For many obtaining/maintaining credit is just a tough situation and sadly, folks oftentimes find themselves behind the eight ball credit-wise. A credit profile can either make or break you when it comes to securing a loan, getting a home/apartment, landing a job, and buying a vehicle and insurance. Having a credit history all boils down to just three numbers, a FICO scoring system.

Simply put, credit reports are documented evidence of our reliability as human beings. Indebtedness and failure to pay marks you as a bad credit risk. Paying your debts in a timely manner makes you a good credit risk and will open doors for you with just about any lender.

FICO scores are used in over 90 percent of lending decisions in this country. These categorized groups of numbers help to represent your credit health and lenders to understand your financial risk. So when you apply for a loan, credit card, or mortgage, for example, your score will help them make a decision as to whether or not to approve you.

There are three major U.S. credit bureaus: Experian, TransUnion, and Equifax.

The credit bureaus maintain records of your credit history and other identifying information about you. When you get a new loan or credit card, make or miss a payment, your lenders will snitch on you and report your credit shenanigans to the credit bureaus. Since it’s up to your lenders what information they report to the credit bureaus, and which credit bureaus they report to, it’s not uncommon for your credit reports to be slightly different at each bureau. And since your FICO scores are calculated from the credit data on your credit reports, your scores at each credit bureau will more than likely differ from one another.

According to the Fair Isaac Corporation, the company that created the FICO scores, these are the factors that affect your credit number:

  • Payment history: 35 percent
  • Amounts owed: 30 percent
  • Length of credit history: 15 percent
  • New credit applied for recently: 10 percent
  • Types of credit used: 10 percent

So if you want to know where you stand credit-wise, here is a chart that depicts the good, bad and ugly of your credit risk to lenders. Just FYI, the national FICO score average is 695:

If you’d like to improve your FICO score it will take time to do so and please keep in mind, there are no quick fixes! The best advice for rebuilding your credit is to manage your finances responsibly! These tips will help you get going:

  • Check your credit report. You can get a free copy of your credit history once every 12 months from the three credit reporting agencies—TransUnion, Equifax and Experian at Make sure you have information on the report that is correct and pertains to you. If there are any errors on any one of the reports, dispute them with the credit reporting agencies.
  • Make sure you pay your bills on time! Many credit card companies and banks offer payment reminders to their customers online, a few might even send texts. Consider enrolling in automatic payment programs and have the money debited from your bank accounts. The longer you pay your bills on time, the more your FICO score will increase.
  • Cut down your debt to make managing your money doable. Put the brakes on wasteful credit card spending.
  • Consider getting help from a non-profit credit counseling service. The move can improve your credit score by helping you manage your debts. The Federal Trade Commission offers free advice on how to select a reputable consumer credit counseling agency because there are many that might take your money and run; so beware!


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