About Reason Codes

The six main categories of information that credit scores evaluate, with their weights in the score calculation. Each category has it’s own set of scores reasons that you should be aware of. Look at it this way, when you are attempting to build credit should have all of the tools.

As you learn more about score reason or reason codes, it put you in the driver seat as it relates to improving your score. I know that for some of you this may seem to be a slow process. However, let me encourage you to take the time and learn the process and it will reward you later.

These score reasons are more useful than the score itself in helping you determine whether your credit report might contain errors, and how you might improve your score over time. However, if you already have a high score (for example, in the mid-700s or higher) some of the reasons may not be very helpful, as they may be marginal factors related to three categories length of credit history, new credit and types of credit in use.

Score Credit Grade

720 and up AA
700 to 719 A
680 to 699 A-/B+
660 to 679 B+/B
640 to 659 B
620 to 639 B-/C+/C
600 to 619 C/D
580 to 599 D/F
579 and below F

It is important to recognize that these scores are not just about derogatory credit history. They are about determining credit risk associated with a particular borrower, and points are added or taken away based on many different factors related to your credit profile.
For example, once you start using credit accounts, you are usually going to have a credit score in the 565 to 580 range. Why so low? Well, you are just starting out, and you have no credit history to rate.

Once you have 12 months of usage on your accounts, you will begin adding points to your credit history. However, if you mess up, you will destroy your credit quickly, and then you really face a tough uphill climb.

Common score reasons
Here is the top 10 most frequently given score reasons. Note that the specific wording given by your lender may be different.

  • Serious delinquency.
  • Serious delinquency, and public record or collection filed.
  • Derogatory public record or collection filed.
  • Time since delinquency is too recent or unknown.
  • Level of delinquency on accounts.
  • Number of accounts with delinquency.
  • Amount owed on accounts.
  • Proportion of balances to credit limits on revolving accounts is too high.
  • Length of time accounts has been established.
  • Too many accounts with balances.

Credit Repair:

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

  • "Credit problems? No problem!”
  • “We can erase your bad credit — 100% guaranteed.”
  • “Create a new credit identity — legally.”
  • “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.

The Scam

Everyday, companies’ nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:

  • Companies that want you to pay for credit repair services before they provide any services.
  • Companies that do not tell you your legal rights and what you can do for yourself for free.
  • Companies that recommend that you not contact a credit reporting company directly.
  • Companies that suggest that you try to invent a “new” credit identity – and then, a new credit report – by applying for an Employer Identification Number to use instead of your Social Security number.
  • Companies that advise you to dispute all information in your credit report or take any action that seems illegal like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.

You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.

The Truth

No one can legally remove accurate and timely negative information from a credit report. The law allows you to ask for an investigation of information in your file that you dispute as inaccurate or incomplete. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act (FCRA):

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