Understanding your credit score and what factors impact that score are crucial tools for building a healthy credit rating. Your credit score determines how much you will pay in interest rates to borrow money or even whether you will even get financing in the first place. Credit reports are also used to decide whether to provide you with insurance, housing, and utilities. Even many employment decisions are based on your creditworthiness. A higher credit score makes you a lower risk to lenders, which, in turn, means you are more likely to get credit or insurance—or pay less for it. It also means you are more likely to get that dream job you worked so hard to achieve. Keep reading and learn to understand, manage, and improve your credit rating.

1. ULTIMATE
CREDIT SCORE
GUIDE
​Understanding and
Increasing Your Credit
Rating
​STEPHENSON LAW FIRM PLLC
www.Utahjustice.com

2. 2|
Table of Contents
4 8 10 12 13
page page page page page
14 17 18
page page page
CreditScore
Components
CreditInquiries ReportingPeriods UnscoredFactors CreditScoreMinimum
Requirements
IncreasingYourCredit
Score
ReviewingYourCredit
Reports
CorrectingCreditReport
Errors

3. 3|
Ultimate Credit
Score Guide:
Understanding and
IncreasingYour
Credit Rating
​Understanding your credit score and what
factors impact that score are crucial tools for
building a healthy credit rating.
​Your credit score determines how much you will pay in
interest rates to borrow money or even whether you
will even get financing in the first place. Credit reports
are also used to decide whether to provide you with
insurance, housing, and utilities. Even many
employment decisions are based on your
creditworthiness.
​A higher credit score makes you a lower risk to
lenders, which, in turn, means you are more likely to
get credit or insurance—or pay less for it. It also means
you are more likely to get that dream job you worked
so hard to achieve.
​Keep reading and learn to understand, manage, and
improve your credit rating.
©2015StephensonLawFirmPLLC
www.Utahjustice.com

4. Credit Score
Components
PaymentHistory
AmountsOwed
LengthofCreditHistory
TypesofCreditUsed
NewCredit
Inquiries
ReportingPeriods
UnscoredFactors
MinimumRequirements

5. 5|
Credit Score
Components
Creditscoresarethreedigitnumbersthat
typicallyrangefrom300–850
Thescoresarecalculatedusingdatataken
fromyourcreditreportsandareusedto
predictyourfuturecreditworthiness
35%
30%
15%
10%
10%
Payment History
35%
Amounts Owed
30%
Length of Credit
History 15%
New Credit 10%
Types of Credit
Used 10%

6. 6|
Credit Score
Components
​Payment History (35%)
​Your payment history is the most important factor in calculating your credit
score. Late payments, charge offs, foreclosures, repossessions, liens, wage
attachments, and bankruptcies will all negatively impact your score at varying
amounts depending on the severity of the issue. The score also considers how
late a payment was, how much was owed, how recently the negative payment
history occurred, and how many accounts are listed with a negative payment
history.
​Amounts Owed (30%)
​The amounts you owe is also a heavily-weighted factor in calculating your
credit score. The score considers how much you owe on individual accounts
and how much you owe in the aggregate compared to how much credit you
have available.
​This factor is also known as the utilization ratio. As a rule of thumb, you should
strive to keep the amounts you owe on credit cards and other revolving debt
below 10% of the total amount available. Alternatively, a utilization ratio of
30% or below is also considered an indicator of a low credit risk.
Arecent60-daylate
paymenthurtsyour
scoremorethana90-
daylatepaymentfrom
twoyearsago
Keepyourtotal
revolvingcreditbelow
10%ofyourtotal
availablecredit

7. 7|
Credit Score
Components
​Length of Credit History (15%)
​Typically, a longer credit history will increase your credit scores. However, even
consumers who haven’t been using credit for very long may have high credit
scores depending on their other credit score factors. Generally, your score
considers the age of your oldest and newest accounts and the average age of
all your accounts. Older is better. The score also considers how long it has
been since you used certain accounts so it may lower your score to have
unused accounts in your credit history.
​Types of Credit in Use (10%)
​Your mix of credit use is also considered in your score. A good mix would
include credit cards, retail accounts, installment loans, finance accounts, and
mortgage loans.
​New Credit (10%)
​The amount of newly opened credit accounts also figures into your score. Too
many new accounts in too short a time period will generally lower your score.
Especially if your history is relatively short.
Ageyouraccountsby
keepingthemopenand
active
Keepadiversemixture
ofcredittypes
Don’topennew
accountsunless
absolutelynecessary

8. 8|
Credit Inquiries ​Hard Inquiries
​With a few exceptions, hard inquiries
that occurred in the last twelve
months are calculated as part of your
score. Any hard inquiries older than
twelve months can remain on your
reports for up to another year but
are not calculated as part of your
credit score.
​Generally, hard inquiries are those
that occur as a result of your
attempts to obtain new credit. Hard
inquiries can also occur as a result of
skip-tracing efforts by collection
agencies.
​Types of hard inquiries include
applications for:
• Credit Cards
• Auto Loans
• Mortgages
• Personal Loans
• Collection Agency Skip-tracing
​Soft Inquiries
​Soft inquiries are not calculated as
part of your credit score. Types of
soft credit inquiries include:
• Consumer-initiated inquiries of
their own report
• Inquiries for promotional or “pre-
approved” offers of credit
• Administrative inquiries from
lenders with whom you have an
existing relationship
Creditinquiriesforemployment
purposes,toobtaininsurance,orto
acquireutilityservicesarenot
calculatedaspartofyourcreditscore

9. 9|
Credit Inquiries ​30 Day Safe Harbor Period
​Inquiries for mortgages, auto loans,
and student loans are not calculated
as part of your credit score if they are
less than 30 days old.
​45 Day Rate Shopping
Allowance
​Mortgages, auto loans, and student
loans also benefit from a 45 day rate
shopping allowance period in which
multiple inquiries for the same loan
type are calculated as part of your
credit score but are only counted as
one inquiry.
​This allowance encourages rate
shopping by consumers by not
penalizing them for multiple related
inquiries.
​Revolving credit applications do not
benefit from this rate shopping
allowance.
Creditinquiriesaremaintainedfor
betweensixmonthsandtwoyears
dependingontheinquirytype

10. 10|
Reporting Periods ​SevenYears
​Most items continue to report for up
to seven years from the date of the
last payment. The most common
items that fall within the seven year
period are:
• Late Payments
• Foreclosures
• Judgments
• Settlements
• Repossessions
• Delinquent Child Support
• Paid Tax Liens
​SevenYears + 180 Days
Collections and charged off accounts
report for the seven year period plus
180 days from the date of the
delinquency.
Ifyourreportisbeingaccessedforaloanor
lifeinsurancepolicyof$150,000ormoreor
foremploymentpurposesforajobpaying
morethan$75,000ayear,thetypical
reportingperiodsdonottechnicallyapply.
Forthesepurposescreditinformationcan
reportindefinitely.
Fortunately,thecreditbureausgenerally
sticktothetypicalseventotenyear
reportingperiodsevenforthesepurposes

11. 11|
Reporting Periods
​Student Loans
​Defaulted student loans can report
for up to seven years from the date
they are paid, the date they were first
reported, or the date on which the
loan re-defaults.
​These time periods are governed by
the Higher Education Act. Under the
FCRA there is no limitation as to the
time periods student loans can report
on your credit.
​Tax Liens
​Unpaid tax liens can remain in your
credit reports indefinitely.
​Released tax liens must be deleted
after seven years from the date
released.
​Bankruptcy
​Chapter 7 bankruptcy can report for
up to ten years from the date the
bankruptcy was filed.
​Chapter 13 bankruptcy can report for
up to seven years from the date of
discharge or up to ten years from the
date the bankruptcy was filed.

12. 12|
Unscored Factors ​Factors that are not used to calculate credit scores
​Credit scores consider a broad range of information on your credit report but
the following factors are not considered as part of your score:
• Race, color, religion, national origin, sex, or marital status
• Age (though other scoring methods do consider your age)
• Income, salary, occupation, title, employer, or employment history
• Where you live
• The interest rates being charged on your accounts
• Child or family support obligations
• Rental agreements
• Whether or not you are participating in credit counseling
• Soft inquiries such as consumer-initiated inquiries, promotional inquiries,
and administrative inquiries
• Employment and insurance inquiries
• Any information not in your credit report
​

13. 13|
Credit Score
Minimum
Requirements
Ifyouhavenocredityet,youcanstart
tobuildsomebyobtainingasecured
creditcard,gettingalow-limitstore
card,orbybecominganauthorized
useronafamilymember’saccount
​To calculate your credit score, your credit report must contain enough
information on which to calculate the score. At least some of that
information must be recently reported for a calculation to occur.
​The minimum requirements needed to calculate your credit score are as
follows:
• At least one undisputed credit account that is at least six months old
• At least one undisputed credit account that has been reported or
updated in your credit report within the past six months
• No indication on the credit report that you are deceased

14. Increasing
Your Credit
Score
PayBillsonTime
KeepBalancesLow
Don’tCloseOldAccounts
AvoidOpeningNew
Accounts
PerformRegularReviews
CorrectErrors

15. 15|
IncreasingYour
Credit Score
​Pay your bills on time
​Late payments and collection accounts will substantially lower your credit
score. It’s easy to understand why. Keeping your bills current and paid on time
is an excellent indicator of financial responsibility. On the other hand, paying
late every month or falling into collections can be an indication of a higher
credit risk.
​One excellent way to keep your bills from ever falling into collections is to use
an automatic payment service. Many banks offer automatic bill paying services
for free.
​Keep balances low
​High balances on credit cards and revolving credit accounts lower your credit
score because they increase your ratio of available credit to used credit. For
the best credit score boost, keep your credit cards and revolving accounts to
less than 10% of the available credit. Keeping a low ratio of credit usage to
available credit limits is another first-rate indicator of financial responsibility.
​If a 10% utilization ratio is unrealistic for your situation, try to keep your
revolving account and credit card balances below 30% instead.
Payingacollectioninfullorbringinga
lateaccountuptodatewillnotremove
itfromyourcreditreportsotryto
negotiateforadeletionbeforeyoupay
Ifthecreditoragreestodeletethe
informationinexchangeforyour
paymentgettheagreementinwriting

16. 16|
IncreasingYour
Credit Score
​Don’t close old accounts
​Age is a critical factor in credit
scoring. Generally, older accounts
boost your score more than newer
accounts s leave old accounts open
even if you don’t use them.
​Most credit scoring models do take
into account how long it has been
since you last used a credit card or
revolving credit account so you
should use your old accounts every
once in a while just to keep things
active.
​Just don’t go crazy and be sure to
keep the balance relatively low.
​Avoid opening new accounts
​True, you get reward points and
discounts when you open a store
credit card but weigh the savings
carefully because opening too many
cards too fast will lower your credit
score. Having too many new
accounts also lowers your credit
score because of the age of the
accounts.
​Sadly, the credit inquiry itself will also
lower your score a little, though the
inquiry is a very small factor
compared to the age of the account
and the number of open accounts
you carry.
Keepoldaccountsopenandactiveand
don’topennewaccountsunless
absolutelynecessary.

17. 17|
ReviewingYour
Credit Reports
​Regularly check your credit
​Check your credit reports every four to six months. Contrary to popular belief,
most consumers do not need to keep monitoring services to watch their credit
hourly or even daily. For most consumers, checking your credit two or three
times a year will be sufficient to be sure you are managing your reports wisely.
You also don’t need to actually check your credit score. Effective credit
management only requires monitoring your accounts and keeping your usage
in check.
​Watching your credit score closely may be desirable, however, if you are
planning a major purchase that will require credit in the near future. Buying a
house or car, for example, can make credit monitoring and regular credit score
checks more important.
Youcancheckyourcreditreportsfor
freeonceevery12monthsat
www.annualcreditreport.comwithout
loweringyourcreditscore

18. 18|
Correcting Credit
Report Errors
​Correct credit report errors
​If you have information in your credit reports that is not accurate it is probably
lowering your score. Occasionally, inaccurate information increases your score
but that is generally the exception not the rule. If you do have inaccurate
information listed, you can dispute that information by sending letters to the
credit bureaus informing them of the inaccuracy and requesting they re-
investigate the matter.
​If you have documentation proving the information is listed inaccurately,
include a copy with your dispute letter. You may also want to include a copy
of your report with the incorrect information highlighted to simplify the
dispute process. In many cases you also want to include a copy of your
identification to ensure the credit bureaus know the disputes are coming from
you rather than a credit repair organization.
​Once they receive your disputes, the credit bureaus will have between 30 to 45
days to investigate the information. Be patient and let the process take its
course. Once the investigation is complete, the credit reporting agencies will
normally send you results of any changes they make in writing.
​You can also send letters requesting correction of inaccurate information
directly to your creditors. If you are disputing specific charges you must do so
within 60 days so check your billing statements regularly for fraudulent
charges.
Asmanyas40millionAmericanshave
errorsintheircreditreports

19. THANK YOU
​Ultimate Credit
Score Guide:
Understanding
and Increasing
Your Credit Rating STEPHENSON LAW FIRM PLLC
www.Utahjustice.com