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Credit Repair

What is Credit Repair?

 

The definition of credit repair in the dictionary is "the process by which a person improves their ability to borrow money by correcting wrong, inaccurate or obsolete information in their credit report or by reducing their amount of debt more quickly."

 

 

A FICO Score is a three-digit number based on the information in your credit reports. It helps lenders determine how likely you are to repay a loan. This, in turn, affects how much you can borrow, how many months you have to repay, and how much it will cost (the interest rate). Below is a chart that breaks down how your scores are viewed compared to the average U.S. consumer.

 

FICO Score Ranges Rating Description
<580 Poor Your score is well below the average score of U.S. consumers and demonstrates to lenders that you are a risky borrower.
580-669 Fair Your score is below the average score of U.S. consumers, though many lenders will approve loans with this score.
670-739 Good Your score is near or slightly above the average of U.S. consumers and most lenders consider this a good score.
740-799 Very Good Your score is above the average of U.S. consumers and demonstrates to lenders that you are a very dependable borrower.
800+ Exceptional Your score is well above the average score of U.S. consumers and clearly demonstrates to lenders that you are an exceptional borrower.

 

whats in a fico score chart

What categories are considered when calculating my FICO Score?

 

Payment history (35%)

The first thing any lender wants to know is whether you've paid past credit accounts on time. This helps a lender figure out the amount of risk it will take on when extending credit. This is the most important factor in a FICO Score.

Be sure to keep your accounts in good standing to build a healthy history.

 

Amounts owed (30%)

Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO Score. However, if you are using a lot of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of defaulting.

 

Length of credit history (15%)

In general, a longer credit history will increase your FICO Scores. However, even people who haven't been using credit for long may have high FICO Scores, depending on how the rest of their credit report looks.

Your FICO Scores take into account:

  • How long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts 
  • How long specific credit accounts have been established
  • How long it has been since you used certain accounts

Credit mix (10%)

FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Don't worry, it's not necessary to have one of each.

 

New credit (10%)

Research shows that opening several credit accounts in a short amount of time represents a greater risk—especially for people who don't have a long credit history. If you can avoid it, try not to open too many accounts too rapidly.

 

 

 

The Secret History of the Credit Card:

https://www.pbs.org/video/frontline-the-secret-history-of-the-credit-card/

 

 

 

 

 

 

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