A Division of Addleman Law Firm

Credit Scoring Basics

Credit Score History

The credit scoring system became prevalent during the 1980′s as a way for lenders to quickly evaluate a potential borrower’s creditworthiness. The system was found to accurately predict financial risk over time and grew to several different industries. Now credit scoring is used by lenders, insurers, landlords, employers, utility companies and even judges to evaluate your lending behavior. A basic knowledge can help you improve credit score reports.

Algebra –  Thousands of different formulas exist today for various evaluation purposes. Each unique scoring system is accurate and correct for its own application. The scores you can order online use an algorithm created for consumers that approximates these different formulas. Your online credit scores may vary a bit from the score your lender uses, but they should be in the same range depending on the score you purchase and its purpose. Knowing it can help improve credit score reports.

Chemistry – The basic scoring formula takes into account several factors from your credit reports. The impact of each element fluctuates based your own credit profile, and are important in the goal to improve credit score:

Payment history – A good record of on-time payments will help improve credit score reports.

Outstanding debt – High balances in relation to your limits can harm your credit. Aim for balances under 35% but to get biggest impact pay balances as close to 0% as you can. This will help to improve credit score reports.

Credit account history – An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.

Recent inquiries – When a lender or business checks your credit, it causes a hard inquiry and a slight ding to your credit score. Apply for new credit in moderation.

Types of credit – A healthy credit profile has a balanced mix of accounts and loans.

Economics – When you are preparing for a major purchase make sure you check your scores and reports from all three reporting agencies: TransUnion, Equifax and Experian. Looking at your scores and reports a few months before your loan application will help you get a complete picture of your credit health. Worried if your score makes the grade? If your score is above 740 you will probably qualify for a preferred loan. Under 640, you may have trouble receiving new credit. If your credit score is a little low, pay your bills on time, reduce your debt, remove inaccuracies and avoid new inquiries for a few months. Plus, don’t forget that your score is not the only factor a lender may look at when they are evaluating your financial standing.

Call (816) 994-4600 to improve credit score reports today!


“Shelly does an OUTSTANDING job working with the clients that I am unable to get financing for. Being a loan originator I pull a lot of credit reports and not all qualify for a mortgage loan and they have no clue what to do or how to fix it. I have given Ceritifed Credit Experts name out to many of my clients over the last few months and not only was I able to close an extra loan or 2 that otherwise I wouldn't have been able to close I was able to provide a service to my borrower's and referral sources that nobody else is providing. In times like today the extra effort doesn't go un-noticed, thank you Shelly for taking the extra effort and working great with my clients and me!” January 4, 2012

Krksi Smith

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255 NW Blue Pkwy #200
Lee’s Summit, MO 64063 Phone: (816) 994-4600
Fax: 855-523-5900


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Wichita, KS 67212
Phone: (800) 994-3070
Fax: (855) 523-5900

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