TexasLending.com: How a Credit Score is Determined

The team at TexasLending.com fields many questions from clients regarding the credit process. Specifically, TexasLending.com reports that clients are curious about what factors go into determining his or her credit score, and what steps to take in order to repair any issues that may have arisen.

The first step to understanding how to repair one’s credit is to get a basic understanding of how the process works, says the team at TexasLending.com, explaining that a credit score is actually a mathematical formula based on a variety of factors. A person’s credit rating builds over time, TexasLending.com adds, with the intention of predicting a person’s likelihood of paying back any loan in a timely, reliable manner.

According to TexasLending.com, there are a variety of resources used to collect credit score information, one of which is the FICO score. FICO looks at twenty different factors, according to TexasLending.com, in five different categories. With FICO, the largest determining factor is how a consumer pays bills. Since a consumer’s most recent payment activity is given priority, TexasLending.com emphasizes that a person who has a past history of late or missed payments can start repairing a poor credit rating immediately.

Late and missed payments are certainly not good, but collection accounts are worse. Bankruptcies are even more serious, TexasLending.com states, yet are still a negative factor that can eventually be overcome.

Income to debt ratio is weighted second most important, according to TexasLending.com. During an initial consultation, your TexasLending.com representative will discuss these factors and advise either increasing your income or reducing your debt—likely a combination of both.

According to TexasLending.com, FICO also takes into account a person’s length of credit history and the types of credit he or she has had. TexasLending.com points out that FICO doesn’t look at a person’s employment status, income or education level, or marital status. While the loan officer may look at these things as part of the loan application process, TexasLending.com notes that these items aren’t included as part of a credit score.

For customers with low credit scores, TexasLending.com recommends taking a look at the credit report. Sometimes consumers are able to contact reporting agencies and successfully contest items that are erroneous on these reports, TexasLending.com has found. This can improve a person’s credit score right away. Then the client can begin the work of paying bills on time and reducing debt, one item at a time, until a good credit score is achieved.

For more information, visit Texas Lending online at www.texaslending.com.

TexasLending.com
4100 Alpha Rd.
Dallas, TX  75244
NMLS# 137773