How is my credit score calculated?

Credit Score Is Calculated Based On Five Factors

Navigating the murky waters of credit scores can often feel like trying to solve a Rubik's Cube in the dark. Fear not! With 15 years under my belt as a credit expert, I'm here to illuminate the path, and maybe even make you chuckle along the way.

The Recipe for Your Credit Score

Think of your credit score as a cake recipe—each ingredient contributes to the final product, and if one is off, the whole cake tastes different. Here's the breakdown:

Payment History (35%): This is the flour of your credit score cake. Just like a cake can't stand without flour, your credit score heavily relies on whether you pay your bills on time. Missed payments are like lumps in your batter; they make the outcome less desirable.

Amounts Owed (30%): This is the sugar in your recipe. Too much debt is like an overly sweet cake—unpleasant and risky. This part looks at your credit utilization ratio, or how much of your available credit you're using. Keeping this ratio low is like perfecting the sweetness of your cake.

Length of Credit History (15%): Consider the eggs in the recipe. Eggs add stability and structure, much like how a longer credit history adds depth to your credit score. It shows you've been managing credit for a long time, which lenders love.

New Credit (10%): This is the baking powder. Just as baking powder helps the cake rise, opening new credit accounts can give your score a lift. However, just like adding too much baking powder can cause the cake to fall, opening too many new accounts too quickly can negatively impact your score.

Types of Credit in Use (10%): This is the flavoring—vanilla extract, almond essence, you name it. A mix of account types (credit cards, mortgages, auto loans, etc.) shows you can handle different types of credit, making your financial profile more appealing.

A Slice of Credit Score Life

Let me slice you a piece of reality cake with a side of anecdote. I once helped a client, let's call her Patty, who was baffled by her credit score dip. Patty was meticulous about payments and couldn't understand why her score had fallen. Turns out, she'd gone on a credit card opening spree, thinking more credit equaled a better score. After explaining the "new credit" and "amounts owed" ingredients to her, we strategized to mix her credit cake more judiciously. Over time, her score rose like a perfectly baked sponge cake.

Maximizing Results with Pay-After-Deletion Credit Repair

Choosing a pay-after-deletion approach for credit repair offers a strategic advantage, ensuring that every dollar you invest directly corresponds to tangible improvements in your credit report. This model promotes a results-driven relationship between you and your credit repair service, where their success is intrinsically linked to your satisfaction and the actual enhancement of your credit score. It’s akin to paying for a meal only after you’ve savored each bite, guaranteeing the quality of the service you receive. Opting for pay-after-deletion not only aligns the service provider’s efforts with your financial goals but also instills a greater sense of accountability and motivation to achieve the best possible outcomes in your credit repair journey.