At Achieve-it Consulting pride ourselves on providing education to our clients.  We believe consumer education in regards to credit scores is extremely important.  Below are resources and information regarding how credit scores are determined.  Please take the time to read through the information below; it will provide you with a good understanding of what credit scores are all about.  If you have any questions regarding the information below, please do not hesitate to contact us.

Your Credit Scores


What most consumers don’t know is that you may be eligible to receive a free copy of your credit file from all three credit bureaus. You should always check your credit file to make sure there are no inaccuracies that have been reported – because if so, your credit scores can be impacted negatively.  To see if you qualify for a free report per the Fair and Accurate Credit Transactions Act (FACT Act) please visit: www.annualcreditreport.com



The three major credit bureaus are:

​
Equifax
www.equifax.com

​

Trans Union
www.transunion.com

​

Experian
www.experian.com



 

​

Use the following links to research your credit rights. These laws will help you have a better understanding of what can be done legally to improve your credit rating; it will also inform you of what creditors can and can’t do in terms of lowering your credit rating or harassing you about your debts.



Fair Credit Reporting Act - FCRA

Fair Debt Collection Practices Act - FDCPA

Equal Credit Opportunity Act - ECOA

Credit Repair Organizations Act - CROA

​

Credit Scores Are Vital to Your Financial Health



A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time.  Each score is based on the information that is in your individual credit file.

Why Do Your Scores Matter?


Credit scores affect whether you qualify for credit and what you are required to pay for credit cards, auto loans, mortgages and other kinds of credit.  For most types of credit scores, higher scores mean you are more likely to be approved and therefore, will be required to pay a lower interest rate on new credit.

If you are looking to rent an apartment how can your credit scores affect the process?  Without good scores, your apartment application may be turned down by the landlord.  Your scores also may determine how big a deposit you will have to pay for telephone, electricity, natural gas service, or other utilities.

Lenders look at your scores all the time.  They use your scores to decide, for example, whether to change your interest rate or credit limit on a credit card, or whether to send you an offer through the mail. Having good credit scores makes your financial dealings a lot easier and can save you money by awarding lower interest rates. That's why they are a vital part of your financial health.

What is a Good Score?


When lenders talk about "your score," they usually mean the FICO® score developed by Fair Isaac Corporation.  It is today's most commonly used scoring system.  FICO scores range from 300-850, and most people score in the 600’s and 700’s (higher FICO scores are better). Lenders buy your FICO score from three national credit reporting agencies (also called credit bureaus): Equifax, Experian and Trans Union.

Most lenders view FICO credit scores that are above 700 as a sign of good financial health. FICO scores below 600 indicate high risk to lenders; this could lead lenders to charge you much higher rates or turn down your credit application.

Not Just One Score


There are different types of credit scores. They are developed by independent companies, credit reporting agencies, and even some lenders. As a rule, the higher the score, the better.

Each credit reporting agency calculates your score; each score may be different because the credit history that each agency has about you may be different. Lenders may make a credit card or auto loan decisions based on a single agency's score, when others such as mortgage lenders often will look at all three scores.

Your credit score changes when your information is updated at that credit reporting agency. This is good news; it means you can improve a poor score over time by improving how you handle credit.

Many insurance companies use something similar when setting your insurance rates, called a “credit-based insurance score.” You may be able to improve your insurance score by improving how you handle credit, which can result in lower premium payments on auto or homeowner’s insurance.

Some credit scores offered to consumers are only estimates, and different from the credit risk scores lenders actually use, although they may appear similar. Consumer reporting agencies and other companies sometimes use an estimated score to illustrate a consumer's general level of credit risk. How might you tell whether a score is estimated? Ask the company if the score is used by most lenders. If it isn't, it is likely to be an estimated score.



Five Parts of Your FICO Credit Scores


As a rule, credit scores analyze the credit-related information on your credit report. How this process is accomplished varies. Since FICO scores are frequently used, here is how these scores assess what is on your credit report.

1. Your payment history – about 35% of a FICO score
Have you paid your credit accounts on time? Late payments, bankruptcies, and other negative items can hurt your credit score. But a solid record of on-time payments helps your score.

2. How much you owe – about 30% of a FICO score
FICO scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your credit limit, the lower your score will be.

3. Length of your credit history – about 15% of a FICO score

A longer credit history will increase your score. However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.

4. New credit – about 10% of a FICO score
If you have recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you need a loan, do your rate shopping within a focused period of time, such as 30 days, to avoid lowering your FICO score.

5. Other factors – about 10% of a FICO score
Several minor factors can also influence your score. For example, having a mix of credit types on your credit report – credit cards, installment loans such as a mortgage or auto loan, and personal lines of credit – is normal for people with longer credit histories and can add slightly to their scores.



​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
 

​

​

​

​

​

​

What’s not in your score?



By law, credit scores may not take into  consideration your race, color, religion, national origin, sex and marital status, and whether you receive public assistance or exercise any consumer right under the Federal Equal Credit Opportunity Act or the Fair Credit Reporting Act.



Know Your Credit Score


It's now easy to get your credit scores and check your financial health. Different sources provide credit scores to consumers via the Internet, telephone or U.S. Mail. For most scores, you will need to pay a small amount. You also will be asked to prove your identity to ensure your financial information isn't disclosed to the wrong person. Below are some helpful tips you should make yourself aware of when checking your own credit score.



• When you get your credit scores, make sure you learn the highest and lowest scores possible, as well as the most important factors that influenced your scores.  These factors will give you an idea of how you can improve your scores.

• Getting your own credit scores or credit reports won't affect your scores, as long as you order them from one of the sources we list here.

• Review your credit reports for accuracy. Mistakes and omissions on your credit reports probably will affect your credit scores. If you spot an error, contact the credit reporting agency and the creditor whose information is wrong. 

• If you have questions or problems with your credit scores, contact the company that provided them to you.



Boosting Your Scores



Your credit scores change when new information is reported by your creditors. So your scores will improve over time when you manage your credit responsibly.  Here are some general ways to improve your credit scores:

Pay your bills on time. Delinquent payments and collections can really hurt your score.

Keep balances low on credit cards. High debt levels can hurt your score.

Pay off debt rather than moving it between credit cards. The most effective way to improve your score in this area is to pay down your revolving credit.

Apply for and open new credit accounts only when you need them.


Check your credit report regularly for accuracy.  Contact the creditor and credit reporting agency to correct any errors.

If you have missed payments, get current and stay current. The longer you pay your bills on time, the more your scores will improve. 



Improving your credit score can help you:

​

• Lower your interest rates

• Speed up credit approvals

• Reduce deposits required by utilities

• Get approved for housing

• Get better credit card, auto loan and mortgage offers



There is a lot of information about consumers’ rights and the laws that help protect credit scores.  It is important for you as a consumer to try and familiarize yourself with at least the basic laws protecting your credit scores.  We understand that the everyday consumer is not an expert on all laws that protect your rights and credit scores - that is where we come in.  We pride ourselves on our expertise and are more than happy to pass on our knowledge to our customers in order to help them achieve the credit scores they deserve.