The ways to improve credit, Anatomy of FICO score, the credit reporting agency

In school, you were always told about things going on in your permanent record. The only permanent record you have as an adult is your credit score. However, your credit score does follow you around everywhere you go. So before start anything else it’s necessary to understand the ways to improve credit score.

It decides whether you can get a loan to buy a car or house. It impacts your interest rates and insurance premiums. A bad credit score forces you to pay expensive deposits for rent, utilities, and mobile phone service. It can even affect whether you get a job or promotion.

Bad credit is like a black cloud hanging over you everywhere you go. It’s overwhelming and fills many people with uncertainty. But you don’t need to passively accept bad credit. Stop holding yourself back with fear and doubts. Debt can be conquered.

It’s possible to buy the car or house of your dreams. Taking control of your financial situation is a breeze when you know-how.

What you do

Credit repair is easier than it looks. A lot of companies claim to have credit repair secrets, but they won’t tell you what they are. That’s because at best, credit repair companies are charging a fee for things you can do yourself. At worst, they’re encouraging you to break the law. It’s always battered to understand the ways to improve credit and do it yourself.

I have no problem telling you credit secrets and hacks that I know work. Banks don’t like you knowing this information because they make money off bad credit loans with high fees and expensive collection actions. Credit cards for bad credit have much higher interest rates and will ultimately just make your situation worse.

Stop letting the banks bully you into overpaying today based on mistakes you made years ago. Credit repair is an achievable goal, and that’s what we’re going to talk about today.

Understand the ways to improve credit score and Take control of your credit by using this information the financial industry doesn’t want you to know about. They’re all legal, and we know they work based on how credit reports work.

This is how to truly improve your credit score.

Get your free credit report

Your credit score affects your life in many ways. So the only ways to improve credit and protect yourself and your money are trying to stay on top of Big Brother. All three agencies are required by federal law to provide you with a free annual credit report at your request once every 12 months. You also have 60 days to report a free copy if you’re denied credit, insurance, or employment based on bad credit. To order, visit annualcreditreport.com or call 1-877-322-8228.

Anatomy of a FICO Score

To make the lending decision quick and properly more than 90% of business uses the FICO system to know the financial health of their customer. The biggest three credit reporting companies in the United States Market are Experian, TransUnion, and  Equifax.

Each credit reporting company set their own standard and business model because of this each of them makes their own changes to formulas according to their own rules. This change causes your credit score may very little bit for different reporting companies. However, there are various ways to improve credit score.

First, what are the components of your FICO score anyway? Your credit score is based on a secret algorithm designed by FICO, originally Fair, Isaac, and Company. The details of this algorithm are still hidden under a veil of secrecy even today. Though we do know the formula is generally comprised of the following five components.

Basics of improving Credit

• 35% Payment History
• 30% Credit Utilization
• 15% Length of Credit History
• 10% Credit Inquiries
• 10% Type of Credit Used

So, in a nutshell, the largest component of your score, Payment History, looks at missed or late payments. Credit Utilization subtracts your amount owed from your credit limit. Length of Credit History looks basically at the Average Age of Accounts (AAoA) and how long it’s been since they were used. Credit Inquiries or “Hard inquiries” happen when you authorize a creditor to check your score. Finally, by Type of Credit Used they mean Credit Mix. They like to see a variety of different types of credit account types, e.g., revolving, installment, open.

The three Credit Reporting Agencies

There are really only three agencies that you need to concern yourself with when talking about your credit score. Feel free to skip ahead if you already know this.

To make the lending decision quick and properly more than 90% of business uses the FICO system to know the financial health of their customer. The biggest three credit reporting companies in the United States Market are Experian, TransUnion, and  Equifax.

Each credit reporting company set their own standard and business model because of this each of them makes their own changes to formulas according to their own rules. This change causes your credit score may very little bit for different reporting companies. However, there are a lot of things and financial habits that matter to your credit score.

How CRA performs

We may not tell you the exact details of how FICO credit score is calculated but FICO gives us information about what kind of information matters on its scoring algorithm.

Equifax, Experian, and TransUnion are the big three report agencies who keep tracks of your financial transaction and other information, including:

• Credit card balances
• History of balances of loan and credit          cards
• History of payments on loan and credit cards
• Number and type of accounts you hold
• Bankruptcy filings

All these agencies mainly collect and maintain your credit information and then resell it to the other businesses. The Experian credit score is a FICO 8 score which ranges between 300 and 850TransUnion score also ranges from 300 to 850. Like others, Equifax also provides FICO and Vantage Score and uses different scoring models which ranges between 300 and 850.

Now let’s talk about small things you can do that can potentially make big impacts in your score to change your life!


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