1What's in your FICO score?
According to Fair, Isaac, the breakdown of your FICO score is as follows:
  • 35% of the score is determined by payment histories on your credit accounts, with recent history weighted a bit more heavily than the distant past;
  • 30% is based upon the amount of debt you have outstanding with all creditors;
  • 15% is produced on the basis of how long you've been a credit user (a longer history is better if you've always made timely payments);
  • 10% is comprised of very recent history, based on your efforts to obtain loans or credit lines in the past few months;
  • 10% is calculated from the mix of credit you hold, including installment loans (like car loans), leases, mortgages, credit cards, etc.

Other models being employed are sure to utilize these in various weightings, plus other data that may be fed in to the model. These might include your address or zip code, how often you've moved and other public and private information about you.
2What It Means?
So, now you've got a score. Why should you care? Increasingly, lenders are trying to fund loans with prices (rates, fees and terms) that more precisely match your risk. In theory, someone with an 850 score should get much better rates than someone with a 650 score.

So far, though, it hasn't exactly worked that way, at least not that precisely. There are several grades of credit which have arisen, most notably below the 620 line (A-, B, C, D). But above the 620 line, everyone pretty much pays the same. Lenders can penalize you for poorly managing credit, but don't much reward you for effectively and wisely managing your debt, at least so far.
3How is Credit Repair legal?
The Fair Credit Reporting Act (FCRA), & the Fair Debts, Collections Practices Act (FDCPA), were enacted by Congress and are regulated by the Federal Trade Commission (FTC) to protect your credit rights. What these laws essentially do for you is hold your creditors, credit bureaus, and collection agencies legally responsible for their actions. Therefore any claims made against your credit history must be backed up and proven. Thus, you have a legal right to an accurate credit report!

Many details must be proven by your creditors in order for negative information to remain on your credit history. These details are almost always overlooked and or are so outdated that the creditor will not have the man power to research or validate the information within the legal time limits required. Thus by law, the negative information has to be removed from your credit report by the bureaus when disputed, if the bureaus can not validate the information reported by your creditors within the legal time limits required.
4What Poor Credit Can Cost You?
It is a known fact that a Poor Credit Rating is the number one reason that consumers are unable to qualify for low interest home or auto loans, insurance & medical services, and even employment in all industries. 70 million Americans suffer from negative credit! Most of us realize far too late, the full financial impact that bad credit can have on our lives. The sad truth of reality, is that in this global economy, our entire financial adult lives or rather lifestyles will eventually depend on and revolve around our credit history whether we like it or not. In fact with a poor credit rating:
  • You will pay higher interest rates for any type of loan if you manage to qualify at all
  • You may be turned down for the job of your dreams, with virtually all employers, relying on credit reports now when screening candidates for
  • You will not get the apartment you wanted in a safe neighborhood since more Landlords and property owners are using credit reports to determine who they shouldn't rent to

By acting now and cleaning up your credit report you can re-establish a positive credit rating, meaning you can obtain low interest rates on a dream home, auto, refinance loan, lines of credit, and even a higher paying job!
5What is the role of the Consumer Reporting Agencies and how do they affect your credit?
The three major credit reporting agencies, also called Consumer Reporting Agencies & often referred to as the Credit Bureaus, are each publicly traded for profit corporations, that collect and sell your private personal information to creditors, landlords, insurers, employers, and virtually any companies that will pay them for your credit information in order to solicit you for their services and products. When you apply for any kind of credit, normally the creditor pays for your credit report from at least one of these credit reporting agencies. There are many other credit agencies throughout the United States, but they are usually affiliated or owned by one of the main three largest, namely Experian, Equifax, & Trans Union. The credit bureaus are money-making businesses NOT government agencies! Their goal is to profit by collecting, retaining and constantly re-selling your financial information to other businesses. Thus they profit from having the largest quantity of your personal & private information, & not necessarily from having the highest quality or the most accurate of your information.
6 What are some examples of common problems on credit reports that affect your credit score?
  1. Late payments or charge offs
  2. Bankruptcies Chapter 7, 11, & 13
  3. Public information such as Tax liens, Mechanic, or Construction liens, Court reported Divorce, and Child Support other financial Judgments, & lawsuits
  4. Hard inquiries from Creditors when applying for any type of credit
  5. Incorrect Personal Information provided from any employer, business, utility, landlord, or person you authorized to pull your credit from the
  6. Creditors not reporting your good payment history to all 3 bureaus
  7. New credit accounts with low credit limits and a short credit history or maxed out balances
  8. Revolving account balances higher than 50% of the total credit limit
7What if I already have good credit?
Even if you have good credit, inaccurate information that's not yours could show up at any time. As a matter of fact, recent research by Consumer Reports showed that more than half the reports studied had errors in them severe enough to keep the person from getting a loan.

A study by the United States Public Interest Research Group found 70% of reports had errors. And with the rising frequency & costs of Identity Theft, consumers need to be ever more vigilant in monitoring and protecting there personal information from being stolen, misreported, and misused.
8What Does This Mean For You?
There are plenty of benefits you’ll have from “Improving Your Credit”. For example, even if you have just one negative item removed from your credit information, it could save you thousands of dollars and hours spent working to pay off high interest credit bills. In fact, if you ever want to get back on right track with your finances, the foundation you build should begin with re-establishing your credit to secure your future when dealing with your credit. Just think the sooner you take action to improve your credit history and most importantly your credit score, you will be able to:
  1. Buy a new home, or auto, or refinance your home with lower interest rates
  2. Get low cost auto, life, dental & health insurance rates
  3. Obtain low interest credit cards, get low interest loans, or lines of credit
  4. Apply for better paying jobs
  5. And most importantly “Improve Your Credit”, & regain your dignity!
9How long does it usually take before I will be able to see any results?
The requirements of the Fair Credit Reporting Act and the average response time from the bureaus may cause each credit cycle to be approximately 30 to 45 days. Most will see results from using our services within the first two dispute cycles and will continue seeing results as long their credit reports continue cycling through the system.
10Can I do this myself?
Absolutely, everyone is entitled and encouraged to exercise their rights under the law. What we provide our clients is the opportunity to benefit from our years of expertise in this industry, therefore potentially saving you time, money, and a lot of headaches coming from having to fight the bureaus experts whose full time job is to keep the average person confused and ineffective in fighting them alone. Why fight alone, when we can fight with you and or for you!
11Does paying my bills restore my credit?
Based on popular opinion, people normally believe that by paying off their bills & or closing their accounts, that that 3 bureaus will then automatically remove all the negative information, and their creditors will then in turn update there records, & magically stop reporting negative information. Sadly, this is not the case, and truthfully, the 3 major credit bureaus and their subsidiary agencies do not profit from operating that way. When you pay off an old debt, the negative credit listing doesn't disappear. Once paid, it will appear on your credit report as a paid delinquency, charge off or collection.
12Understanding the FICO Scoring Model, a Model of You
Scoring models like the one developed by Fair, Isaac have always been shrouded in mystery, especially when it comes to specifics. Generally speaking, though, they utilize your credit history, income, outstanding debt and debt utilization over the years, access to credit, and other indicators of your financial behavior to determine how likely you are to pay your bills on time, or if at all.

A numerical score is then developed, typically ranging from 300 to 850, with the low end of the scale indicating a poor credit risk. This can tell a lender whether or not he'll lend to you. For example, a credit score of 620 is frequently cited as a "cutoff point" for loans which can be funded by Fannie Mae or Freddie Mac. Below that, and you're usually off into the private "sub-prime" market, where rates are higher, although Fannie and Freddie can do offer some 'credit improver' mortgages where FICO scores can be as low as 580.

The FICO score is the dominant method lenders use to determine your credit-worthiness. Whether you're getting a mortgage, car loan or home-equity loan, you're Fico score will have a major

impact on the lender's decision. Named after Fair, Isaac & Co., the firm that developed the scoring model used by the three major credit bureaus -- Equifax, Experian and Trans Union -- your FICO score is calculated using a computer model that compares the information in your credit report to what's

on the credit reports of thousands of other customers.

Generally, the higher the FICO score, the lower the credit risks. It's almost impossible to say, what a "good" or "bad" score is, since many lenders have different standards, in addition to the FICO, which they use to determine how much risk they will accept. A credit score that one lender considers satisfactory may be regarded as unsatisfactory by other lenders for comparable credit instruments, "says Fair, Isaac Senior VP Cheryl St. John”.

Scores also fluctuate depending on credit activity. Since credit bureaus only calculate your score at the lender's request, it will be based on the information in your file at that particular credit bureau, at that particular time only.

The Fair, Isaac model takes into account these five factors when evaluating your credit worthiness:

Past Payment History

Over 35 percent of your FICO score is based on this, which includes late payments, delinquencies and bankruptcies. The fewer the late payments, the better your score -- though a recent late payment hurts your score more than one from five years ago.

Outstanding Debt

About 30 percent of your FICO score, this includes what you owe on your credit cards and how much you owe on installment loans, compared with the original amounts of the loans. Someone who uses a high amount of available credit (say 75%) is a greater risk than someone who uses only 25 percent according to Fair, Isaac.

How long you’ve had Credit

How long you've had accounts and how often you use them, this accounts for about 15 percent of your FICO score.

New Applications for Credit

According to Fair, Isaac, "research shows that opening several credit accounts in a short period does represent greater risk, especially for people who do not have long-established credit history." This makes up about 10 percent of your FICO score.

Types of Credit

making up about another 10 percent of your FICO score; this includes credit cards and loans, including installment and mortgage loans. Bear in mind, however, that U.S. law forbids

personal information such as ethnicity, religion, sex or marital status from being reflected in your FICO score. The main benefit of credit scoring, lenders argue, is that an automated system allows for faster decisions. Keep in mind, too, that a credit bureau score isn't the only factor lenders take into

account when considering your loan application. "A consumer can have a very good credit score and still not be approved for a loan due to other reasons, such as insufficient income or down payment," Fair, Isaac's St. John says. Other factors, such as length of time at your current employer and the value of other collateral can also influence a lender's decision.
13New Scores on the Block
Fair, Isaac has been successful in making FICO scores the dominant tool in credit scoring, and they have made a nice business for themselves selling credit scores to lenders and now consumers alike. It's little wonder then that new competition has arrived on the scene.

Aside from selling their own flavors of FICO scores (like "Beacon" from Equifax or "Empirica" from TransUnion, produced by running their proprietary credit report data through a FICO model) the three major credit bureaus have banded together to produce a joint venture called Vantage Score LLC, where they merge certain of their credit report data to produce what is called a "Vantage Score".

Vantage Scores differ somewhat than FICO scores, most notably that they use both a letter grade (A-F, like a report card) as well as a numeric scale ranging from 501-990. Introduced in March 2006, it's too soon to tell how serious a competitor to FICO the Vantage Score will be, but you should expect to hear more about it as time rolls forward.
14What's in your Vantage Score?
According to Vantage Score, LLC the breakout of your Vantage score is as follows:
  • 32% of the score is determined by payment histories on your credit accounts;
  • 23% is based upon the amount of total credit available in all your accounts which you are currently utilizing;
  • 15% is the portion of your score your outstanding balances contribute;
  • 13% is determined by the "depth of credit" in your profile (the kinds of credit you hold and how long you've held them);
  • 10% is calculated from the number of recent accounts you've opened, and how many credit inquiries have been generated from your search for those loans or lines of credit;
  • 7% is the weight applied to the total dollar amount of credit you could potentially utilize.At the moment, it appears that the only way for you to directly have access your Vantage Score is through Experian, one of the three major credit At thiswriting, there was no information about cost anywhere on the Experian Vantage Score website.