Building Credit
Building your credit can help you get your life back on track. When something occurs derails your plans, such as excessive student loans, a medical bill, or something else, it's easy for your credit to be affected. However, just because you have seen your credit decline doesn't mean that you can't build it back up again. At Credit Repair in Columbia SC, we want you to know up front that there are no quick fixes for repairing your credit and there is no quick way to build your credit. Building credit only happens over time, as you continue to prove your worthiness.
The First Step
The first step in building credit is to find out if you already have credit. You may not know it but you may have purchased something that has been reporting to the credit reporting bureaus without your knowledge. This is good for you because it means that you at least have established credit. You can begin building better credit from that point. We pull credit reports from all three credit reporting bureaus, Experian, TransUnion, and Equifax. Once you receive the report then we can show you where you can begin to make improvements.
Payment History
Your payment history accounts for 35% of your FICO score (the standard by which credit is rated). If you have noticed a decline in your credit then it might be due to a late payment or two. Try to make your payments on time. We often suggest that you make them before the due date, if possible. This is sure to help improve your credit. We also encourage our customers to make payments in full each month, as this also contributes to positive payment history. Contact our associates to learn more about how late payments affect your credit.
The Amount You Owe
30% of our FICO score is based on the amount of credit you owe. This is also called your utilization rate. This rate is calculated by dividing credit card balances by the credit limit. It is recommended not to use more than 10% of your credit to maintain a favorable utilization rate. Some recommend that you keep it below 30%. Just keep in mind that the lower the utilization rate, the better your score. Work on paying down any high balances on your credit report.
Additional Factors
There are some additional factors to consider when you are trying to build your credit:
The First Step
The first step in building credit is to find out if you already have credit. You may not know it but you may have purchased something that has been reporting to the credit reporting bureaus without your knowledge. This is good for you because it means that you at least have established credit. You can begin building better credit from that point. We pull credit reports from all three credit reporting bureaus, Experian, TransUnion, and Equifax. Once you receive the report then we can show you where you can begin to make improvements.
Payment History
Your payment history accounts for 35% of your FICO score (the standard by which credit is rated). If you have noticed a decline in your credit then it might be due to a late payment or two. Try to make your payments on time. We often suggest that you make them before the due date, if possible. This is sure to help improve your credit. We also encourage our customers to make payments in full each month, as this also contributes to positive payment history. Contact our associates to learn more about how late payments affect your credit.
The Amount You Owe
30% of our FICO score is based on the amount of credit you owe. This is also called your utilization rate. This rate is calculated by dividing credit card balances by the credit limit. It is recommended not to use more than 10% of your credit to maintain a favorable utilization rate. Some recommend that you keep it below 30%. Just keep in mind that the lower the utilization rate, the better your score. Work on paying down any high balances on your credit report.
Additional Factors
There are some additional factors to consider when you are trying to build your credit:
- Length of credit history – Length of credit history makes up 15% of your FICO score
- New credit – New credit accounts account for 10% of your FICO score. However, be advised that while your credit increases with each new account, it can also decline whenever a hard credit inquiry occurs. Don’t apply for too much credit that would require a hard inquiry.
- Credit mix – 10% of your FICO score is based on a mix of credit. This mix might include mortgage, credit cards, and loans.
Contact Credit Repair Columbia SC at 803-266-1101 for free estimates.