1st Priority Tech Solutions
We are excited to offer credit repair options for our customers.
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Why is credit repair important?
Credit affects every area of life. When your credit is bad, it follows that your life may face similar hardships in the areas of:
- Loan applications. Lenders rely on credit to recommend new customers. When your credit is low, your borrowing power is stifled by risk. In this economy, mortgage and auto lenders are tightening their restrictions when it comes to drafting new loans. More is required of the average borrower, including a sizable down-payment and a credit score of 720 or higher. If your credit score is stalled, it could spell trouble when applying for a new loan.
- Interest rates. Interest rates depend heavily on your credit score, a number that is calculated based on the level of risk found in your credit report. If your past is peppered with late payments, collections, bankruptcy, etc., the result may equal higher interest rates. As your credit score improves, you're likely to see a reduction in interest, allowing you to save money over time.
- Insurance premiums. Insurance is the business side of risk mitigation, so it's no surprise that a clean credit report results in better rates. Insurance providers rely on your financial track record to determine your risk levels in other areas of life. A low credit score is often viewed as high-risk behavior.
- Employment opportunities. Many employers now require credit checks before hiring a new team member. The job market is competitive, and managers use this strategy to gauge a new-hire's level of responsibility. Despite your qualifications, a bad credit report is likely to make you seem disorganized and careless—two qualities that should never appear on your resume.
- Savings. Favorable loan terms, interest rates, insurance premiums, and employment all add up to one sum: savings. A good credit score means leaner options. The less money you spend, the more you'll have to save for emergencies, retirement, and education.
Your credit score is based on five key categories contained within your credit reports (as follows):
- Payment History: Accounts for roughly 35% of your score. This one is pretty self-explanatory, paying your bills on time will help keep your scores high, while late payments, charge-offs, and collections will hurt. If you’re trying to improve your credit rating, avoid the latter at all costs. And while this category makes up the largest single chunk of your scores, it’s important to understand that 65% of your score is determined by other factors. Meaning that there’s more to it than simply making your payments on time. Let’s take a look at the other categories…
- Amounts Currently Owed: 30% of your score is based on the amount of debt you’re currently carrying –or more specifically, the amount of money you currently owe your creditors. While this category looks at the total amount that you owe (credit cards, home loans, car loans, etc.), it’s the credit cards –or revolving accounts – that have the most impact on your credit score. In order to maximize your scores in this section, you should keep your balances in relation to your credit limits as low as possible.
- Length of Credit History: Consisting of roughly 15% of your score, this category specifically measures looks at how long you’ve had credit. It does so by reviewing all of your accounts and looking at the opened dates. Obviously, the longer you’ve had credit, the more points you’ll earn in this section. This is just one of the reasons why it’s not a good idea to close old, good accounts. Why would you want to lose the good credit history?
- Types of Credit: Worth 10% of the points in your credit score, this section is looking for a healthy mix of accounts. Diversity is key – having a mix of different types of accounts including credit cards, auto loans, mortgage loans, etc., will insure you do well here.
- Searches for New Credit: This section accounts for 10% of your score. Basically, when you apply for credit an inquiry will post to your credit report showing that you’re seeking credit. Having too many inquiries in a short period of time can hurt you. As a general rule of thumb, try to avoid excessively shopping for credit – only open a new credit account when you really need it. (Tidbit: By law inquiries remain in your credit reports for two years. However, only inquiries in the last 12 months are considered in your credit score calculation.)