What is a Credit Score?

Credit Building & Repair

Your Credit Score?

  • Your credit score is a track record of your payment history.
  • It’s usually used to approve you for loans, credit, or purchases.
  • Your Credit Score can affect your finance rate and how much you pay for something.
  • It can keep you from being able to purchase certain things from certain businesses.

Things Happen

Nobody’s Perfect

  • Sometimes things happen, like a late payment, and that can reduce your score, even though you are perfectly capable of making payments. To dealerships, your score may be low, and they may be fearful to pre-approve your car loan.
  • With the “Rent2Own”, we look at your job to tell us whether you can afford to buy a vehicle. If you can afford to drive a vehicle, you shouldn’t be denied based on your credit score!
  • The bottom line with most lenders is they just want to know that they will get paid at the end of the day. If you can afford a vehicle and its monthly payment, we are willing to overlook many of the bad marks on your credit report.

Building, Repairing and Increasing Your Credit Score

  • With our Rent2Own program, you will be enrolled in our free credit repair program and will be building your credit history and increasing your credit score.
  • We will Assign You a Credit Building Specialist to Help You and Assist with Removing Any Derogatory Marks on Your Credit Report / History.
  • As your credit score increases, this will allow you to get even better finance rates, the next time you buy a vehicle.

What affects your
Credit Score?

The main factors that go into how your credit score is calculated are:

  • Amount of debt, also known as your credit utilization ratio
  • Age of credit accounts also referred to as credit history
  • Mix of credit accounts
  • New credit inquiries

Payment history

  • Payment history is the main factor to affect your credit score. It accounts for about 35% of your credit score for each of the scoring models. Your payment history is basically the record of whether you’ve paid your bills on time—or not. Creditors report your payment activity—good or bad—to the major credit bureaus, typically every 30 days. A single late payment won’t likely hurt your score, especially if it’s a one-time thing. Multiple late payments do affect your score though. This is as true for credit card payments as it is for a mortgage or other loan. Missing a payment on any bill affects your credit score negatively, including:
  • Credit card bills
  • Student loans
  • Mortgage loans
  • Car loans
  • Other types of payments, such as your utilities or phone bill, don’t affect your credit score at first, but multiple late payments will cause the provider to turn your debt over to collections.

Amount of Debt

  • The amount of debt you owe accounts for 30% of your credit score. That debt, also called your credit utilization ratio, is calculated by comparing how much debt creditors have extended to you—AKA your credit limit—to how much of the credit you’ve used. Say you have no loans and a single credit card with a $200 balance and a $1,000 credit limit, your credit utilization rate is 20%.
  • It’s best to keep your credit utilization to 30% or less. But, keeping it at or under 10% is even better.
  • The reason debt has such a large impact on what affects a credit score is that it identifies whether or not you’re a high-risk borrower. Naturally, someone carrying less debt is a less risky borrower than someone who’s using quite a bit of his/her credit limit(s).

Credit Age or Credit History

  • Credit age affects 15% of your overall score. When it comes to the age of your credit accounts, there are two main factors that a lender looks at:
  • The first is the age of your oldest account.
  • The second is the average age of your combined accounts—calculated by adding up the age of each account and dividing it by the number of accounts you have.
  • As you probably guessed, the older your accounts, the more that affects—and helps—your credit score. Because of this, it’s important not to close out your older accounts unless there’s a good need to do so.

Account Mix

  • Credit mix accounts for 10% of your score. There are two main types of credit accounts that go into that mix, revolving debt—AKA credit cards—and installment debt—AKA loans, such as car loans and mortgage loans. Your credit score is happiest when you have a good mix of both.

Credit Inquiries

  • The two types of credit inquiries as soft inquiries and hard inquiries. Soft inquiries don’t show up on your credit report. A hard inquiry does show up on your credit report and can lower your score in increments for some time before your credit begins to climb again. The fewer hard inquiries your credit report, the better. Hard inquiries, like account mix, make up about 10% of your credit score.

Surprising Things that Affect Your Credit Score

  • When it comes to what affects credit score numbers, the factors mentioned above are the most common. Some of them are pretty straightforward. Where account mix or credit inquiries might seem a bit more vague. But it can get more vague even than those. Here are 16 other things that can also affect your credit score number—some for the worse, some for better or worse.

Know Your Score