tax liens, or civil judgments, can significantly reduce your credit score.
<span data-metadata=""><span data-buffer="">High Credit Card Balances:
Utilizing a large portion of your available credit can negatively affect your credit score. High credit card balances relative to your credit limits can signal potential financial stress.
<span data-metadata=""><span data-buffer="">Lack of Credit Mix:
A diverse mix of credit accounts, such as credit cards, installment loans, and retail accounts, can positively impact your credit score. A limited credit mix may result in a lower score.
<span data-buffer="">Accounts in Collections:<span data-metadata="">
Accounts that have been sent to collections due to non-payment can have a severe negative impact on your credit score.
<span data-buffer="">Identity Theft or Errors:<span data-metadata="">
Inaccurate information on your credit report, possibly due to identity theft or reporting errors, can unfairly lower your credit score.
<span data-buffer="">Length of Credit History:<span data-buffer="">
If you have a limited credit history, your credit score might be lower. Credit scoring models prefer longer credit histories to assess creditworthiness accurately.
<span data-buffer="">Closing Old Accounts:<span data-buffer="">
Closing old credit accounts can shorten your credit history and potentially decrease your score.
<span data-buffer="">Applying for New Credit:<span data-buffer="">
Frequent applications for new credit, such as credit cards or loans, can result in hard inquiries on your credit report, which can temporarily lower your score.
<span data-buffer="">Co-Signing for Others:<span data-buffer="">
Co-signing for a loan can expose you to the other person’s credit behavior. If they miss payments or default, it can negatively impact your credit score.
I don’t understand why my
credit score is low
Sometimes there can be incorrect, unjust, or unconfirmed negative entries on your credit report. We are specialists having these kinds of entries removed. That means following up directly with your creditors and getting verification for each and every collection, late payment or charge-off.
Ready to Get Started?
By clicking ‘Submit’ I agree by electronic signature to be contacted by Maclean Credit Repair about credit repair or credit repair marketing by a live agent, and SMS text at my residential or cellular number, dialed manually or by autodialer even if my phone number is on a do-not-call registry