Category: Credit Score

Credit Hero Score: What It Is, How It’s Calculated, and Why It Might Look Different Than You Expect

Posted on June 16, 2025 by - CREDIT BLOG, Credit Score

Credit Hero Score: What It Is, How It’s Calculated, and Why It Might Look Different

If you’ve pulled your Credit Hero Score recently, you might assume it’s the same score a bank or credit card company would use. But it isn’t. A mortgage lender, banker, or creditor will most likely use the FICO score. And understanding the difference between what lenders see when they pull your FICO score and what you see when you receive your Credit Hero Score can help you make smarter financial decisions, especially if you are working to rebuild your credit after a financial hardship. In this guide, we’ll break it down and explain how you can find your true credit score.

Your Credit Score Isn’t a Fixed Number

Your Credit Score Isn’t a Fixed Number

Here’s something that might surprise you: You don’t have a single credit score. You have many. At any given moment, your credit score depends on two things:

  1. Who’s requesting it, and
  2. Which credit bureau is reporting it.

Let’s break those two factors down.

Who Is Requesting Your Credit Score, and Why Does It Matter?

Your credit score is a three-digit number that answers this question: What is the likelihood that a borrower will be more than 90 days late on a bill within the next two years?

To answer that question accurately, lenders often use specialized versions of your credit score designed for their specific industries. Most of them use a formula called FICO, but the formula is tailored a bit based on their industry.

For example:

  • Landlords tend to care more about your history with housing-related payments—like mortgages or past evictions—than your credit card habits. After all, someone might occasionally pay a credit card late but always pay rent on time. So rental screening services may highlight different aspects of your credit report than a bank or credit card issuer would.
  • Auto lenders might use a version like FICO Auto Score, which gives more weight to your history with car loans.
  • Credit card issuers might use the FICO Bankcard Score, which weighs revolving credit (like credit cards) more heavily.

When you check your own score you’ll receive a different, more generalized version of your credit score. Like most companies selling or providing credit services directly to individuals—including Credit Karma, Credit Sesame, and Capital One CreditWise—Credit Hero Score uses the Vantage 3.0 formula. This model is designed to give consumers a clear picture of their credit standing, but it’s not the exact score lenders see and it isn’t based on the FICO formula.

Which Credit Bureau Is Requesting Your Credit Score, and Why Does It Matter?

To add one more layer of complexity: each bureau—Equifax, Experian, and TransUnion—may have different information about you, because not all creditors report to all three bureaus. You might, for instance, have a credit card that reports payments to Experian and Equifax but not TransUnion, which means TransUnion would be plugging different data into its formula to calculate your score.

That’s why lenders who pull your FICO score will be given three different scores. Lenders usually look at all three scores and use the middle one to make their lending decisions. So, if your scores are …

  • 721 from Experian
  • 680 from TransUnion
  • 612 from Equifax

…your lender would go with 680.

If your Credit Hero Score doesn’t match what a lender sees, that’s not an error. It’s just how the credit system works.

What Is Credit Hero Score?

Credit Hero Score is a credit monitoring service that helps people track their credit health. It gives users access to their credit reports, credit alerts, and a score based on the VantageScore 3.0 model, a widely used formula for consumer credit tracking. This model is designed to give consumers a general picture of their credit standing.

Credit Hero Score is not the only company that offers credit services directly to consumers. Credit Karma, Credit Sesame, Capital One CreditWise, and even Experian also provide consumer-based credit scores. It bears repeating: These scores do not use the same scoring formula that lenders typically rely on. Instead of a FICO score, they use the VantageScore 3.0 model.

What Is Credit Hero Score?

This means that while the Credit Hero Score can provide a useful overview of your credit behavior, it won’t necessarily reflect the score a lender sees when they review your application for a mortgage, car loan, or credit card. It’s a general indicator of your credit health, but it is not a substitute for a lender-grade FICO score.

How Can You See the Same Thing a Lender Sees?

Your best bet for seeing the version of your FICO score that lenders actually use is to either:

  1. Pay for it yourself at MyFICO.com, or
  2. Ask a lender to pull your score as part of a credit application or pre-approval.

Let’s look at the pros and cons of both options.

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Option 1: Pay to See Your Scores at MyFICO.com

MyFICO.com is operated by the creators of the FICO scoring model. When you purchase your scores here, you’ll get access to:

  • Your FICO Score 8, commonly used by credit card companies
  • Industry-specific scores like FICO Auto Score and FICO Bankcard Score
  • The older FICO versions still used in mortgage lending (FICO 2, 4, and 5)

This is the most direct way to see exactly what lenders are likely to see—without needing to apply for credit. But there are pros and cons …

Pros:

  • You will not hurt your credit score if you request your own credit score. This is called a soft inquiry.
  • You will see a full breakdown of scores from all three bureaus
  • It includes industry-specific FICO versions used in real-world lending decisions

Cons:

  • It’s not free. You’ll pay anywhere from $20 to $40+ per month depending on what you need.
  • It can feel overwhelming because you’ll see many variations of your credit score. You might not know which one will apply to your specific situation.

Pay to See Your Scores at MyFICO.com

Option 2: Ask a Lender to Pull Your Scores

If you’re preparing to apply for a mortgage, auto loan, or major credit product, you can ask a mortgage broker or lender to pull your scores as part of a pre-approval or application process.

Lenders typically pull your FICO scores from all three credit bureaus, using the versions relevant to their industry (for mortgages, this means FICO Score 2, 4, and 5).

You can ask the lender to share:

  • The scores they pulled
  • The FICO version used
  • Which bureau reported which score

Pros:

  • You’ll see the exact scores the lender will base their decision on
  • This will be free if it’s part of a pre-approval or formal application
  • The score you see will be useful if you’re actively preparing to borrow

Cons:

  • This is a hard inquiry, which may cause a small, temporary dip in your score, though your score will recover in about six months, and the dip will be just a few points.
  • Not all lenders will pull your scores unless you’re moving forward with a real application.

What the Credit Hero Score Rewards (and What It Penalizes)

That said, whether you’re looking at your Credit Hero Score, a VantageScore from another platform, or even a lender’s FICO score, the fundamentals are the same. All scoring models reward certain credit behaviors and penalize others.

Here’s what helps your score most:

  • Paying on time, every time
  • Having a healthy mix of credit, which includes three to five credit cards and an installment account
  • Keeping your balances low (below 30 percent of your credit limit)
  • Keeping your credit card accounts active, which means you use them (without going above that 30 percent threshold)
  • Removing errors from your credit score

And here’s what tends to hurt your score:

  • Late payments, missed payments, or collections
  • Maxed-out or high-balance credit cards
  • Errors on your credit report
  • No credit, not enough credit, or no mix of credit
  • Having too many accounts
  • No credit activity at all (no reporting = no score movement)

If your goal is to rebuild your credit, these are the habits that matter most. And they’re the same habits that will help raise any score, whether it’s FICO or Credit Hero Score.

Box: Want to learn more about building your credit score FAST? Check out the Credit Rebuilder Program.

How Do Loan Terms Affect the Cost of Credit?

Posted on June 3, 2025 by - CREDIT BLOG, Credit Cards, Credit Report, Credit Score

How Do Loan Terms Affect the Cost of Credit

When you take out a loan, it can be easy to focus on one number: the monthly payment. But there’s a much bigger question to ask: How do loan terms affect the cost of credit? 

A loan term is the amount of time you agree to repay the debt. It can range from a few months (like a payday loan or personal loan) to 30 years (like a mortgage). And while longer terms often mean smaller monthly payments, they can also cost you far more in the long run.

So in this article, we’re going to walk through how loan terms affect the cost of credit—and how you can make smart choices to protect your wallet and your credit score.

The Basics: What Is a Loan Term?

A loan term is simply the agreed-upon time period you have to repay a loan. Common loan terms include:

  • Auto loans: 36 to 84 months
  • Personal loans: 12 to 60 months
  • Mortgages: 15 to 30 years
  • Student loans: 10 to 30 years

The longer the loan term, the lower your monthly payment tends to be. But that doesn’t mean it’s cheaper. In fact, that extended timeline can cause the total cost of credit to balloon.

Let’s look at why.

Interest Over Time: The Longer You Borrow, the More You Pay

When you borrow money, you pay interest—which is the cost of using someone else’s money. Even if you have a low interest rate, the longer the loan term, the more months you’re paying that interest.

For example, imagine you borrow $10,000 at a 6% interest rate:

  • On a 3-year loan, your total interest might be around $950.
  • On a 5-year loan, your total interest might jump to $1,600.

Same loan amount. Same rate. But a longer term means you pay significantly more over time.

So when asking, How do loan terms affect the cost of credit?, one of the biggest answers is this: loan term determine how much interest accrues.

The Psychological Trap of Smaller Payments

Lenders often advertise lower monthly payments to make loans feel more affordable. And yes, those smaller payments might fit better into your monthly budget. But they also keep you in debt longer.

These long loan terms are like stretching out the pain instead of dealing with it upfront.

Let’s say you’re offered two options for a $20,000 car loan:

  • A 36-month term at $608/month
  • A 72-month term at $340/month

That $268/month difference sure makes the 72-month option tempting, doesn’t it! But you’ll end up paying thousands more in interest over the life of the longer loan. Plus, you’ll spend six years paying for a car that might not even last that long.

So how do loan terms affect the cost of credit? Loan terms can tempt you into longer, more expensive obligations with seemingly “affordable” payments.

Evaluating Bankruptcy: Is It the Right Choice for You?

Real-Life Example: The Mortgage Trade-Off

Mortgages are the most common example of long-term loans, and they illustrate this concept perfectly.

  • A 30-year mortgage comes with lower monthly payments, but you might pay over $100,000 more in interest compared to a 15-year mortgage.
  • A 15-year mortgage has higher payments but builds equity faster and saves a huge amount in interest.

Again, this is why understanding how loan terms affect the cost of credit is so important. You don’t just want a payment you can afford today—you want a financial future you can grow into.

Loan Terms and Your Credit Score

Now let’s talk about how loan terms affect your credit score—because that’s part of the cost of credit too, and it’s what our credit-education course and the Credit Rebuilder Program focus on.

Your credit score is based on several factors, including:

  • Payment history
  • Credit mix
  • Length of credit history
  • New credit inquiries
  • Amounts owed (aka utilization)

A longer loan term might seem like a good idea for keeping your credit score stable, especially if it helps you avoid missing payments. And that’s true to a point: on-time payments over time do help your score.

But a long-term loan can also make it harder to reduce your overall debt load. Because the repayment period is extended, you end up paying more in interest over time, which means you’re spending more money without significantly lowering the principal. That can trap you in a cycle of slow progress. And if you fall behind later, the impact on your credit will be even greater—because larger balances carry more weight.

Here’s why that matters: credit utilization (how much of your available credit you’re using) is one of the most important factors in your credit score. High balances can push your utilization rate above the recommended 30% threshold, signaling to lenders that you may be financially overextended. So if a long-term loan keeps your balances high, even with on-time payments, your score may still suffer. And if you start missing payments on top of that, the damage can compound quickly.

Prepayment: Can You Pay Off a Loan Early?

One way to offset the cost of longer loan terms is to pay the loan off early. But here’s the catch: not all lenders allow it without penalty.

Some loans come with prepayment penalties that charge you for paying ahead of schedule. Why? Because early payoff means less interest income for the lender.

Never forget this: banks and lenders aren’t in the business of helping you reach your dreams—they’re in the business of making money off of you. Every interest charge, every late fee, every penalty is designed to take money out of your pocket and put it into theirs. That’s their business model.

So before you accept a longer loan term thinking you’ll just pay it off sooner, ask the lender: is there a penalty for early payment? If so, you might end up paying more than you planned—even if you do everything right.

Flexibility vs. Friction: Choosing the Right Term for You

There isn’t one right answer when it comes to loan terms. Sometimes a longer term is necessary to make a payment fit your budget. And in those cases, it might be a helpful tool.

But the more important question is: Do you know what it’s costing you?

When you understand how loan terms affect the cost of credit, you’re in a better position to:

  • Compare total interest costs
  • Decide if a shorter term (with higher payments) is worth it
  • Consider refinancing or early payoff
  • Avoid hidden fees or prepayment penalties

How to Choose the Right Loan Term

Here are a few guidelines to help you make a smart decision:

  1. Use a loan calculator. Plug in different terms and see how much interest you’ll pay overall.
  2. Choose the shortest term you can comfortably afford. This helps minimize total interest.
  3. Look for prepayment flexibility. Even if you choose a longer term, the ability to pay more when you can gives you control.
  4. Don’t forget to factor in your financial goals. If you’re planning to buy a house or start a business soon, minimizing long-term debt matters.

What If You’re Already Stuck in a Long-Term Loan?

If you’ve already taken out a long-term loan and regret the terms, don’t panic. You have options:

  • Refinance: Look into shorter terms or lower interest rates.
  • Make extra payments: Even $50/month toward the principal can save you thousands.
  • Call your lender: Ask if there are any programs to reduce your interest rate or term.

And if the debt has become unmanageable, it might be time to speak with a debt professional. We help people understand all their options, including whether they should explore reset strategies and debt-reduction options.

The Bottom Line

So, how do loan terms affect the cost of credit?

They impact how much interest you pay, how long you stay in debt, and how much financial flexibility you have going forward. Shorter terms usually cost less in the long run—but you have to balance that with what you can afford today.

The goal isn’t just to get approved. It’s to make decisions that support your future, not sabotage it.

Credit Card Debt Lawyer: When Legal Help Is Needed

Posted on April 14, 2025 by - Credit Score

Credit Card Debt Lawyer: When Legal Help Is Needed

With credit card debt in the U.S. soaring past $1.2 trillion and interest rates hovering around 22.8%, millions of Americans are struggling to keep up with mounting balances. For many, the stress of collection calls and lawsuits can feel overwhelming. This is where a credit card debt lawyer steps in—a specialized legal professional who can help you untangle the complexities of debt disputes, protect your rights, and explore pathways to financial stability, like bankruptcy (it isn’t as scary as you think!).. Let’s break down what these lawyers do, when you might need one, and how they can support you.

You don’t have to figure this out alone. A debt professional can walk you through your options and help you take the next step—with no cost to get started. Call (602) 691-7570, or schedule your free consultation here.

What Is a Credit Card Debt Lawyer?

A credit card debt lawyer is a legal expert who focuses on resolving issues tied to credit card debt, from negotiating settlements to defending clients in court. These professionals are well-versed in consumer protection laws, debt collection regulations, and bankruptcy procedures. Their primary goal? To help you navigate the legal maze of debt disputes while minimizing financial harm.

For example, if a creditor sues you for unpaid debt, a credit card debt lawyer can scrutinize the lawsuit for errors, challenge improper collection tactics, or even negotiate a settlement that reduces what you owe. They’re also skilled at identifying inaccuracies in credit reports—like incorrect balances or fraudulent accounts—that might be inflating your debt. If you qualify for bankruptcy, they can guide you through bankruptcy filings, ensuring you understand the differences between Chapter 7 (liquidation) and Chapter 13 (repayment plans).

Given the steep rise in credit card debt, their role has become increasingly vital. High interest rates mean even small balances can snowball quickly, turning manageable payments into unmanageable burdens. A lawyer’s intervention can halt this cycle, offering strategies tailored to your unique situation.

When Should You Hire a Credit Card Debt Lawyer?

Checkout When Should You Hire a Credit Card Debt Lawyer

Not every missed payment requires legal help, but certain scenarios demand professional expertise. Here are four key situations where hiring a credit card debt lawyer makes sense:

  1. You’re Being Sued by a Creditor
    If you’ve received a court summons for unpaid debt, don’t ignore it. Creditors often win lawsuits by default when borrowers fail to respond. A lawyer can help you draft a defense, challenge the creditor’s evidence (like proving they own the debt), or negotiate a settlement. Studies show that borrowers with legal representation are far more likely to secure favorable outcomes, such as reduced payoffs or dismissed cases.
  2. Negotiations with Creditors Have Stalled
    Maybe you’ve tried negotiating lower payments or settlements on your own, but creditors aren’t budging. Lawyers have leverage here: They know debt collectors often prefer some payment over none, and they can use legal pressure to broker better terms, like interest-free repayment plans or lump-sum settlements for pennies on the dollar.
  3. You’re Considering Bankruptcy
    Bankruptcy isn’t a one-size-fits-all solution, but it can offer a fresh start for those drowning in unmanageable debt. And to be sure, bankruptcy isn’t as scary as you think it is. Instead, bankruptcy is a safe, legal option for moving past debt quickly so that you can build wealth.

We think of it like this: If you are deeply in debt, every penny you earn has already been claimed by someone else (in this case, your credit card companies). You can’t build wealth when you can’t keep any of the money you are making. This is when bankruptcy can be a great option for reclaiming your life.

A lawyer will evaluate whether you qualify for Chapter 7 (which erases most debts) or Chapter 13 (which restructures them), file the necessary paperwork, and shield you from creditor harassment during the process. 

Want to talk with a debt professional about your situation and explore your options? There’s no cost to get started. Call (602) 691-7570, or schedule your free consultation here.

  1. Debt Collectors Are Crossing the Line
    If collectors are harassing you with relentless calls, threats, or false claims, they might be violating the Fair Debt Collection Practices Act (FDCPA). A lawyer can demand they stop, sue for damages, and even recover compensation for illegal tactics.

When you join the Credit Rebuilder Program, you will have free legal representation if your rights have been violated under the FDCPA or the Fair Credit Reporting Act (FCRA).

How to Choose the Right Credit Card Debt Lawyer

Finding the right lawyer requires research, but these steps can simplify the process:

Look for Specialization
Seek out attorneys who focus on consumer debt or bankruptcy law. General practitioners might lack the nuanced knowledge needed to tackle aggressive creditors or complex cases. Check their websites for keywords like “debt defense” or “credit card litigation,” and verify their state bar credentials.

Read Reviews and Ask for Referrals
If you need an introduction to a bankruptcy attorney, call (602) 691-7570, or schedule a free consultation with a debt professional. 

Personal referrals from friends or financial advisors can also highlight trustworthy professionals. Pay attention to testimonials mentioning communication skills—regular updates are crucial in debt cases.

Schedule a Consultation
Most lawyers offer free initial consultations. Use this time to ask about their experience with cases like yours, fee structures (flat fees vs. hourly rates), and success stories. For instance, you might ask, “How many credit card debt lawsuits have you resolved in the past year?”

Explore Affordable Options
If private attorneys are too costly, legal aid organizations or pro bono programs might help. Nonprofits like the Legal Services Corporation assist low-income individuals, while some law firms offer sliding-scale fees based on income.

What to Expect When Working with a Credit Card Debt Lawyer

What to Expect When Working with a Credit Card Debt Lawyer

Once you’ve hired a lawyer, the process typically unfolds in stages:

  1. Case Review
    Your lawyer will examine your debts, credit reports, and any pending lawsuits. They’ll identify errors, assess creditor claims, and determine the strongest legal strategies—whether that’s disputing a debt’s validity or negotiating a settlement.
  2. Strategy Discussion
    You’ll explore options together. For example, if you’re being sued, your lawyer might recommend settling out of court to avoid a judgment on your record. If bankruptcy is on the table, they’ll explain how it impacts your credit score and assets.
  3. Action Phase
    Depending on your situation, your lawyer might draft settlement offers, represent you in court, or file bankruptcy paperwork. They’ll handle all communications with creditors, relieving you of stressful interactions.
  4. Ongoing Communication
    A good lawyer keeps you informed at every step. Expect regular updates on negotiations, court dates, or deadlines. If new issues arise—like a creditor violating a settlement—they’ll adjust the strategy accordingly.

Final Thoughts

Facing credit card debt can feel isolating, but you don’t have to navigate it alone. A credit card debt lawyer offers not just legal expertise, but peace of mind. Whether you’re battling a lawsuit, exploring bankruptcy, or pushing back against predatory collectors, their guidance can help you regain control of your finances. By understanding your options and choosing the right professional, you’re taking a proactive step toward a debt-free future—one where financial stability is within reach

How to Improve Your Credit Score With Simple and Smart Steps

Posted on April 14, 2025 by - Credit Score

Improve Your Credit Score With Simple and Smart Steps

Your credit score isn’t just a random number—it’s the key to unlocking better financial opportunities. Whether you’re applying for a mortgage, financing a car, or even renting an apartment, a strong credit score can save you thousands of dollars and open doors that might otherwise stay closed. But if your score isn’t where you want it to be, don’t panic. Improving your credit is a marathon, not a sprint, and with the right strategies, you can build healthier financial habits over time. Let’s break down how to get started on your journey toward better credit. 

To boost your score quickly, be sure to check out the Credit Rebuilder Program. You’ll get free access to our credit-education program, 7 Steps to a 720 Credit Score, and you’ll start to see your credit score improve in about six months.

Understanding Your Credit Score: The Basics

Your credit score is a three-digit number (typically ranging between 300 and 850) that reflects your financial reliability. Think of it as a report card for your borrowing habits. Lenders, landlords, and even some employers use it to gauge how responsibly you manage debt. The higher your score, the lower the risk you pose—which translates to better interest rates, higher credit limits, and greater financial flexibility.

Credit scores are calculated using data from your credit reports, which track your history with loans, credit cards, and other debts. The two most common scoring models are FICO and VantageScore, both of which weigh factors like payment history, credit utilization, and account age. While the exact formulas are proprietary, we understand the key categories that impact your score. Let’s explore these crucial factors next.

The 5 Factors That Shape Your Credit Score

How to Improve Your Credit Score With Simple and Smart Steps

Your credit score isn’t arbitrary—it’s built on five core components. Here’s what matters most, ordered by their impact:

  1. Payment History (35%)
    This is the most significant factor in credit scoring. Paying bills on time—every time—ibuilds trust with lenders. Even one missed payment can remain on your report for up to seven years, negatively affecting your score. Set up autopay or calendar reminders to ensure you stay on track and never miss a due date.
  2. Credit Utilization (30%)
    This measures how much of your available credit you’re using at any given time. For example, if your total credit limit is $10,000 and you’ve charged $3,000, your utilization rate is 30%. Experts recommend keeping this ratio below 30% (ideally under 10% for the best scores). High utilization suggests over-reliance on credit and can lower your score.
  3. Length of Credit History (15%)
    Older accounts demonstrate to lenders that you have experience managing credit. That’s why closing old credit cards—even if they’re unused—can negatively affect your score by shortening your average account age. The longer your credit history, the better.
  4. Credit Mix (10%)
    Having a diverse mix of credit accounts (e.g., credit cards, mortgages, personal loans) indicates that you can handle different types of debt responsibly. 
  5. New Credit (10%)
    Applying for multiple loans or credit cards in a short time frame can trigger “hard inquiries,” which temporarily lower your score. Space out credit applications by at least six months to minimize the impact on your credit health.

Proven Strategies to Boost Your Credit Score

Now that you know what matters, let’s tackle actionable steps to improve your score.

  1. Never Miss a Payment
    Late payments are the fastest way to tank your score. If you’re forgetful, automate payments for at least the minimum due. Struggling to keep up? Contact lenders immediately—many offer hardship programs or adjusted due dates.
  2. Lower Your Credit Utilization
    Pay down existing balances first, focusing on cards closest to their limits. If you can’t pay in full, ask for a credit limit increase (without spending more!) to lower your utilization ratio.
  3. Audit Your Credit Reports for Errors
    One in four people find mistakes on their reports, like outdated accounts or incorrect balances. And if you’ve been through bankruptcy, that number is more like two in five. Claim your free annual reports at AnnualCreditReport.com and dispute errors with the credit bureaus. For guidance on disputing errors, check out the 7 Steps to a 720 Credit Score, free when you join the Credit Rebuilder Program.
  4. Keep Old Accounts Open
    That dusty store credit card from 2010? Don’t close it. Older accounts lengthen your credit history, which boosts your score. Just use them occasionally (e.g., a small charge every six months) to keep them active.
  5. Build Credit Strategically
    If you’re new to credit or rebuilding, consider a secured credit card (backed by a cash deposit) or a credit-builder loan. These tools report payments to the bureaus, helping you establish a positive history.
  6. Avoid “Quick Fix” Scams
    Ignore companies promising to “erase” bad credit overnight. This is unethical, sometimes illegal, and oftentimes will backfire when creditors catch on and start to deem your disputes as frivolous. Legitimate improvement takes time–at least six months if you join the Credit Rebuilder Program, and 12 to 24 months if you enroll in 7 Steps to a 720 Credit Score. Focus on consistent, responsible habits instead.

Tracking Your Progress and Staying Motivated

Track Your Progress and Staying Motivated

Improving your credit score isn’t a one-time task—it’s an ongoing process. Here’s how to stay on track:

This program is designed to help you improve your score quickly. Plus, it includes free access to 7 Steps to a 720 Credit Score, a program normally reserved for clients of Evergreen Financial Counseling. 

  • Monitor Your Score Regularly
    Many banks and credit card issuers provide free FICO or VantageScore updates. Apps like Credit Karma and Experian offer weekly credit monitoring and send alerts for any changes.
  • Review Reports Annually
    Check your reports from all three credit bureaus (Equifax, Experian, and TransUnion) at least once a year. Look for any errors or signs of identity theft, and dispute inaccuracies promptly.
  • Celebrate Small Wins
    Did you pay off a credit card? Notice a 20-point increase in your score? Recognizing progress—no matter how small—helps maintain motivation and reinforces positive financial behavior.
  • Be Patient
    Negative marks like late payments fade over time, and positive habits accumulate. Most people see noticeable credit score improvements within six to twelve months when following these strategies.

The Bottom Line

Your credit score is a reflection of your financial habits, and improving it requires consistency, patience, and a strategic approach. By paying bills on time, keeping balances low, and staying vigilant about your credit health, you’ll gradually build a strong credit profile that opens doors to better loan terms, approvals, and financial opportunities. There’s no shortcut to a perfect score—but with time and effort, you’ll create a financial foundation that benefits you for years to come. 

Now, go check your credit report—you’re on the right path to success!

What Is My Credit Score and How Can I Improve It

Posted on April 12, 2025 by - Credit Score

Your credit score is like a financial report card—it tells lenders, landlords, and even employers how responsible you are with money. But what exactly does that three-digit number mean, and why does it feel like it’s following you everywhere? Let’s break it down in plain language, minus the jargon.

What Is My Credit Score? The Basics Explained

Your credit score is a three-digit number, typically between 300 and 850, that summarizes your creditworthiness. Think of it as a snapshot of your financial habits: Do you pay bills on time? How much debt do you carry? Have you applied for five credit cards this month? All of this information is fed into a formula that calculates your credit score. Lenders use this score to decide whether to approve you for loans, credit cards, or even rental agreements—and at what interest rate.

Scores are calculated using data from your credit reports, which are maintained by three major credit bureaus: Equifax, Experian, and TransUnion. These reports track your borrowing history, including credit cards, mortgages, and student loans. The most common scoring models are FICO® and VantageScore®, both of which weigh factors like payment history and credit utilization.

Here’s how the ranges generally stack up:

  • Excellent (720+): You’re a lender’s dream. Low-risk borrowers get the best rates.
  • Good (670–720): You’ll qualify for most loans, but might not snag the lowest rates.
  • Fair (580–669): Approval isn’t guaranteed, and interest rates will be higher.
  • Poor (300–579): Rebuilding is key—you’ll face limited options and high costs.

Keep in mind: You don’t have just one credit score. It can vary slightly depending on which bureau or scoring model is used.

Evergreen Financial Counseling enrolls all of its debtor-education clients into 7 Steps to a 720 Credit Score for free. This simple credit-education course will help you rebuild your score to 720 in just 12 to 24 months. 

How Is My Credit Score Calculated? The Recipe Behind the Number

How Is My Credit Score Calculated? The Recipe Behind the Number

Your credit score isn’t plucked out of thin air—it’s based on specific ingredients from your financial history. Here’s how the “recipe” breaks down for FICO® scores (the most widely used model):

  1. Payment History (35%): The biggest slice of the pie. Lenders want proof you pay bills on time. Even one late payment can dent your score.
  2. Credit Utilization (30%): This measures how much of your available credit you’re using. Aim to keep balances below 30% of your limit. (Example: If your credit card limit is $10,000, try to owe less than $3,000.
  3. Length of Credit History (15%): Older accounts show stability. Closing your first credit card could shorten your history and hurt your score.
  4. Credit Mix (10%): A blend of credit types (e.g., credit cards, mortgages, auto loans) signals you can handle diverse debt.
  5. New Credit (10%): Applying for multiple loans or cards in a short period raises red flags. Each “hard inquiry” can knock off a few points.

VantageScore® uses similar factors but tweaks the weights. For instance, it prioritizes payment history and credit utilization even more heavily.

Pro Tip: Your income, savings, or job title don’t directly affect your score—but they can influence a lender’s overall decision.

Want to boost your score quickly? Check out the Credit Rebuilder Program, which will help you improve your score in just six months. 

Why Does My Credit Score Matter? It’s More Than Just Loans

A strong credit score isn’t just about qualifying for a mortgage. It impacts everyday life in surprising ways:

  • Lower Interest Rates: A 100-point difference could save you $40,000 in interest on a 30-year mortgage.
  • Renting an Apartment: Landlords often check credit to gauge if you’ll pay rent reliably. A poor score might mean a higher security deposit—or rejection.
  • Insurance Premiums: Some insurers charge higher rates for low scores, linking them to “riskier” behavior. That said, it’s worth noting that not all states allow this practice. For example, California, Massachusetts, and Hawaii restrict or ban the use of credit-based insurance scores in setting auto insurance rates. As well, your actual credit score isn’t used—insurers use their own formula based on credit behaviors (like payment history, debt levels, etc.).Job Opportunities: Employers in finance, government, or roles with expense accounts may review credit during hiring.
  • Utilities and Cell Phones: Companies might require deposits if your score is low.

Even small wins matter. For example, improving from a “fair” to “good” score could drop your auto loan APR from 9% to 6%, saving $1,500 on a $20,000 loan.

How Can I Improve My Credit Score? Actionable Steps

How Can I Improve My Credit Score? Actionable Steps

Building or repairing credit takes time, but these strategies deliver results:

  1. Pay Bills Like Clockwork
    Set up autopay for minimum payments to avoid late fees. If you miss a payment, catch up ASAP—most lenders only report late payments after 30 days.
  2. Tackle High Credit Card Balances
    Focus on paying down cards with balances above 30% utilization first. Not sure where to start? Try the “debt snowball” (pay smallest debts first) or “debt avalanche” (target high-interest debt).
  3. Check Your Credit Reports for Errors
    If you’ve been through a financial crisis, there’s about a 40% chance your credit report contains an error. Visit AnnualCreditReport.com to access your free credit report. Look for and dispute any inaccuracies, such as accounts you didn’t open, incorrect late payments, or outdated balances.

In 7 Steps to a 720 Credit Score, we teach people how to: 1) identify high-priority errors; and 2) dispute these errors. As well, if you have been through a bankruptcy, we will introduce you to a law firm who will review your credit report for errors and represent you for free if any of your credit-related rights have been violated. 

  1. Be Selective About Opening New Accounts Unless Necessary
    Each time you apply for new credit, it may trigger a hard inquiry on your report, which can cause a small dip in your score—typically around 5 to 10 points. The good news? These effects are usually temporary and drop off after about six months. And if you’re rate-shopping for a mortgage or auto loan within a short window (usually 14–45 days), multiple inquiries are often grouped as one.
  2. Keep Old Accounts Open (Even If You Don’t Use Them)
    Closing a credit card lowers your total available credit, which can spike your utilization ratio. Instead, use it occasionally for small purchases to keep it active.
  3. Consider Credit-Building Tools

Consider credit-building tools like secured credit cards, where you deposit cash (e.g., $500) as your credit limit, use it responsibly, and (eventually) get the deposit back. You can find a list of credit cards, including secured credit cards, that are likely to pre-approve people with poor credit here.  Another option is a credit-builder loan, where your payments are reported to the credit bureaus, which helps your score improve. Check out the Credit Rebuilder Program here. 

Patience Pays Off: Negative marks (like late payments) fade from your report after 7 years. Focus on consistent habits, and you’ll see gradual progress. When you join the Credit Rebuilder Program, you’ll learn strategies to improve your score in just 12 to 24 months, even while those negative items are still on your report.

The Bottom Line

Your credit score isn’t just a number—it’s a tool that opens (or closes) doors to financial opportunities. By understanding how it works and taking small, consistent steps to improve it, you’ll save money, reduce stress, and gain control over your financial future. Start by checking your score (many banks offer free access), then tackle one habit at a time. Remember: Even “good” credit can always get better!

Survey says consumers still confused about credit-scoring

Posted on September 23, 2017 by - Credit Score, CREDIT SCORING

A survey from NerdWallet and Harris Poll found that many Americans do not know the rules of credit scoring. Here are some of the findings:

  1. About half of Americans don’t know that having bad credit can limit their option for cell phone service, and more than half don’t know that people with poor credit will pay higher utility rates.
  2. Almost one-quarter of Americans in the survey didn’t know that they might be unable to rent an apartment due to poor credit.
  3. Nearly 45 percent didn’t know that they might pay higher car insurance premiums if their credit scores are low.
  4. About 41 percent erroneously think that carrying a small balance on credit cards will hurt their credit scores.

Knowing the rules of credit-scoring is important because having bad credit is expensive. You will pay higher interest rates on your credit cards and loans, as well as higher premiums on insurance, and higher deposits for utilities.
Credit-Scoring 101
Here are the basics of credit-scoring. FICO scores are calculated from data reported to credit bureaus by lenders. This information includes:

  1. Your payment history accounts for 35 percent of your credit score. If you are 30 days or more late on a payment, your score could drop.
  2. The amount of credit you use accounts for 30 percent of your score. You will have a higher credit score if your credit card balances never exceed 30 percent of your credit limit. And, as your loans age, your score will increase, assuming you pay your loans on time.
  3. The age of your accounts determines about 15 percent of your score. The older your accounts, the deeper your roots, and the better your score.
  4. Having a healthy mix of credit accounts for about 10 percent of your score. Creditors want to see that you can juggle different types of credit, so they assign better scores to people who have, at a minimum, three credit cards and an installment loan or credit rebuilder loan.
  5. Credit inquiries account for 10 percent of your score. Unless you are rate shopping, your score will drop a few points every time you apply for a credit card or a loan.

Correct Errors To Rebuild Your Credit Score

Posted on May 5, 2016 by - Credit Report, Credit Score, CREDIT SCORING

The first step to rebuilding your credit is getting a copy of your credit report. Yes, I know that’s an extremely simple first step, but it is an essential one. When rebuilding your credit, it is wise to review your credit report at least once every six months. If your credit score is low, you may want to pull your credit report quarterly. This won’t negatively affect your credit score. After getting your credit report, look for errors. If there aren’t any, good! You can now focus on rebuilding your credit score. If there are errors address them immediately if they are severe. In Step Five of my program, I explain that almost 80 percent of people have errors on their credit report, and 25 percent of these errors are severe enough to cause a person to lose a loan or a job opportunity. This is one reason it is essential to know what’s on your credit report. When finding an error on your credit report, what should you do? First and foremost, if you think you are a victim of identity theft, call the three credit bureaus right away to put a freeze on your credit account. This way, no one else can open credit in your name. If the mistake doesn’t seem to indicate you are a victim of identity theft, you can start by filing an online dispute at each of the three credit bureaus. Following are the three credit bureau links:

If a bank or credit card company is responsible for incorrect information on your credit report, contact them. Ask them to investigate the mistake they reported to the credit bureaus. Make sure you have documentation to support your statements. One of the most common (and dangerous) errors you will find is an inaccurate credit limit. So why does an inaccurate credit limit hurt your credit score? The credit-scoring agencies give higher credit scores to people with lower utilization rates (your credit card balance as a percentage of your limit.) If your limit is, for instance, $2,000, and your balance is $600, you have a utilization rate of 30 percent. Maintaining a 30 percent utilization rate is good. It should improve your credit score. If your credit card company is reporting your limit as $1,000 instead of $2,000, this is an error. Your utilization rate will appear to be 60 percent (a $600 balance on a $1,000 limit). This is a bad utilization rate because it may seem that you rely on credit. This will cause your credit score to drop. Notify the credit bureaus of the error on your credit limit by filing a dispute with all three credit bureaus. At the same time, place a call or send a letter to your credit card company demanding they report your correct limit. Correcting errors help rebuild your credit score. After all major errors are corrected, get another copy of your credit report to verify it is error-free. If it is, focus on rebuilding your credit to increase your credit score. FYI: Your credit score will not decrease if you get a copy of your credit report. Inquiries into your credit score by lenders will cause a dent in your score, but you are not penalized for getting your own credit report. This is considered responsible financial behavior. Therefore, get your credit report as often as you desire to check for errors and/or to rebuild your credit score.

What You Should Know Before Closing Credit Card Accounts

Posted on March 3, 2016 by - CREDIT BLOG, Credit Cards, Credit Score, Personal Finance

After learning the difference between traditional, secured, subprime, retail and major credit cards, you may want to close one or more of your credit cards, especially if you have more than five. If that’s your only solution to increasing your credit score, learn more about the credit process before closing an account.
Most credit scoring systems award a higher credit score to those who have no more than five credit cards. Before rushing to close an account, know the impact it will have on your credit score.
Here are a few basics about owning credit cards.
Fifteen percent of your credit score comes from the age of your credit accounts. The older your credit accounts are, the better it is for your credit score. Credit scoring systems consider the average age of your accounts. If possible, never close older accounts. If you do, you will drive down the average age of your accounts which will decrease your credit score.
Closing a credit card account may also affect your utilization rate. “Utilization rate” is the ratio of your credit card balance against your credit limit, expressed as a percentage. For example, if you charge $800 on a credit card with a credit limit of $2,000, your utilization rate is 40 percent. Credit-scoring bureaus reward people who have utilization rates below 30 percent. If you want to be rewarded by the credit scoring bureaus, always keep your utilization rate under 30 percent.
How does closing credit card accounts impact your utilization rate? If you transfer the balance on the account you want to close to another account, consider this first. If you decide to cancel a credit card and transfer the remaining debt to another card, you may cause the utilization rate on the second card to rise sharply.  This may cause your credit score to drop.
Leaving a balance on your card after canceling the account is worse than transferring a balance because you won’t have a credit limit to offset the balance owed. For example:  If you leave a $700 balance on the canceled card, your utilization rate will suffer dramatically since the limit on the card will be $0.
Develop a strategy to increase your credit score when you have more than five credit cards. Your best bet is to keep all of them active but pay them off every month. This is achieved with a budget. Plan which expenses you will pay with credit cards.
A steady history of payments will demonstrate to credit-scoring bureaus your ability to manage your accounts and will eventually improve your credit score. Pay special attention to the cards with the highest limits, oldest ages, and best interest rates. Be sure to keep these cards active, maintaining a utilization rate below 30 percent.
Retail credit cards, cards which can only be used at the designated company on the card, are an exception to the “keep-them-open” rule. There is no reason to purchase monthly from these stores. Letting a retail account go inactive may not be the ideal choice, but it should not be a cause for alarm unless it causes your credit score to drop. If that happens, call the retail store and to see if you can reactivate the card.

How Divorce Impacts Your Credit

Posted on February 27, 2015 by - Credit Score, Personal Finance

Divorce statistics do not reflect a “happily ever after” marriage for the majority of couples. When you realize there’s a possibility your marriage may end, take action to protect your credit.
When taking inventory of all assets, please remember to include all jointly held credit cards, auto loans, and mortgages. This may seem insignificant, but it will certainly affect your credit score after you’re divorced. Learning to build credit means you must also learn how divorce can impact your credit.
If you and your partner kept all credit separate during your marriage, your credit score will not be impacted by your ex-spouse’s credit behavior at any time before, during, or after your marriage. However, if your spouse is an authorized user or joint holder of a credit card, an angry former spouse may attempt to create financial havoc in your life by charging on jointly held credit cards without making a payment.
All debt incurred on jointly held cards are the responsibility of you and your ex-spouse. Therefore your ex-spouse’s financial decisions impact your credit score after divorce. For example, your ex-spouse’s late payments and collection notices will be on your credit report after your divorce if you do not separate the accounts.
Before the divorce, you should cancel all jointly held credit cards. This eliminates any chance of a negative impact on your credit report from your ex-spouse’s financial mismanagement. Some credit card companies may require a special type of notice to cancel jointly held cards, such as a written notice. Doing this as soon as possible is in your best interest in terms of divorce and credit. After a divorce, your ex-spouse may need to charge many things to make up for reduced income. Even if your ex is not being malicious, this could harm your credit score by causing your utilization rate (the balance as a percentage of the credit card limit) on jointly held credit cards to increase.
Credit cards aren’t your only consideration in a divorce. Don’t forget your mortgage. If you and your ex-spouse own a home together, both of you are responsible for the debt, unless you have worked out another arrangement. If you choose not to sell, refinance. Use a quitclaim deed to take your name off the title of the property. But don’t stop there! Your ex must also refinance. If not, your credit score will decrease if he or she becomes delinquent on payments.
If you retain ownership of your home and do not put the property in your name, you have not fully protected yourself. If your ex-spouse is sued, the house might be seized to pay off your ex-spouse’s debts.
Are you separated? No problem. Here are a few steps to prepare for an eventual divorce. Pull your credit report and assess your financial situation, noting all existing credit accounts. Keep copies of everything in a safe place. If you have joint accounts, have a discussion with your spouse about who will assume payments for which credit accounts.
If you are on peaceful terms with your spouse, have a frank discussion about the impact of divorce on your credit. Both of you need to protect yourselves. Consult an attorney. Create the best possible plan to keep your payments on schedule to protect your credit.
To reduce the negative impact of divorce on your credit, cancel all joint accounts and contact the three credit bureaus to update your address information.

Becoming an Authorized User Quickly Increase Your Credit Score

Posted on October 10, 2014 by - CREDIT BLOG, Credit Score, CREDIT SCORING

The easiest and fastest way to increase your credit score is to become an authorized user on a family member’s credit card account.
This is an excellent strategy for teen children or people who have suffered a severe financial crisis. Both are interested in building or rebuilding their credit. As an authorized user, they receive the benefits of someone else’s credit but have no contractual obligation to pay the bills.
A person’s individual credit score is not considered when becoming an authorized user. Neither is his or her credit report reviewed. There is no pre-qualification for an authorized user status on a credit card. However, the credit card’s history will be reported on the authorized user’s credit report as long as the authorized user is related to the account holder.
Becoming an authorized user on a family member’s credit card will quickly raise your credit score, even after bankruptcy or other financial disaster, by allowing you to “borrow” the account holder’s clean credit history.
Family members may not be receptive to adding you to their credit card accounts if they believe you will not honor your commitment to repay the charges you make. You must assure them of your ability to re-pay. Show them how you will repay charges or tell them you do not want a credit card or access to their account. Your goal is to become an authorized user to increase your credit score.
To protect the family member adding you as an authorized user, here are two suggestions:

  1. The account holder should shred the credit card that arrives in your name.
  2. The account holder should never give you the account number, credit card expiration date, or card security code.

Both of you will then benefit. How? Your credit score will increase because you have a good credit report. The account holder benefits because he or she is able to help a family member without worrying about irresponsible behavior on your part.
Authorized users must be related to the account holder for their bad credit scores to benefit from this strategy. Try to choose someone with the same last name and address. Otherwise, the credit-scoring bureaus might not recognize your status as an authorized user and your credit score might not improve.
Call the credit card company and ask if they are reporting your status as an authorized user. You can also check your credit report to see if the account is appearing. If not, choose another account holder.
Be sure that you also choose a responsible relative with an account in good standing. If you become an authorized user on an account that becomes delinquent, guess what happens? Your score will drop. Therefore, pick an account with a clean history of payments and a utilization rate of no more than the 30 percent limit. If the balance exceeds 30 percent, or if the account holder makes a late payment, you should immediately remove your name as an authorized user so the negative information does not hurt your credit score.
Authorized users usually see a quick jump in their score. In twelve or eighteen months remove yourself from the account because you should be able to qualify for loans on your own.