How Your Credit Score Works
Bad credit can haunt you for years, but it doesn’t have to be that way. At Ascension Credit Services, we’re an established Dallas credit restoration service that can help you get your financial life back on track once more through our industry-leading credit repair services and professional solutions. We also believe that our clients are better positioned for future success by understanding key elements of their financial life. One of the most important things to understand prior to beginning the credit restoration process is how your credit score works.
What Is a Credit Score?
Your credit score is a number based on a mathematical formula that tells potential lenders and creditors how creditworthy you are. It’s made up of a wide range of factors related to your past financial decisions and actions.
Contrary to what many consumers assume, you do not have a single credit score. Rather, you have multiple scores. Each of the three main credit bureaus (Experian, TransUnion, and Equifax), has its own score, plus other organizations use their own mathematical formula to create yet more credit scores.
While there are numerous credit modeling formulas in use today, FICO is one of the most frequently used. Each of the three main credit bureaus uses the FICO scoring model to create a numerical picture of your financial past, likelihood of repaying new debt, and your level of risk as a consumer. While each credit bureau’s score is different, it is because each has slightly different items on their reports.
What Makes Up a FICO Score?
There are several components that go into your FICO score, including the following:
Number of hard inquiries
Types of credit
Length of credit history
Debt utilization ratio
Payment history
Of those five items, payment history and debt utilization are the two most important when it comes to determining your credit score. Late payments, missed payments, delinquent accounts, foreclosures, and the like will have a serious effect on your credit score. Likewise, using too much of your available credit will also affect your credit score significantly.
Why Negative Items Might Lower My Credit Score?
Your credit score is affected by almost every financial decision you make, including the following:
Delinquent accounts
Accounts in collection
Charge-offs
Closed accounts
Bankruptcies
Foreclosures
Tax liens (city, county, state, or federal)
Hard inquiries by lenders/creditors
Where Can I Find My Credit Score?
While you’re allowed to request a copy of your credit report from each credit bureau once per year at no cost, those reports do NOT include your credit score. For that, you’ll need to visit https://www.MyFico.com and order your report (for a fee). This is considered a soft inquiry, and will not lower your credit score.
Incorrect Items on Your Credit Report
Sadly, up to 90% of consumers have incorrect information and errors on their credit reports, according to the Government Accountability Office. In addition to erroneous items, your credit report could also include improperly reported items, and minor errors that drag your credit score down.
At Ascension Credit Services, we offer the chance to dispute those erroneous items, remove incorrectly reported data, and move forward with your life once more. Our credit repair services are guaranteed to remove at least 25% of the negative or inaccurate items from your credit report with all three bureaus, or we will refund your money.