Category: Credit Repair

Anyone who is financially aware knows that having a higher credit score can help you in many areas of life.  It is just the way the system is set up and how the world works. Lenders, employers, landlords, and others may look at your credit score before deciding whether or not to continue doing business with you.  Your credit score can mean the difference between a home loan with 3% interest and 8% or more.  This can be hundreds of dollars each month.  So, what is considered a good credit score?

If your credit score is too low you may not be able to get a loan, the job you want or live in the home of your choice.  It important to know what goes into determining your credit score, how you can raise it and what a good score is that you can set out to achieve.  Below we have included some of the most popular questions we receive regarding credit scores.

 

What is the average credit score in the U.S.?

The average credit score in the United States is 693 which is higher than it ever has been.  This is a good thing, it means that more people are becoming financially responsible and paying attention to the importance of their credit score.  However, it is important to know there are different credit scoring models and some have a higher average than others.  This can cause your reflected credit score to fluctuate a little.  Most Americans will fall between 665 and 725.

When determining your credit scores we recommend getting the average of the 3 credit bureaus.  Adding all three scores together and then dividing by 3 will give you your average score and this will be the most accurate portrayal.

 

What is considered a high credit score?

Generally speaking, a good credit score is anything that is above 700.  However, everyone has their own opinion on this.  Excellent credit will be any score above 780.  With a credit score above 780, you can usually qualify for the best interest rates on home and personal loans.

 

What is a perfect credit score?

The two most popular scoring brands are FICO and VantageScore both of which have a maximum score of 850.  The lowest range you can have is 300 and not 0.  At Sunbeam Financial we get asked all the time if it is possible to achieve an 850 credit score and the answer is YES.  Although very rare, an 850 score is possible.  In fact, about 1.3% of all credit scores in the United States are a perfect 850.  Now that is a worthy goal to achieve!

 

How are credit scores determined?

Credit scores are determined using different criteria.  The biggest factors that effect your credit score include your total credit limits, how much credit you currently have used, the amount of time the accounts have been open and your on-time payment history .  When trying to get a loan, one of the biggest factors will be your debt to income ratio.  This works the same for a good credit score, try to keep your total debt below 20 percent of your credit limit.

Paying your bills on time each month is very important towards your credit score.  For example, if you are late paying your car payment, the bank may report it to the three main credit reporting agencies.  When this happens, you will get a mark against you on your credit report which will have a negative impact on your credit.

 

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What affects credit score the most?  Negative things to look out for..

• A lack of credit history
• Not making your payments on time
• Total outstanding debt is too high
• Closing several accounts in a short period of time
• Not having enough accounts open
• Having a bankruptcy
• Unpaid medical bills
• Not paying your utility bills
• Too many accounts with balances
• Using all of your available credit

All of these things can have a negative impact on your credit score.  Of course, some have a greater impact than others.  Try your best to avoid the items on this list if you want the highest score possible.  Now that we know what to avoid, we will discuss what we can do to improve our credit rating.

 

How To Improve a Credit Score

• Watch your credit limits and keep your total debt on each account below 20 percent
• Make your payments on time each month
• Develop a long credit history with each account
• Examine your credit report for any errors and correct them
• Get a personal loan and pay it off within 6 months
• Delete old inquiries from your credit report
• Open a few accounts to build your available credit
• Ask for credit line increases from your credit card company
• Only apply for credit when necessary to reduce the number of inquiries

Doing the things listed above will have a positive impact on your credit score.  There are a lot of benefits to maintaining a good credit rating.  Quite frankly, it will make your life much easier in general.  If you have a high credit score, you most likely have your financial world in order.  This leads to less stress and a healthier life overall.

 

What is the point?  Why do we use credit scores?

Agencies came up with a credit score in an attempt to fairly rank an individual person’s creditworthiness.  In the past, if you wanted a loan you would go to your local bank.  You would then consult with a loan officer who would look over your situation and either approve or not approve a loan for you.  This could simply be based on the feeling he got from you or if you have a good standing within the local community.

Obviously, this system was flawed and needed to be updated.  That is where the credit score comes into play.  It can give an unbiased view of how good a person is with credit.  Of course, even the credit score system is not perfect.  There are a lot of people who have low credit scores that would be a great borrower.

Maybe you are just starting out and have not established credit yet or you had an accident and acquired medical debt that you couldn’t repay.  It happens.  Unfortunately, it can make it hard on your financial future.  The good news is it is not permanent.  You have learned what is considered a good credit score and can use the tips we have provided on this page to take your financial status to the next level.  Get started today!

Having a few bad marks on your credit report can have a negative impact on your credit score.  It can make the difference on whether you will be approved for a loan or not.  Sunbeam Financial and our partners can show you how to fix your credit score fast.  Whether you want to do it yourself or hire a professional credit repair company, that is up to you.

Personally, at Sunbeam Financial we recommend hiring a proven credit repair company to do the work for you.  They do this every day on a daily basis and will know what works and what doesn’t.  Most credit repair agencies will begin with writing a letter to the credit bureaus disputing the negative marks on your account.

Of course, some negative marks are legitimate and will stay.  However, many times there are errors on a person’s credit report that is negatively effecting their score and these need to be removed.  In order to keep your score high you should avoid closing any of your credit accounts.  The reason for this is simple.  The more credit you have available and are not using the better it looks.  Also, the longer the accounts are open the more credit history you will have which in turn helps your overall credit score.

Should I Consolidate My Debt Into One Payment?

Everyday at Sunbeam Financial we get someone who asks us the question “Should I consolidate my debt into one payment?”  Most of the time, the answer is YES.  There are many reasons for this.  If you have several credit cards that you owe a balance on with high interest rates, consolidating them into one loan at a lower interest rate is usually a good idea.

Having one payment and paying off your credit cards will free up more credit and have a positive effect on your credit score.  This is a quick and easy way to fix your credit score fast.  With this being said, it is important that you do not rack up more debt on your credit cards once you have consolidated your debt into one payment.  This is an easy trap to fall into and can lead you into getting over your head in debt.

When this happens you will more than likely try to consolidate those payments into another bigger loan.  The terms will be extended and you will be right back where you started.  This happens all the time and is a dangerous cycle.  We suggest you contact our credit partner to find out the solution that is best for you.  We can give you a FREE analysis of your current financial situation and lead you to the right path.

Paying all of your bills on time each month is obviously an important part of a good credit score.  It shows the bureaus that you are stable, responsible and able to establish long standing credit accounts.  These two things combined make up about 35 percent of your overall credit score.  They are important factors.

Can You Pay To Fix Your Credit Score?

Another very common question we receive is “Can you pay to fix your credit score?”  The answer to this is both Yes and No.  You can’t simply pay the credit bureaus to change your score, that would be fraud on their end if they did that.  However, you can pay a credit repair company to help you improve your score.  We have partnered with CreditRx to help our customers fix their credit scores quickly and efficiently.

When looking for a credit repair company you want someone with experience that is affordable as well.  CreditRx is a pay per deletion credit repair company.  What this means is they will not get paid until they remove a negative mark from your credit report.  Once the mark is removed you will pay CreditRx the agreed upon amount which usually is between $50-$99 each.

These prices are very competitive and are well worth it in our opinion.  The time and headache it takes to repair your credit on your own is not worth it.  Let the experts at CreditRx do the heavy lifting for you.

One area that is an easy way to improve your credit score is by getting the inquiries removed from your report.  Whenever you apply for a loan, whether that is online or in person, the business will run your credit.  This is called a hard inquiry and having several of them on your report will have a negative impact.  You can write the credit agencies and have these removed from your report.  Getting these inquiries off of your report will help you to fix your credit score fast.

Review your credit report on a regular basis and know how many hard inquiries are on your report at any given time.  This will help you to maintain a good credit score.  Keep track of the agency that you are pulling your credit from.  There are three different credit bureaus to get your credit report from which are Equifax, Experian, and TransUnion.  Each report will be slightly different and may have different things reported on them.  Monitor your credit with each agency on a consistent basis.

You don’t have to pay to receive your credit report.  Each agency is required to send you a free report once per year.  At Sunbeam Financial we recommend spreading out your requests to each of the credit bureaus throughout the year.  For example, in January you can request a report from Equifax, in May request your report from Experian, and in October request your report from TransUnion.

This is an easy and free way to stay on top of your credit.

How To Fix Your Credit Score By Paying Off Credit Cards

If you want to repair your credit by yourself, start paying off your highest interest credit cards first.  The interest on these cards are eating up all of your payments and not touching the principle.  Focus on one card to pay off, pay the minimum on the other cards and apply any extra money to the one payment.  This will reduce the balance on the card the fastest.  This will free up credit on the card and will improve your credit score over time.

You do not need to worry if you are not completely familiar with the way credit works or if you are not sure how you can repair your credit.  There are many individuals who are in the same situation.  That is why we have partnered with a credit company that offers a FREE credit evaluation.  There is absolutely no cost to you and no obligation to move forward with one of the services they provide.  However, understanding your options and where to go is a good idea.  They can show you the steps you need to take to repair your credit and help you with any bad financial habits you may have.

If you are behind on your payments you will inevitably start getting calls from the credit card company and debt collectors.  At this point, it is important that you know your rights.  You need to know when they are allowed to call and when they are not in order to avoid being harassed by the bill collectors.  Some collection agencies have been known to lie or engage in illegal techniques in order to get paid.  Read up on the collection agency laws in your area as well as the Fair Debt Collection Practices Act.  A little knowledge will give you the ammunition you need to shut down harassment.

Using a Credit Repair Company To Get Your Finances Under Control

Most people who have credit cards got their first one to use only if an emergency popped up.  Unfortunately, rarely do people stick to this method.  They will see something they like at the store, a new pair of shoes or an entertainment center and use the card with the intention of paying it off in the next few months.  Then they will make another purchase such as a plane ticket to visit their parents which adds to the monthly balance to pay off.  The cycle continues until they have run up a significant balance on their credit cards.

At this point it is imperative that you get your spending under control so the necessary actions will have a positive effect.  If you don’t stop your spending you will never get out of debt even if you hire the help of a credit repair company.  Cutting up your credit cards is a good way to keep the spending down.  We don’t suggest closing the accounts because this could have a negative impact on your credit.  Simply cut them up so you can’t use them anymore.

Once your balances are paid you can request the credit card company to send you a new card.  Which they will happily do so for free 🙂  At the end of the day, getting out of a bad credit situation is all about arming yourself with the proper information to do so. The net is riddled with misinformation and half-truths so heed this information wisely and use it to pull yourself up by the bootstraps so you can experience a life bereft of bad credit.