The term FICO stands for Fair Isaac Company. This company has developed a mathematical formula to determine how high of a risk you are as a credit applicant. The formula is nothing short of complicated and confusing!
We at Onyx Legal Credit Repair have done extensive research on the scoring model and have learned: The FICO score is developed by taking millions of people, their payment histories, balances, credit limits, number of open accounts and the percentage that don't pay, then coming up with several different averages to justify credit worthiness.
Unfortunately, your score really isn't your score. It's a score based on the performance of millions of people in America. The score consists of up to 300 different characteristics which are then boiled down to 10 different score cards. Each score card is a determining factor in being approved for credit.
We understand the 10-card scoring system as well as the 300 encoded characteristics that are used to develop the concluding model. Here is a percentage breakdown of some factors the formula takes into consideration:
Payment history (35%).
The largest factor determined on your FICO score is your basic payment history. The number of unpaid bills you have, any bills sent to collection, bankruptcies etc... The more recent the problem, the lower your score. In fact, even something as significant as a 30 day late payment can have a tremendous negative impact on your score if it occurred within the last few months.
Outstanding Debt (30%).
Are your cards maxed out? High balances or more precisely, balances that are close to your credit limit can negatively affect your score. Keep your balances below 50% of your limit or pay the cards off altogether (if possible). If you have to choose between paying $1000 on three cards or paying off one card with a $3000 balance, pay off the one card.
Length of your credit history (15%).
How long have your accounts been open? The longer, the better.
Recent inquiries (10%).
Every time you apply for credit of any kind, you create an inquiry on your credit report. Lots of Inquiries negatively affect your score. Inquiries within the last six months are especially damaging.
Types of credit in use (10%).
How many and how much? Having loans from finance companies (Beneficial Finance, American General, etc.) can detract from your score.
As you can see, raising your credit score can be more complex than disputing the accuracy, validity, and timeliness of a negative item on your credit report. Remember that removing inaccurate and unverifiable information from your report will increase your scores. But in order for you to benefit the most from your score, you must take a look at your credit situation as a whole. We at Onyx Legal Credit Repair help make your credit situation clearer for you to understand.
