Chapter Six
The Nuts and Bolts of the Credit Score
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As you look to improve your credit score, there are several "chunks" that you'll want to address. Some chunks are more critical than others. We'll rate each piece of the credit score improvement toolbox on a scale of one-to-ten, with ten being "prime importance," five being "average importance" and one being "low importance." However, depending on a variety of factors, the importance of any particular "chunk" of credit score improvement could go up. For example, if you have seventy-five credit inquiries, even though each one is a pretty low-impact chunk of credit improvement, the sheer number of them begin to overshadow even the more important pieces like credit history. In short, our rating system is informative, but not conclusive.
Bad Credit Listings
Level of Importance: 10 out of 10
The biggest score-killer is definitely the presence of negative credit listings. These may include public records, collection accounts, charge-offs and late payments. The bulk of the credit score depends on credit history.
Amount of Revolving Credit Used
Level of Importance 8 out of 10
This piece rates the amount of your available credit that's tapped. In other words, how loaded up are your cards and credit lines? Basically, this part of your credit score adds up the total of all the revolving credit you have used, and then divides that by the sum of your available revolving lines of credit. This provides what credit experts term a credit "utilization ratio" that gives the scorer an idea of how extended your credit is. The more maxxed out your credit looks, the more likely the banks believe you are to default on your debts (and the lower your credit score will go). This is an area where it's particularly valuable to get a good credit coach. Grooming your credit score by adjusting your balances is a fast and easy way to push your score up – if you know what you're doing.
- Credit Revolution: Path of the Smart Consumer
© 2007 John C. Heath, Esq., Dr. Randy Padawer, Jayson R. Orvis. All Rights Reserved.
Published by Far Cliffs Multimedia, LLC
More information about fixing credit scores
What is a credit score?What does it mean to fix your credit score?
Fixing Your Credit Score Becomes Necessary in a Broken Credit System
*Important: While the testimonials and other information on this website may be exciting, Lexington Law promises only to perform the steps we've agreed to in each client's case and to charge each month only for steps already completed. As with any legal work, no outcome is promised. Your results will vary. **The number of items removed represents the combined removals for all three credit bureaus. For example, if a single questionable negative item is removed from all three credit reports, it is counted as three separate removals.
© 2010 Lexington Law®. All rights reserved. John C. Heath, Attorney at Law, PLLC, d/b/a Lexington Law. Lexington Law is a group of law firms that may also be referred to throughout this site as "Lexington," "Lexington Law Firm," "we," "us," or "our firm". The number of items removed represents the combined results of the group.