Learn About Good Financial Health

Many people don’t understand how credit works. To be honest,
you usually don't need to know much to still make good decisions for your
credit and to build up a good score, but you can be much more effective if you
learn the basics. Studies
show that consumers who took credit literacy courses lowered their revolving
debt by an average of $6,000. Knowledge in this area really does have tangible
results in improving your financial situation. April is Financial Literacy
month, and it’s the perfect time to learn more about how your credit score
affects your life, how it’s calculated, what you can do to improve it, and
other great financial behaviors.

Take the Time to Learn More

Ultimately, the best way to become literate in anything is
to do your research. This simple guide will give you a good overview of the
basics about credit, but after that you could benefit by diving deeper into the
subject. Of course, it is a good idea to start small. After reading this guide,
take a look at these sources:

• The
  CreditRepair.com blog – Our blog is a great source because it keeps things
  simple and easy to digest. This should be where you take your first step into taking
  financial literacy. It also provides information on a wide range of different
  topics, giving you a well-rounded understanding of credit. Plus, our catalogue
  of information is always growing, so check back regularly to continuously grow
  your knowledge.
• The National
  Foundation for Credit Counseling – Once you have an understanding of the
  basics, turn to this foundation to deepen your knowledge. This nonprofit
  financial-counseling organization educates consumers on credit and other
  financial issues. You may be happy to hear that receiving credit counseling does
  not negatively impact your credit score.
• The Consumer
  Financial Protection Bureau – This government agency strives to assist
  consumers and promote legislation that empowers consumers to take more control
  over their finances.

The Three Big Credit Bureaus

The first thing you need to understand about your credit
score is where it comes from. There are many consumer credit bureaus out there,
but the three biggest ones that lenders turn to are Equifax, Experian, and TransUnion.
These companies examine your financial information to create reports that
record your credit history. It is important to keep in mind how these bureaus
gain the information their reports are based on. This happens in three ways:

• Receive financial information reported by
  creditors
• Purchase financial information
• Receive financial information shared by other
  bureaus.

Another aspect to the way the bureaus work is that your
credit reports may differ slightly depending on the bureau. This is because the
three credit companies may have varying information about you. Not all
financial information is required to be reported, and many creditors only
report it to one or two of the three major bureaus. Additionally, it may be
helpful to understand that there are many different bureaus, each using
slightly different standards. The Consumer Financial Protection Bureau offers a
useful list
of these bureaus, organizing them by their differences. The most important
thing to remember is that these bureaus' reports determine your credit score,
which affects how likely you are to be approved for loans.

Managing Your Credit Score

Now that you have an understanding of the basics, you can
start learning about how you can manage your credit score. To start, consider
the different aspects that are used to calculate
your score in the first place:

• Payment History – This aspect is basically how
  well you have made payments in the past. This lets lenders assess how risky it
  would be to lend to you in the future. Payment history accounts for 35% of your
  score.
• Credit Utilization – Having a good utilization ratio
  between how much credit you use versus how much is available to you generates a
  strong score. The ideal is for this ratio to never exceed 30%. Credit
  utilization accounts for 30% of your score.
• Length of credit history – This is essentially
  just how long you've had your accounts. Closing an old account may negatively
  impact your score, because it lowers your length of credit history. This
  accounts for 15% of your score.
• Inquiries – Applying for new credit is all part
  of building your history, but excessive applications hurt your score because they
  make you appear risky. Inquiries account for 10% of your score.
• Credit Mix – Having different types of credit
  strengthens your score. If all your credit is in the form of a credit card, it
  does not reflect well on your ability to handle different types of debt. But
  having payments on student loans, mortgages, credit cards, and more shows that
  you are capable. This accounts for 10% of your score.

You can get a free credit report once a year. This is a
great way to keep tabs on your progress.

Search for Inaccuracies and Negative Items

With your credit report in hand, read through the
information on it and make a list of everything that you don’t recognize or
that you know is inaccurate. If there is any negative information that is
inaccurate, it is likely hurting your credit score. If you challenge these
items and they are removed, it can help boost your score.

Of course, this may be simpler said than done. It is
possible for you to handle this yourself, but this is also what
CreditRepair.com does. Allow us to take care of
challenging the negative inaccurate items. Due to our extensive experience in
the field, we can identify areas of improvement on your credit. If the bureau
can't prove that the items are accurate, it is required by law to remove them.
By working with CreditRepair.com, you can be confident that your credit repair
needs are being handled.

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