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Your Credit Score

Understanding Your Credit Score

Our credit score, or FICO score, tells lenders, banks, and even employers a lot about us. FICO stands for Fair, Isaac & Company, and has been the most common measure of a person’s creditworthiness for almost half a century. It can determine whether we are approved for a mortgage, credit card, or other loan, and what interest we’ll pay. Additionally, many employers have begun checking the credit scores of job applicants. But how credit scores are calculated, and how lenders and creditors use that information, is still largely a mystery to many people.

Understanding your credit score and how you can keep it as high as possible can mean better interest rates on your credit cards and mortgage, getting approved for loans and leases, landing a job, and much more. At Redman Ludwig, P.C., in Indianapolis, our credit attorneys are committed to helping you understand how credit scores work and helping you develop a game plan for getting on the fast track to your future financial goals.

Credit Score Basics

Many people do not realize that they have not one but three credit scores. That’s because there are three major credit reporting agencies: Experian, Equifax, and TransUnion. A lender may check one or all of them when considering you for a loan or line of credit, and your scores at each agency may vary greatly. Credit scores generally fall on a scale from 300 to 850, with 850 being the highest possible score, and anything over 720 being considered excellent credit.

How Are Credit Scores Calculated

While the exact calculations are highly complex, the two most important factors that make up your credit score are your credit history and your debt-to-credit ratio. Your credit history is a timeline of whether you made your monthly payments on time, how long you’ve had accounts open, and other factors. Your debt-to-credit ratio is just that: the ratio of debt you currently have to the credit available to you. Generally speaking, someone with maxed out credit cards will likely have a lower credit score than someone with plenty of available credit that they don’t use.

Your Credit Score After Bankruptcy

While a Chapter 7 or Chapter 13 bankruptcy can appear on your credit report for up to ten years, in cases where a debtor is having a hard time making their payments every month, bankruptcy can actually be an effective way of raising credit scores. By faithfully sticking to the terms of your bankruptcy filing, you can begin raising your credit score immediately. Many people who file for personal bankruptcy are surprised to see how quickly their credit scores begin to raise following bankruptcy. Our optional credit building program helps clients who have filed for bankruptcy return to good credit in as little as 18-24 months.

Contact an Indianapolis Bankruptcy Attorney Today

The bankruptcy lawyers at Redman Ludwig, P.C., are experienced at finding workable solutions for Central Indiana residents who are falling behind on payments or are facing foreclosure. Offering flexible payment plans and appointment scheduling, our comprehensive approach to debt relief goes beyond bankruptcy to help you build a brighter financial future. Call our office in Indianapolis, IN at 317-800-6181 today.

Our experienced Indianapolis bankruptcy attorneys serve clients in Terre Haute, Muncie, Fishers, Richmond, Carmel, Noblesville, Westfield, Greenfield, Lawrence, Beech Grove, Shelbyville, Greenwood, Franklin, Edinburgh, Plainfield, Lebanon, Zionsville, Brownsburg, Avon, Danville, Lafayette, Kokomo, Columbus, Richmond, Bloomington, and other communities throughout Marion, Hamilton, Hancock, Boone, Tippecanoe, Shelby, Johnson, Morgan, Hendricks, Madison, Bartholomew, Wayne, Vigo, Delaware, Monroe, Howard, Clay, Putnam, Owen, Randolph, Rush, Green, Montgomery, Clinton and Henry Counties.