Credit Score – How is it calculated?

Your Credit Minute Show Notes:


  • 00:01                                   Awesome credit question, guys, from Lori Magelky, Lori Magelky, nice to meet you, Lori. Um, and her, her question is real simple. How is a credit score calculated? So, guys, I’m actually going to pull this up and show you how it’s calculated. Okay. There are five parts. We call these the FICO 5 and if you simply just Google “FICO scores” and you click the images button, which is exactly what I’m doing right now, you’re going to see what makes up the credit score. Okay. So we have, let’s actually document this for you. We’re going to erase my pretty house.
  • 00:39                                   So, the FICO 5 is going to consist of … we’ve got 30%, actually 35%, we have pay history, guys. Okay? 30% is debt. Then we have 15% length of history. Then we have 10% credit mix. And then another 10% for new credit. Now, let me elaborate a little bit on these numbers. Let me move to the side so you can see them. The first one is payment history. 35% of the score is just payment history. Anytime you get a 30 day late, guys, it’s going to effect your credit score in a negative way. Okay? That’s going to effect the 35% of your credit score. Okay? Uh, of what makes up your credit score. Any time you make a payment on time, okay? It’s due on the first, you made it on the first. It’s due on the first even if you made it on the fifth, it counts as an on time payment. You’re getting the great credit for it. Okay? So on time payments are number one.
  • 01:41                                   The second thing is amounts owed. This is the big flop for a lot of, um, for a lot of our clients. Okay? Specifically the amount you owe in proportion to the credit limits on credit cards. Having past due balances and having items in collections. The amounts you owe is 30% of what makes up your score. So, for those of you that have never missed a payment on time, or excuse me, have never missed a payment, you’re paying everything perfectly for 50 years but you’re maxed out on your credit cards, you’re going to take a hit here. Okay?
  • 02:10                                   The next 15% is the length of credit history. How old your accounts are. Older people tend to have higher credit scores. Why is that? Well, because their accounts tend to be older. Okay? Age does not go into the credit score but the age of your accounts certainly do.
  • 02:27                                   Beyond that we have 10% which is new credit. When you get credit, people want to give you credit. Okay? Do you ever get approved for a credit card and then all of a sudden you get five new flyers in the mail for five new credit card offers that are even better than the one you just got? The reason for that is that inquiry is registered. That new account that hits your credit report is registered and you get a bump in your score. And all of a sudden you get more credit offers, guys.
  • 02:52                                   And last but not least we have credit mix. This is a big one. Okay? Although it’s only 10%, it’s an easy opportunity. Some of you only have student loans. Some of you have only had a mortgage. Some of you only have credit cards. Those are the three types of accounts. Mortgage or real estate related, revolving, and installment. Okay? You want to have a mix of all of that. You don’t just want to have credit cards or mortgages or installment or two out of the tree. The ideal mix is one of each. Okay? The number of accounts isn’t as relevant as the mix of the different types of accounts.
  • 03:26                                   So, guys, thank you again. Um, big thank you to Lori Magelky for that awesome question. And if you have any additional questions, obviously, hit us up directly at See you, guys.
Credit Score - How is it calculated?
Credit Score – How is it calculated?

Credit Cards – How often should I be using them?

Your Credit Minute Show Notes:

  • 00:00                                   YouTubers, what’s going on? This is Nik Tsoukales with Key Credit Repair. Excuse me, my voice is a little uh, beat, beat up here. Bear with me. A question of the day is, “Nik, how often should I be using my credit cards?” And, it’s a great question, and I think you’re going to be shocked at my response, and that response is never. I don’t think you need to. Um, I know you don’t need to, okay? One of the greatest little secrets of credit is the fact that if you don’t use your credit card, the bill comes in, it says zero due, and you don’t have to send a check, um, even though you’re not sending in a payment, it’s still reporting an on-time payment, guys.
  • 00:34                                   And a lot of people don’t know this. Your banker’s not going to tell you this. The credit card companies are not going to tell you this, but this guy’s going to tell you this, because I’ve looked at, I don’t know, a hundred bazillion credit reports in my lifetime, okay? Let’s say you have a slew of four or five credit cards right now that are active, but you really don’t use them. I mean you can just don’t use them every single month, you are getting an on-time payment from that credit card, okay?
  • 00:58                                   To fol-, uh, to follow up with that question, some people ask me, “Nik, but if I don’t use it, they’ll close it out.” That’s a good question. Okay. Um, if you’re scared of that, um, I, I haven’t seen it yet, I’ve not seen a card get closed, uh, because of no use. Uh, in my experience I have cards that are over 10 years old, I haven’t touched them, they’ve never been closed, okay? They’re expecting you at some point to make a purchase. But, if you’re worried about that, and you want to once every six months buy yourself a cup of coffee and pay it off the same day, if that makes you feel better, go ahead. Even that, I don’t think is necessary.
  • 01:32                                   Also, some people will say, “Nik, but there’s an annual fee for that card. Should I pay the annual fee just to keep it open?” Heck yeah, you should. You know, if it’s a $29 annual fee, or $59 annual fee, or whatever it’s going to be, there’s a higher likelihood they won’t close out the card. Because they’re getting something, okay? It does have a little … The card does have um, some costs associated with it, they mail out a card every so often, they have to send you a statement, so if that alone covers their cost, there’s a higher likelihood that they would never close it out. So, I would absolutely pay the annual fee. I’m cool with it, okay? Because you know what you get. You know, you get a card, it’s active, it’s open, and it’s reporting on time, because you didn’t use it.
  • 02:11                                   Keep the cash in your pocket, keep the cards at home. Throw them in the freezer. If you’re wondering what I mean by that, check out one of my previous episodes about, you know, how to freeze your credit cards, literally. Freeze them.
  • 02:22                                   Guys, this is Nik Tsoukales, with Key Credit Repair. Thank you so much, have a great day.
Credit Cards - How often should I be using them?
Credit Cards – How often should I be using them?


What Should I Do If a Collections Agency Calls About Old Debt?

What Should I Do If a Collections Agency Calls About Old Debt?

Your Credit Minute Show Notes:


  • 00:00                                   What’s up guys. This is Nick Suggali with Credit News Daily.
  • 00:03                                   Great question of the day today. What should I do if a collection agency calls about an old debt? This is a simple answer. Do not engage. Do not engage. Don’t have a conversation. Don’t fight. Don’t do this back-and-forth. Do nothing, okay.
  • 00:22                                   Listen, if it’s a legitimate collection agency and they’re reaching out to you, they should be able to do it in writing. And when they do something in writing, you can reply in writing. And what happens, you have a paper trail, okay.
  • 00:32                                   You’re unsure if that debt is past the statutes of limitations? You’re unsure if the collection agency can verify the debt? You want to put them through the pressure of validating everything via the Fair D- Debt Collections Practices Act? Guess what? You can’t do that over the phone, you can only do that in writing.
  • 00:47                                   So my suggestion? If you do get on the phone by mistake with them, simply say this, “Hey Mr. Debt Collector, um, I don’t know who you are, I’m not validating everything. If you need to tell me anything, please send it in writing. [inaudible 00:01:01] have my address.” Click.
  • 01:03                                   Literally, click, okay? If they don’t have that information, they’re not legitimate, okay? Do not engage, do not verify anything. Um, one of the scams of a debt collection agency is they’ll call you and they’ll pressure you to make a five dollar payment towards a debt. Otherwise, they will send you to jail.
  • 01:20                                   Number one, they can’t send you to jail, and if you do send them five dollars in over the phone, guess what? You have re-initiated or restarted the statues of limitations. You’ve got another seven years of misery with that debt collection agency.
  • 01:32                                   Also, check some of our previous vlogs, okay? We have a reference point that shows you your state by state statutes of limitations, which shows you when each of these debts could possibly expire in the state that you live in. Okay?
  • 01:44                                   Also, even if a debt is within the statutes of limitations, what’s to say the debt collector can validate it, okay? Um, have you ever heard of something called the Fair Debt Collections Practices Act, probably haven’t. It’s pretty boring stuff. It’s on our website under the tab, “Credit Laws.” I would suggest reading through it or contact us to help you or assist you with this topic, okay?
  • 02:04                                   Ah, FDCPA, what it’s basically telling you is, “Hey, Mr. Debt Collector, you want money from a- a- um- ah, from a consumer? You need to be able to validate the debt. Show me um, your ability to buy debt my state. Show your license, your licensing to collect on debt in my state. Okay? Um, show me when the contract was signed, okay? Show me a copy of the contract. Show me copies of statements. Show me the bills. Show me proof of the date of last activity. If you have in fact, reported it to the credit agencies, okay?”
  • 02:37                                   Um, you know, validate that the statutes of limitation hasn’t in fact expired. Okay? So these are things you can ask for from these companies. But you should never, ever, ever engage over the phone. This is something you want to ask for via a letter, something you put in writing, something that should be sent to the debt collector. That way, you have your paper trail, you have everything dated, you can view registered letters if you don’t have a PO Box, so you know who’s signing for it.
  • 03:04                                   Um, but again, let’s get off the phone, guys. This is Nick Suggali with Credit News Daily, thank you for this amazing question. Let’s see where this one came out of. This one is out of let’s see here, we have Astoria, Queens, New York. All right guys, thank you so much. Have a great day.
How are medical bills treated when applying for credit?

How are medical bills treated when applying for credit?

Your Credit Minute Show Notes:


  • 00:00                                   Hey what’s up guys? I’ve got a great question today out of Detroit, Michigan. How does, or how are, medical bills treated when applying for credit?
  • 00:10                                   So let’s give you the example of buying a home, okay? Um, you saved up some money for a down payment, you walk into the bank, you want to apply for a, a home loan, but you have some medical bills outstanding, okay? Your typical medical bill, okay? Really shouldn’t report on the credit report. Just keep that in mind. You can, you can owe a million bucks for all we know, okay? As long as it’s not on the credit report, a mortgage lender isn’t going to see it, okay?


  • 00:33                                   If it is on the credit report and it is in collections, and that’s really the only way to report to the credit agencies is in collections, that would adversely effect your credit score, pretty much change your credit score, okay? Um, and even if you’re in a repayment plan, until you’re really fully out of collections by paying off the debt, the credit score is going to suffer in a big, big way.
  • 00:54                                   Just to put things into perspective, the number one reason that we get a phone call for credit repair, is somebody that’s incurred a ton of medical debt, okay? The debt has gone past due, let’s say 90 days, 120, even 180 days or six months. And then that, uh, that debt was then referred to a debt collector and that debt collector placed it on the credit report.
  • 01:15                                   Um, let’s elaborate a little bit on medical debt, I just want to answer a question you’re probably thinking of right now which is, I thought medical debt couldn’t report to my credit report. Absolutely, it can.
  • 01:26                                   What they cannot do is report the physicians name on the credit report, okay? They do not want to breach patient privacy on either side, patient or surgeon. So what they will typically do is, either report the medical collection as a simple generic term like medical collection, and that’s it. And then the uh, phone number and address of a, a uh, of the company that’s doing the bill collecting for the hospital. But they usually will almost never ever report uh, the name of the hospital, the doctor’s office, the pediatrician, the dental office. They’ll always use a generic term and that’s how they get around violating the HIPAA laws or patient privacy laws, okay?
  • 02:05                                   So just to recap guys, how will medical bills affect uh, my ability to access credit? Out of Detroit, Michigan. Again, simple stuff, unless it’s in collections, it won’t. Um, usually you’re going to wait at least 120 days before it hits collection status. So if you just got the bill, don’t stress about it, reach out to that doctor’s office, or their medical billing company, whatever they’re using to manage that aspect of it. And if you can’t afford to pay it off in one chunk, immediately get into a repayment plan. And that could easily avoid any sort of collection status.
  • 02:36                                   Guy, this is Nik Tsoukales from Credit News Daily, thanks for tuning in today. You have a great day.


How does co-signing affect my credit?

Your Credit Minute Show Notes:


  • 00:00                                   Guys, awesome credit question coming out of the Detroit, Michigan, today. We have, “How does cosigning hurt my credit score?” Okay. Probably the second biggest reason we get a phone call, aside from medical collections, is cosigning gone all wrong. Okay, let’s talk about what cosigning is, or co-guaran-, co-guaranteeing a loan, okay? Uh, you’re on it with them, okay? So, you could get called by a friend, and they say, “Just come and cosign for this car loan with me. I’m down at the dealership,” or, “Cosign for this mortgage,” or, “Cosign for a credit card.” It doesn’t matter. “Apply with me. Help we out this loan. I just need a signature, here.”
  • 00:39                                   Well, why would the bank just want a signature? They don’t just want your signature. They want a guarantee, okay? The way they … way more secure is by putting a … on the hook. So, first [inaudible 00:00:54] approve for it, okay? So, they say, “Bring on somebody that can sign with good credit,” and you get that phone call. Now, keep in mind, that item is gonna report to all three bureaus in the exact same way that it’s gonna report to the, uh, the primary borrow. If you cosign for your friends car loan, you’re getting that item the exact same way on your credit report, um, as a loan, as a- as a debt, okay?
  • 01:20                                   If you go to apply for something, you go to apply for your own home loan, and that liability is on there each month. Let’s say it’s a car loan and it’s $500. That $500 is gonna affect your income to debt ratio as well. Most banks and lenders, even if you tell them you’re paying it, they’re still gonna factor it into your income to debt ratio. Or, actually, let’s say you say, “My friend is paying it.” They’re still gonna factor it into your income to debt ratio. And, the reason for that is, they’re not sure if your friend’s gonna pay it. They don’t know who they are, so they’re gonna say, “Well, if you signed for it, you’re guaranteeing it, we’re factoring it into your income to debt ratio as well, which is gonna affect the amount you can borrow.”
  • 01:57                                   Now, that’s scenario one. That’s the biggest reason not to cosign, okay? But, there’s another big reason, and the other reason is, there’s no control. There’s zero control. Let’s say you cosign for your friends car loan, okay, and they default on that loan. What happens? Immediately you’re gonna get that late payment. They go into repossession status, you’re getting a repo on your credit. They send you to collections, that debt collector’s coming after you. That item becomes a judgment, because of your friend’s inability to pay. That judgment is coming to your credit report, okay? That’s gonna affect your ability to get approved for anything, and that’s a real big problem, okay?
  • 02:34                                   So, if you want to help out a friend, give them some money. Give them a ride, call them an Uber. There’s no reason you should be cosigning for them, because you’re getting on the hook for many, many years to come, and just like anything, you’re losing that control, and that control is everything. You work very, very hard to reestablish your credit, to build it up to a point where you can get started, or get started with approvals, um, and you don’t want to risk it, uh, for a friend. Help your friends, but in a different way. Thanks [inaudible 00:03:02]. Have an amazing day.



How Does Closing a Card Affect My Credit?

Your Credit Minute Show Notes:

  • 00:00                      Nik Tsoukales with your credit question of the day. We have, “How does closing a credit card affect my credit score?” So let’s break this down to a science. So, we’re going to uh, you’re going to see here we have the five factors that make up your FICO score. Or, we call them the FICO five, okay? So let’s break down how closing your credit card could or could not affect your credit score, and let’s go into the specific scenarios.
  • 00:23                                   So, let’s say for example, uh, you only have one credit card, and you close it out, okay? What’s typically going to happen is your going to see a massive credit score drop, believe it or not. And the reason for that is, number 130, percent of your credit score is based on debt. Specifically your credit card utilization rate. So, if you cut off all credit cards, um, really you’re not getting any of the points in that specific category, so you’re going to see a drop here. Okay? Um, also, 10% of your credit score is a mix of different types of accounts, okay? So all of a sudden, you don’t have what they call a revolving account. You’re going to see a drop here as well, okay?
  • 01:01                                   The other place you could see a drop is the age, okay? So let’s say the average age or length of history of all of your active accounts um, let’s say that account has some good age on it, or it’s been pretty old, it’s 10 years old, and you, and you, and you, uh, uh, deactivate that card, you’re going to see a drop here, so yes, um, shutting down credit cards could have a pretty big adverse affect uh, or pretty large drop in your credit score, and it can happen very quickly. So, I’d advocate you know, don’t carry balances, don’t carry the credit cards, but it doesn’t mean you need to shut them down. Now, if you think the temptation is too hard to resist, I would suggest taking that credit card, locking it up in a safe. Maybe putting it in a safety deposit account.
  • 01:47                                   If you have it only for the purpose of credit, um, maybe what you want to do, and I’ve advocated this before, is put it in a red cup, fill up the cup with water, stick it in your freezer. Sounds a little insane, why do I say that? For the obvious reasons, okay? You’re not going to make a compulsive decision to buy something, because that credit card is locked up in the freezer, okay? And if you do find something you really, really want, and you want to buy it, your going to have to melt the water. You’re going to have to melt the ice, and you are going to feel absolutely foolish and then going through those emotions, you might actually think twice about your next compulsive decision, okay? So another quick tip in terms of how to keep a credit card without having to use it.
  • 02:27                                   Um, now, let’s say you have a bunch of credit cards. Okay? Let’s say you have five credit cards, and they’re all fairly the same age, okay? And you really just don’t like this credit card, it’s a garbage annual fee. Maybe it’s the type of credit card you got when you first established your credit, and the annual fee really stinks, and the rates stink, and there’s just no purpose behind, and the service stinks, and you already have a bunch of really uh, good credit cards, where you’re getting the points, the rates are super low, you have a decent credit limit, so the utilization rate doesn’t get all wacky when you use it.
  • 02:58                                   That’s one of those scenarios where closing out one of those types of credit cards, you’ll probably see zero adverse affect, really. Because at that point, your utilization rate hasn’t been affected, okay, hasn’t been affected. Um, the age, by the way, this doesn’t mean your age, okay? The age of the accounts. Um, this really hasn’t been affective, because you have other really good healthy aged accounts. The types of credit in use, or credit mix, that’s not really affected either. Okay? So keep that in mind. Um, also payment history … Something else to keep in mind.
  • 03:32                                   Um, 35% of the score is payment history, um, so keep in mind, as long as you have other accounts reporting each month on-time payments, you are going to pretty much maximize this part of your credit score. Um, but if you don’t have enough accounts, you could see an adverse drop in your credit score, scenario one, by closing another credit card, because you could lose some points here, just because you have less accounts reporting an on-time payment. Um, 35% of your score, okay?
  • 03:58                                   So, you know, remember building credit, okay? We advocate opening up new accounts. Not going into debt, okay? Paying um, or using the card um, obviously you’re required to make a payment, but let’s say you haven’t used the card, and it’s a zero balance, by default you still get an on-time payment, okay? So we talk about that in the building process. We don’t need to go into debt to build up our credit report. Well, think of that in reverse. If you got 50 points from building up your credit scores, and use … Or building up those healthy accounts, and you start doing the opposite, just imagine those 50 points pretty much going away, if that’s all you have on the credit report.
  • 04:37                                   Guys, this is your credit minute. If you have more questions about whether or not you should close on an account, that’s definitely a phone call you should make to us, that’s something we can discuss in a free consultation, actually looking at each of the trade lines. Looking at the age of those trade lines, and helping you make a healthy decision on whether or not you should or you should not close something. Have a great day. Bye bye.


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Whether you’re looking to adopt a new pet or you’re seeing the medical bills pile up for your current aging pet, believe it or not, your four-legged family member can take a huge toll on your credit score. For future pets, how you acquire it can sometimes make all the difference with your credit score. For current pets, unexpected medical expenses, vet visits and more can all add up to impact your credit utilization ratio. Here’s a closer look at what you should be mindful of when it comes to pets and your credit score:

Caring for an Aging Pet

Just as aging humans typically need more medical care, the same is true with pets. But while humans likely have medical insurance to cover or help offset expenses, pets usually don’t. And when prescriptions, an increased number of vet visits and medical procedures become more frequent, the costs can really add up. If you don’t have the cash on hand, it could drive you into debt. Here’s how to help manage such costs:

  • Save for a pet emergency fund: Even setting aside $1,000 a year can really help with your pet’s medical bills.
  • Talk to your vet about costs: Just taking your pet to the vet costs money. Speak with your vet to see if they’ll be willing to waive the vet visit fee if you have to take your pet in more than twice a year, for instance. Most vets will work with you this way to retain your business.
  • Look into pet health insurance options: While still fairly uncommon, there are options out there. Before selecting one, be sure that it makes sense for you and your pet’s situation.

Acquiring a New Pet

  • Are you buying or leasing your pet? Yes, leasing, or renting, a pet is a thing – you might just not know that you’re doing it. Many pet stores offer financing plans for their more expensive pets, but what they won’t tell you is that the pet is technically still theirs until you pay it off. Any financing agreement impacts your credit reporting, and while financing a pet could be a good thing in terms of building credit history, it could also be a bad thing too if you don’t stay up with payments or if the pet store is unethical about the process.
  • Speaking of unethical pet stores, many experts state that you should try to use credit cards as payment to adopt pets. Why? Because if something goes awry or the pet store disputes the purchase, you have a paper trail of the transaction. A credit card can help prove that the pet belongs to you. It can also be an ally in your corner if there’s something wrong with the pet in terms of getting a refund if the pet store is uncooperative.



We love our pets. To many, they’re part of the family. But don’t let your furry family member lead you into financially troubling times.

Getting preapproved for a mortgage loan

Spring has sprung, and beyond just the greening of grass, warming temperatures and longer days, it’s also a period of the year that sees a significant uptick in real estate activity. Yes, with an increase in overall inventory come spring, the season is an ideal one for buyers on the hunt for their next home. But before you can buy, you need to get preapproved mortgage. Unfortunately, getting preapproved is easier for some consumers than it is for others. Some consumers may need to enact some credit repair tactics to get their credit score where it needs to be for home buying

Improving Credit Scores for Preapproval

If your credit score isn’t up to snuff and you don’t want to wait months to repair it, there are some things that you can do now that may improve your score faster, assuming that your score was dinged because of something minor, like a late payment. More sever credit mishaps like defaulted payments, bankruptcies and foreclosures will obviously require much more time for consumers to repair, but there is hope to eliminate something minor like a late payment that could be preventing you from getting preapproved for that mortgage loan. Here’s what to do:

  • Act quick: Start by contacting the company that reported the late payment and explain the situation. Perhaps you thought you made the payment, but there was an online bill error. Or maybe it was an honest mistake on your part and you didn’t pay the bill in full. Regardless of who – or what – is at fault, come clean and explain the situation. You may even choose to enact a one-time goodwill intervention, where a company will review the case, analyze your credit and make the call on whether or not to reverse the decision. Remember, lenders want to keep your business, so if you work together with them, your chances are good.
  • Contact the credit reporting agencies: If you don’t get anywhere with the lender, consider writing the credit reporting agencies. Explain the scenario to them, and they’ll conduct a 30-day investigation to determine whether or not the lender’s decision should be reversed. This method may take a little longer than working with the lender, but if the agency rules in your favor, it can help improve your FICO score to the point where you can get preapproved.

Unfortunately, some mortgage consumers don’t have great credit and won’t be able to fix their issues by contacting either their lender or the credit reporting agencies to have the issue resolved. If this is the case, the consumer’s best bet is to start establishing good financial behavior. This includes making on time payments and keeping low balances on credit cards, just to name a few.

FICO Credit Score? A crucial aspect of knowing whether or not you’re in need of credit repair is obviously learning what your actual credit score is. After all, those crucial three digits are what lenders look at when deciding how at-risk of a consumer you are and whether or not your application should be approved or denied on everything from mortgage loans to auto loans to student loans. But how consumers attain this credit score information is a topic that has always been up for debate.

The aspect of how to attain credit scores recently made headlines again, as two of the leading credit reporting agencies in the United States were fined for allegedly charging consumers to check their credit scores – a practice viewed as unethical and misleading by the Consumer Financial Protection Bureau. In light of these recent events, the question remains: Should consumers pay for their FICO scores? Or should they rely on free avenues for attaining this crucial data?

FICO Credit Score. Where to Get Free?

Most experts advise consumers to check their credit scores and credit reports at least once a year. This is suggested even for consumers with very good credit, as checking such information annually can help detect potential errors and lead to quicker all-around fixes. Federal law permits consumers to attain credit reports free of charge from the three main credit reporting agencies once a year. Consumers that are looking to repair credit to make themselves more attractive on a loan or credit card application, however, may need to check their scores more frequently than annually to judge where they stand. The good news is that more and more outlets are making it easier to do this on a complimentary basis.

Here’s a look at some of these free avenues available for checking your FICO Credit Score:

  • Your bank or credit union: Many financial institutions will offer free credit score checks for members. Some may even offer complimentary consulting services to help consumers reach their credit score goals.
  • Your credit card company: Credit card companies like Discover now offer free credit scores to both cardholders and non-cardholders. Citi and Chase have similar policies. Others may provide your credit score if you simply ask.
  • Websites: If you go the route of getting your credit score through a website, it’s important to make sure that the site is a credible one (i.e. CreditKarma) and that you aren’t supplying your credit card information for the service. Credible credit reporting websites will help provide you regular credit score updates, as well as provide guidance on potential purchases based on your score.
  • Applications: Applying for a new credit card, car loan, or refinancing? As part of the approval process, the lender will be surely checking your credit score to make sure you qualify. Take advantage of this situation to learn what your credit score is.

We should note that you can buy your credit score. However, you should only ever consider doing so when you’ve either exhausted the options that we’ve listed above or if none of the aforementioned complimentary means of acquisition are viable for FICO Credit Score.

Black Boxes That Are Credit Scores

The concept of a Black Boxes is actually derived from the science and engineering fields. Specifically, Black Boxes are defined as something that you can view externally, but have no understanding of how it works internally. The same concept can be applied to credit scores, as many consumers just take note of the three-digit score that they get, yet have no idea of how – and why – it is what it is.

A Google search will quickly provide you with how the FICO score is calculated, but consumer beware – there’s also a lot of misinformation about credit scores and scoring formulas on the Internet as well. You could say that the formula itself behind the credit score isn’t that big of a mystery. The mystery is how that formula is navigated and what parts of it are stressed by the consumer. This post is designed to help you better debunk the black boxes when it comes to credit scores.

Black Boxes that are Credit Scores In a Nutshell

As you likely know, your credit score is essential to getting approved for a mortgage, auto loan, student loan and more. But what you might not know is that there’s more than just one credit score. In fact, while the FICO score is the most popular, there are dozens of credit scores that lenders may choose from based on the data that is reported to the three major credit bureaus. Because of the various different credit scores, and the fact that new formulas are always coming out, this confuses people. It’s why we encourage consumers to pull their credit report at least once a year and pay more attention to the data – not necessarily the three digit number that they get. Understanding the data is what’s really important when it comes to determining whether or not you have good credit – and how you can improve your credit score.

A Credit Repair Plan

Say you want to buy a home, but your credit isn’t good enough to get approved for a mortgage. Or maybe you want to further elevate your credit score so you can lock in a lower interest rate. That’s where a credit repair plan is necessary, as you need to know what your current score is and how much you need to elevate it to meet your goal. This is the point where the “3 Ups” come into play:

  • Clean Up
  • Build Up
  • Pay Up

Before you can truly put a credit repair plan into place, you need to know why your score is what it is, and make a plan to clean it up accordingly. After this, you need to analyze ways that will allow you to build your credit back up. And then, finally, there’s likely to be debts that you have to pay off in order to get your debt-to-credit ratio to at or below 30 percent to really notice an improvement on your score.