Build and Protect your Credit Score

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Your FICO Score

FICO measures credit-worthiness and can range from 350 to 850. VantageScores, a new way of measuring credit, can range from 501 to 990. Underwriters use three credit bureaus, Equifax, Experian, and Trans Union, to determine your score. The factors that affect your score are the payment history, the total amount of current debt, requests for credit, the length of credit history, and the types of credit in use. When making the most significant change in your credit score, it is important to focus on the total amount of current debt and the payment history because together they make up 65% of the credit score. Here are some things to consider when making decisions that involve credit:

1. Delinquencies lower scores, and scores drop when several credit accounts are opened in a short period.

2. A long credit history is better than a new one, and too few revolving accounts makes it harder to evaluate the ability to manage credit. This is why it is better to not close an account if it has a long and positive credit history. 

3. Consumers with “maxed out” cards may have trouble making payments. Too many revolving accounts indicate over-extension. Try to keep the amount of credit you use below 33% of the maximum card amount. It is even better if the balance is below 15%.

4. Tax liens, bankruptcies, collections, and use of consumer credit agencies can all lower a FICO score. It is best to avoid collections as much as possible: try everything you legally can to pay off your debt on time so that will not happen. Once you start paying collections, it will drop your score significantly and it will take longer to bring it back up.

5. Small credit card balances and no late payments show responsibility. The credit card should preferably be a Discover, American Express, VISA, or Master Card.

6. If you have subsidized student loans that are in grace period, paying just one dollar a month will help build payment history for the account. This works for as long as the loan is in grace period. Once it leaves the grace period, you need to pay at least the minimum due per month.

7. Put a utility bill in your name and paying off the amount due consistently.

8. Avoid opening up a department store credit card.



Circle the incorrect items on your credit report.

Write a letter to the reporting agency, telling them
which information you think is inaccurate. Provide
supporting documentation.

Send all materials by certified mail.

Send a similar letter to the creditor whose reports
you disagree with.

The reporting agency will conduct an investigation.

If negative information is accurate, it can stay on
your report for 7-10 years.


Warning signs of debt problems:

Delinquent Payments

Default Notices


Collection Agencies

Judgment Lien



Know Your Rights as a Consumer:

Truth In Lending Act

Fair Credit Reporting Act

Equal Credit Opportunity Act

Fair Credit Billing Act

Fair Debt Collection Practices Act


It is always recommended to speak to a financial adviser to receive a professional opinion on how to achieve your financial goals. If you would like me to refer you to someone that can help with your personal finances, please let me know.

Much of this information was provided by the Neighborhood Housing Services of Great Berks, INC.