Repairing ones credit has always been a mystery to most people. Most of us have learned the hard way how quickly their credit can be damaged due to the smallest of credit mistakes. They soon realize that although their scores can drop quickly, it takes a long time to rebuild it back up, years in fact. Now, there is a new tool to help those needing a quick boost.
How Important are Credit Card to Your
Scores?
One thing
that most don’t realized is the importance that revolving credit has on their
credit report. Having credit cards are scored by FICO under the Credit
Utilization section of your credit report. Basically the scoring model looks at
how much credit you have (credit limits) and how much you use. A great deal of
the points earned are based on the ratio of your outstanding debt, as reported
once a month, to your credit limits. You are scored on individual accounts, and,
the total sum to total of your credit limits. According to FAIR ISAAC Corp.,
this area accounts for approximately (for
the General Population) 30% of your total credit score. (Yes, this number can vary based on which of
the ten scorecards you are placed in prior to a score being generated. More on
that in another article.) Of this 30%, credit cards alone account from 10%
to 20% of the TOTAL credit score, (depending on what else is on the credit
report). The impact is less if you already have good credit or a number of
active credit card accounts.
Installment Loans
Although
installment loans are scored they make up a small percentage of the total
points. This is due to the payments being fixed and paid down based on a
schedule. No one expects you to pay off those loans at a more rapid rate.
The Impact of Credit Cards on Your
Credit Report
What does
have a major impact are credit cards. They are unsecured, and the usage is
under the complete control of the consumer. High usage and low credit limits
affect the scores negatively. The FICO scoring model looks for a consumer
having, ideally, 2 or 3 cards to base the score on. If someone has no credit
cards, or only one, the model has little to score and points are lost.
Unfortunately,
many consumers fail to establish new credit after a bankruptcy, job loss, or
other financial crisis thinking if they don’t have the cards to begin with, it
can’t hurt them. But it does. This is why we became excited when a mid-western
company started a new “merchant card” service. The problem with the merchant
cards in the past was they seldom lasted very long. One credit bureau after
another denied them the ability to report to their bureau. Some ended up
reporting to only one bureau. This is little help for people needing to
re-establish new credit. They have found a way to solve this problem. A
“merchant account” reports to the credit bureau like a MasterCard or Visa but
can only be used on that merchant’s website. We have seen jumps of 25 to 50 or
60 points for most of our clients and in some cases up to 100 points!
If you are
interested in finding out all the particulars and apply for this card, e-mail
us at info@CreditScoringAdvisor.com and we will e-mail the info to you
and a link to the website.
We look
forward to you having a better financial future.
We ARE the
experts in Credit Repair. Our founder, Daniel Sater, is a Nationally Recognized
Credit Expert, Speaker & Author, and a Certified FICO Professional who also
trains and coaches numerous Credit Repair Companies across the country and
speaks at industry conferences. We are the people that other credit repair
companies go to for answers.
With
Credit Scoring Advisor you get personalized, not computerized service from
someone who will fight for you to improve your credit profile. Dan handles
every file personally to ensure the best results for our clients. You have
continued access throughout our process to a recognized credit expert. Better
Knowledge – Better Tactics – Better Results
We
would love to hear from you, give us a call, 631-392-8685
