Credit Management

There are five key factors that contribute to a credit score. It is essential to understand how each contributes to your credit health. Here is a breakdown of each component: 

• Payment History (35%): This is the most important factor in determining your credit score. Timely payments create a positive track record. Late payments, defaults, or bankruptcies have a negative impact. 

• Utilization Ratio (30%): This reflects how much of your available revolving credit (like credit cards and lines of credit) you're using. Keep your balances below 30% for a higher score. A high utilization ratio suggests to lenders that you may be overextending yourself financially.

• Length of Credit History (15%): The longer you've had credit accounts open, the more reliable your financial behavior appears to lenders. It’s better to maintain older accounts rather than closing them, as this increases the average age of your credit history.

• Credit Mix (10%): Lenders like to see a variety of credit types in your file (e.g., credit cards, mortgage, car loans). A diverse credit mix shows you can manage different forms of credit responsibly.

• New Credit (10%): Frequent applications for new credit can hurt your score because they indicate a greater level of risk. New accounts lower your average account age and can reduce your score temporarily.

Check your credit report regularly to ensure accuracy and spot signs of identity theft. Under the Fair Credit Reporting Act, you’re entitled to one free printed credit report annually, with free weekly online reports now available. 

Use AnnualCreditReport.com, the only FTC-approved source for free reports. Be cautious of other sites that request credit card or bank info, as they may be scams. Access your information from a secure server and network. 

Tips:

• Use a secure server and network to accesss your files
• Not every creditor reports on every bureau, so it is important to check each reporting agency (Equifax, Experian, and Trans Union) to look for irregularities
• Alternative formats are available - visit the FAQs tab for more
• Annualcreditreport.com will never ask you to input your bank account details, or a credit card, if you are asked for this information STOP, you are most likely on a spoofed site

Under the Fair Credit Reporting Act, both credit bureaus and the entities supplying data are responsible for correcting inaccuracies in your report. If you spot an error, act quickly to address it.

1. Notify both the creditor and the credit bureau of the error:

Contact the creditor to correct any mistakes; as they can update the information quickly. Simultaneously, dispute the error with the credit bureau showing the information using their online or mail dispute form. If you mail in a dispute keep copies of all records submitted. You will need to provide:

• Your name and address
• Each item in your report you dispute
• An explanation of why you dispute the information

2. The bureau then has 30 days to invistigate and notify you of the results. 

3. If an investigation doesn't resolve your dispute you may ask to include a statement in your file summarizing your explanation of events.