credit repair

The Basics Of Credit Repair For Bad Credit

Credit repair is something many people start to think about as they start earning money and wanting to take on financial responsibilities like mortgages, car loans, and more. While it seems like a pipe dream, credit repair is achievable with the right mindset and strategies.

At Georgia Auto Pawn, Inc., we dive deep into the top five ways you can easily begin your credit-fixing journey, so you can build the life you want. Learn more about how to improve your payment history, understanding your credit utilization, what to do before closing your accounts, fixing any errors and how a title pawn can assist you.

Things You Need To Know About Credit Repair

How Credit Scores Are Calculated

However, before fixing your credit, it's essential to know how your score is calculated by the two major models, FICO and VantageScore. While the exact calculations are trade secrets, both models operate on the same data found inside your credit report. All the information pertains to your borrowing and repaying habits.

Since FICO is the most common score used by lenders across the country, let's take a look at the factors that matter most in its calculations:

  • Payment history — Remaining on top of your bills helps your credit score. It accounts for a whopping 35% of your overall FICO score.

  • Credit utilization — Also known as credit usage or credit utilization rate, it accounts for roughly 30% of your FICO score.

  • Length of credit history — Typically, your score increases over time. Thus, establishing a healthy financial record builds your score as the years go by. It makes up about 15% of your FICO score.

  • Credit mix — This reflects your total outstanding debt and the types of loans/credit in use. It can influence roughly 10% of your FICO score, with the favored types being installment loans and revolving credit.

  • Recent credit applications — Applying for loans or credit cards initiates hard credit inquiries that lower your score by a few points. But if you keep paying your bills on time, your score rebounds in several months. Recent applications make up about 10% of your FICO score.

  • Derogatory information — Some credit report entries can damage your score for longer periods. It depends on the information, but FICO doesn't assign a percentage because it isn't found in all reports. It can include foreclosures, accounts sold into collections, and bankruptcies.

credit repair factors

The Top 5 Ways To Easily Start Credit Repair

Now you understand the basics of your score, fixing it becomes easier, as you'll see from our top five tips:

1. Improve Your Payment History

As noted, your payment history is the most influential factor. Therefore, it plays a massive role in your credit repair journey. Late or missed payments reduce your credit score and can remain on your report for seven to ten years. Generally, your score considers the size of your debt and the timing of late payments to establish the score reduction. Paying debts on time will always positively impact your score.

2. Understand Your Credit Utilization Ratio

Your credit utilization rate is how much you owe compared to how much credit is available to you. In other words, it's the total of all revolving debt, divided by the total credit and multiplied by 100 to form a percentage.

For example, if you have $4,000 in credit card balances and $40,000 in total available credit, your utilization rate is 10%. High credit usage negatively impacts your credit score. Typically, you shouldn't go above 30%, so do the following to reduce your ratio:

  • Pay down account balances.
  • Open a new credit card to increase your available credit.
  • Consolidate credit card debt.

3. Think Before You Close Credit Accounts

While it's tempting to close old accounts once you've repaid them, try avoiding this practice (unless you have to pay fees to keep them open). You can establish a long credit history this way, improving your score.

4. Fix Errors On Your Credit Report

Credit bureaus can make errors — the Federal Trade Commission reported that 25% of people had errors on their credit reports. So, disputing mistakes can boost your credit score relatively quickly.

5. Take On New Financial Obligations Only In Emergencies

Finally, it’s better to avoid taking out new loans when they aren't needed. But if you are in a financial pickle, you can get a bad credit title pawn online from us to borrow up to $15,000 to fund your crisis.

We use the value of your vehicle to offer the loan, ensuring you can access money regardless of your score or financial history. All you need to get a title loan is a car, truck, or van, a lien-free title, and your state-issued photo ID card (your driver's license is best here). The best part about our title loans is that the in-person process only takes 30 minutes! Afterward, you'll receive your money in less than 24 hours.

title loan cash for emergencies

Get A Bad Credit Title Pawn Right Now!

If you run into difficulties during your credit repair journey, give us a call or complete our convenient online request form to get cash for your car title with Georgia Auto Pawn, Inc.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Emma Frost

Emma Frost is a lifestyle and finance blogger with a talent for communication and a passion for financial literacy. She uses her writing talents to explore topics that help her readers gain financial stability and growth.