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What Really Impacts Your Credit Score?

I have clients from all over the country asking me how much particular items on their credit report are affecting their credit and if the item is removed, then will their credit score rise. It is difficult to provide a precise answer because there are many underlying factors that can make or break your credit! Follow Credit Law Center as we delve into the 5 major factors that impact your credit score!


#1 Payment History


Payment history holds the most weight over your credit score is calculated. Your payment history roughly translates to 35% of your FICO score and could be one of the reasons you aren’t seeing those numbers rise. It is extremely important to establish healthy and beneficial trade lines and to make sure that your debts are monitored and paid in a timely fashion.  Therefore, it is more difficult for beginners to start establishing healthy credit because they have not had the time to acquire a positive credit history.

It goes to show that if you have upheld your credit obligations in the past then you will reap the rewards in the future!


#2 Missed Payments

It happens to the best of us, something comes up and we miss a payment! Even a 30-day late payment can hurt your score and if you make frequent late payments then expect your score to start to drop.

Credit scoring models look at:

-Are there late payment appears on your credit report?

– How late are those payments?

-How recent were those late payments?

– How many late payments appear on the report?


Automated payments are one of the best ways to ensure that you don’t make a late payment. Most credit card issuers will offer scheduled payments and the option to either pay in full or pay the minimum payment and will allow you to choose whichever fits your financial needs.


I use automatic payments on my CareCredit account, and it lifts a lot of stress knowing that I don’t need to remember to log into my account every month to set up a withdrawal. It is smart to check your transaction history to make sure that the payment was made successfully!

#3 Credit Utilization

Credit utilization is almost as important as your payment history in terms of credit health and importance. Your credit utilization rate makes up roughly another 30% of your FICO score!

The lower your credit utilization rate, the lower risk you are to lenders. Say you have a $6000 limit on your credit card, and you are using $2000 worth of credit. You are using a little more than 30% of your credit cap and are seen as a lower risk borrower.

Paying off your statements in full is the best way to keep your credit utilization at a healthy percent and can really bump up your credit score!


#4 Length of Credit History


Length of credit history and payment history go hand in hand when it comes to establishing your credit score. Length of credit history only takes up about 15% of your credit score but can be a wonderful way to passively grow or stabilize your report!

Fico will consider:

  • Your oldest account held
  • Average account age
  • Usage of accounts

Becoming an authorizes user is a wonderful way to start building credit history if you are just beginning to start building credit. If you have established credit then keeping those older accounts open and in use will be beneficial if done responsibly.


# 5 New credit

Studies show that people who apply for a lot of credit in a short period of time are riskier borrowers. In other words, they’re more likely to pay a credit obligation 90 days late in the following 24 months.

Some people apply for many credit cards at once to boost their score quickly. This can have negative implications for your credit score as it makes you seem desperate for credit and you will be seen as a high-risk borrower.

When a financial institution pulls your credit score, a record known as an “inquiry” is added to your credit report. Most inquiries stay on your report for 24 months. Certain inquiries, known as “hard” inquiries, have the potential to damage your credit score for 12 months.


Your credit score determines many factors in your life and the more that you understand it, the more fruitful your endeavors will be!

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How To Start Building Your Credit

I Have No Credit History!

“I’ll just pay cash for everything.”

I have said many things in my life with the best of intention, but this had to be the one that hurt the most when it failed. When I was younger, like most people out there, I saw credit as a trap to get us to pay double the money for something we couldn’t afford in the first place. I didn’t know that having no credit would affect me in almost every aspect of my life and I learned that having no credit would impact me even harder than having a poor credit score. High car insurance payments, poor rates and high monthly payments on my car and home were just the tip of the iceberg and I knew something had to change!

“OK… but how do I build credit” I thought to myself as I scoured the internet, looking for a referable source of information. Well, after much trial and error and the help of Credit Law Center I happily present my 5 Easy Steps To Building Credit!

Step 1- Acquiring A Credit Card and How To Use It Safely!

So,  to start building credit I got 15 credit cards and…. I’m kidding! No lender in their right mind would set me up with anything other than a secure card.  A secure credit card is the perfect way to start establishing credit while with very little risk. A secured credit cards works the same as any other credit card, but it is backed by a cash deposited. This is a great way to get you begin building your credit and get it to a point where you can acquire an unsecured card later down the line! Once you can acquire the sweet unlimited power of the unsecured credit card, you can begin the task of keeping the over all usage to about 30% of the spending cap. A 30% utilization rate is still about a C+ rating and you really would like to get the utilization rate to around 10-15% in the long run to really build a positive trade line. Just be sure to make your payments on time!

Step 2- Find That Special Someone, Your Co-Signer!

Acquiring a trusted Co-Signer can really get you on the right foot to build credit safely. You need to be extremely diligent however because your co-signer is affected by the positives and the NEGATIVES the same as you. So make sure that both you and your co signer are aware of the consequences of delinquency when dealing with credit, lest you both end up with a credit score in the low 400s.  Attempting a co signer can be difficult for many people attempting to build credit, but a co signer is not the only way to passively grow your credit score!

Step 3- “The Buddy System” -Becoming an Authorized User!

If possible, become an authorized user on a family members or significant others card. This adds their payment history for that card onto your credit files…just make sure they are a responsible cardholder. You don’t need to use the card to reap the benefits as an authorized user most of the time, but please, if you end up using the card, be sure to pay your fair share!

Step 4- You Work for the Bills, Make the Bills Work for You!

Rent- Reporting services like RentTrack take a bill you are already paying and put it on your credit report, showing off how responsible you have been with those on time payments. Not every credit score takes these payments into account, but those that do could be the deciding factor for a car loan! This will be a slower way to build up your credit, but it is a steady

Step 5- Establish Positive Trade Lines and Keep Them Positive!

Paying your accounts on time, low credit utilization, keeping your accounts open and keeping positive credit history is paramount in establishing perfect credit. I say this as one of my steps to building credit because it is important to acquire these habits early! Your credit is an investment, the more that you put into it early, the better off you will be in the long run!


Slow And Steady Wins The Race

Though your credit score will not sky rocket from 400- 800 over night, these 5 steps will help you climb! If you can make your payments on time, establish positive trade lines, establish a positive credit history and keep your card usage below 30% then you will notice your score climb. After that, it is only a matter of time until you are sitting high at the fabled 800 credit score! Your credit is like a garden, you need to give it plenty of attention, take care of it and occasionally pick out the weeds for it to flourish!


Author- Joe Peters

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

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Are you among the 12 Million Americans?

Tax Liens and Judgements Removed Equals A Jump in Your Credit Score – Credit Law Center

If you are one of the 12 million consumers that have derogatory tax liens or civil judgments on your credit report you may see a score increase after these critical items are removed.

As of July 1, the three major credit reporting agencies, Equifax, Experian, and Transunion, will be removing the derogatory information on credit reports. The information being removed will be tax liens and civil judgments and will affect approximately 7% of all credit reports.

The credit reporting agencies have made the decision to eliminate these items after lawmakers recently settled within more than 30 states. Attorney generals alleged that tax liens and civil judgments were often attached to wrong consumers and hurting millions of Americans from obtaining credit.

The New Guidelines for the Reporting

The new guidelines will require all tax liens and judgments to match three of the four items to attach the derogatory information to the consumer accurately.

  1. Name
  2. Address
  3. Security Number
  4. Birthdate.

If the tax lien or civil judgment does not match 3 of these items it will not be reported.

What does the removal of Tax Liens and Judgements mean for Lenders

Tax liens and judgments are in the major derogatory events category; this could be rather concerning for lenders. The removal of these items may fool banks into to thinking the credit application may be a better credit risk. Lenders will need to find a way to balance the consumer’s needs versus the banks need to assess who is likely to pay back the loans accurately.


Benefits to Consumers

According to FICO, out of 200 million Americans with credit scores, 12 million will see an increase in their score. The increase could be at minimum 10 points and maybe as much as 40 to 60 point increase. The removal of this items could help consumers who were not able to get approved for items as little a cell phone contract without a large deposit, to as big as a lower interest car loan, or a home mortgage.

What's The Time Frame of Credit Repair

Time Frame For Credit Repair? – Credit Law Center

How long does it take actually to take for the credit repair process? There seems to be no definite answer on the time frame for how long the credit repair process takes. If you google it, you will see there is not a standard amount of time and no straightforward answer. Unfortunately what happens most the time is when the question is asked” how long does it take for credit repair” you end up more confused then you were before you asked the question.

So here’s the answer broken down as simply and clearly as possible.

Scenario 1

The perfect scenario would be someone that has two to three credit cards, and one to two installment loans. An installment loan could be a home loan, personal loan, or a car loan. In a perfect world, it would be at least twelve months or older, and in good standing, and would have zero collections or negative items on the report but have high credit card balances. If you pay the credit card balances down as little as possible 3 to 5% balance vs the limit is ideal. Paying down the balances will give a significant boost to your credit scores. A great rule of thumb to keep in mind “The older the credit card, the lower the balance, the better your FICO score will be.” This scenario will be the fastest way to since a jump in your scores.

Scenario 2

If you have established trade lines; a few credit cards and installment loans that are in good standing, and have a few medical collections it may take around 35 to 45 days to several months. Depending on how you choose to dispute these items you may see faster results. It is important to remember by law credit reports needs to be accurate and verifiable. Whether you choose an actual Law firm or doing the credit repair process yourself, it is important to remember for faster results you will want to dispute all information at one time, not just one or two items every month.

Scenario 3

If your credit report only has one trade line that has only been open 12 months or less and has collections accounts reporting, removing the negative collections could only take 35 to 45 days, to several months. Although your scores may increase slightly, you will want to establish a thicker credit file, by establishing more trade lines. A good rule of thumb is to have two to three installment accounts and two credit cards accounts.

Depending on your situation your scores may or may not be high enough to get approved for installment loans or credit cards. If you are unable to get approved the traditional way, you may look for a bank or credit union that has a CD credit builder loan and look for credit card companies that have secured credit cards.
After these new trade lines have seven or more months of positive credit history and balances that are 30% or below of the limit, you will see a more significant increase in your scores. Waiting for thirty to sixty days before you get your credit ran after the seven months is the best.

Helpful Tips to Remember

If your credit profile is lacking the recommended amount of trade lines, think of trade lines as your ongoing homework. Trade lines are similar to homework for the credit bureaus to grade, if you do not have them, they have nothing to grade you on. Your credit score is like a grade, the better you handle the trade lines, the better score you will have.

If all you have are collections and negative items, and zero positive trade lines open, the negative items should still only take anywhere between thirty-five days to six months to remove depending on the severity of the negative things. Opening active and positive trade lines as soon as possible is an important piece of the credit repair process. The longer the account is open, the better it is for your credit profile.

Having any late payments or slow pays will be very damaging for your credit profile, and will affect your credit for about twenty-four months. Each credit profile is unique and has its own individual information, and having one thirty days late could lower your credit score by one hundred points.

Repairing your credit could take anywhere from forty days to years depending on the scenario and how you go about correcting it. If you just wait for things to fall off, it could take seven or more years. It is important to remember that credit reports must be timely, accurate, and verifiable by law. Seventy-nine percent of all reports have inaccurate information on them. There are many rules and regulations that debt collectors and credit bureaus must follow, and if you are not familiar with these laws, you may want to reach out to a professional law firm to make sure your report is accurate.