Credit Counseling

Credit Counseling will Strengthen Your Credit Score

Credit scores, also known as FICO Scores, range between 300 and 850. Scores over 700 are considered respectable scores, and scores below 660 find it challenging to get approved for credit. Even small credit cards or loans prove challenging to obtain. Keep in mind that 58% of Americans have a FICO Score exceeding 700, 27% fall between 600 and 700, and the remaining 15% score below 600.

FICO Score

Credit Counseling with Rock Credit Repair in Texas

Credit Counseling Information

Now let’s look at what affects credit scores and learn how to increase them dramatically, using some simple techniques.

Payment History – 35%

This is the most self-explanatory category, simply pay your bills on time. Do not be more than 30 days late on any bill. Creditors start reporting late payments on your credit at that time.

If you foresee yourself being late on a bill, you are better off notifying the creditor in advance. Installment payments might allow a special 30-day forbearance without any adverse effect on your credit.

A recent late payment affects your credit more adversely than an older one. Don’t be surprised to see a drop of 60 points on a new late charge, if you currently have a flawless credit history.

Credit Card Capacity – 30%

It is not how much money you owe but what percentage of your available credit limit you are using up.

Your credit score is lower if your combined credit card limits are $500 and you are using $400 of it compared to you using up $50,000 of $100,000 available credit.

Therefore, you should carry balances on not more than a couple of credit cards and preferably keep their balances at 10% utilization of the credit limits of those accounts.

Doing so can increase your credit score by over 60 points.

There is More

Types of Credit – 10%

This factor pertains to the assortment of the credit accounts found on your credit profile. In order to satisfy this category, one is expected to have open and active, at least one of each of the different credit accounts:

  • Mortgage Account
  • Installment Account
  • Revolving/credit card account

Of the three different types of accounts above, not having an open credit card account will affect your credit the most. So for those who do not have an open credit card, simply acquiring one will result in a FICO Score boost of up to 30 points.

Length of Credit History – 15%

The older your credit history is, the higher your credit gets propelled by this factor. You can expect someone with a 20-year-old credit profile to have a relatively higher FICO score than someone with a credit profile for ten years.

This would be considering all other factors are similar.

New Credit – 10%

Additionally, your score is calculated by factoring in the average length of time accounts have been open. Opening a new account contributes negatively to this factor, also it is not wise to close old accounts as they will lower this average.

For instance, you will notice as accounts become more seasoned, your credit score will propel, provided no new accounts have been opened.

Also, factored into this category are recent requests for your credit reports made by prospective lenders and the number of recently opened accounts you have. It is advisable to keep both at a bare minimum.

Credit Counseling 101

Let’s discuss some of our best credit counseling tips. These tips will get you big results, quickly.

Credit Card Capacity Optimization By Paying Down Cards:

(Possible score increase up to 60 points)

Pay down all your revolving account balances to a zero balance, but do not close these accounts. (i.e., keep balances low and limits high).

However, leave a balance on only one card of around 2% of the total credit limit.

When funds are limited, pay the credit cards that are near their limits first. This is assuming interest rates are close to the same.

You can also explore moving revolving balances to installment debt; but do not close the revolving accounts.

Length of Credit & New Credit Optimization:

(Possible score increase up to 40 points)

A) Minimize new accounts, do not open any credit accounts unless necessary or if you are looking to diversify your mix of credit accounts. If you have any concerns, feel free to reach out to us.

B) If you are transferring balances due to an offer from a new credit card company, a better strategy than getting a new credit card is to ask your current credit card lenders if they have any existing offers. We are available to do this for you as well.

C) If you have closed some revolving accounts recently, a better strategy than opening up new accounts would be to call the lenders where the account was closed. See if they can re-open the same accounts and are able to keep the original open date.

Diversity and Longevity

Diversifying Type of Credit on Your Report:

(Possible score increase up to 40 points)

If your credit report is missing either an installment loan or a credit card, then opening up such an account will add to the diversity of your credit report. Also factored into this category are recent requests for your credit reports made by prospective lenders.

This and the number of recently opened accounts you have. It is advisable to keep both at a bare minimum.

Length of Credit & New Credit Optimization:

The time in which you have had credit is a factor in calculating your score. Having a credit score that’s lower than you would like it to be can be a looming presence in your life.

We can help you optimize your credit and get the most of your credit score. Let us take the stress away and guide you to a better financial future with our credit counseling.

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