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How credit works


We have the knowledge and resources you need to complete your journey to financial stability. Our financial coaching program not only helps you repair your credit but helps you build positive credit. We provide all the financial tools needed to meet your goals.  


How Credit Scores are Calculated

1. Payment history (35%)

The first thing any lender wants to know is whether you've paid past credit accounts on time. This helps lenders determine the risk they 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 positive credit history.


2. Amounts Owed / Credit Utilization (30%)

Having credit card accounts and having a balance due on them does not exactly mean you are a high risk borrower. However, if you are using a high percentage of the available credit line it will effect your score negatively. High credit card utilization indicates that you are not able to manager your finances in best manner and banks can interpret this to mean that you are at a higher risk of defaulting. Keep in mind utilization is based on percentages, not the dollar amount. We recommend you do not use more than 25% of your available credit limit at any given time. For Example, if your credit card limit is $1,000 do not use more than $250 (25%). 25% is looked at as a high utilization and it is best to stay under 10% utilization per credit card. If need be spread out the charges over different cards and pay them off in full at the end of each month.


3. 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 History is based on:

  • How long your credit accounts have been open

  • The age of your oldest account

  • The age of your newest account and

  • Average age of all your accounts

  • How long specific credit accounts have been open

  • How long it has been since you used certain accounts


4. Credit Mix (10%)

FICO Scores consider your mix of credit cards, retail accounts, installment loans, finance accounts and mortgage loans. We do not need one of each but your credit accounts need to show a good mixture to prove your credit worthiness. 


5. New Credit (10%)

Opening several new credit accounts in a short period of time represents a higher risk, especially for those whom have a thin file, meaning don't have a long credit history. It is highly recommended to avoid opening too many new accounts.

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