Modern society runs on credit, and you cannot underestimate the importance of a good credit score. Proof that you are financially responsible is essential if you are looking to take out a loan, a mortgage, or simply purchase a new car.
Unfortunately, many of us are guilty of living beyond our means and can all too easily fall into the trap of being financially unviable in the eyes of lenders. Yet, according to renowned credit repair specialist Alex Miller, the difference between a positive and negative credit score is simply a question of math. He believes that with a bit of knowledge and work, everyone can transform a terrible credit score into an exemplary one.
“Never give up hope is what I tell everyone whose credit score has sunk below the radar,” explained the founder of Alex Miller Credit Repair. “Having bad credit is not a permanent state and can be fixed.”
As someone who went from being broke and depressed to the head of a multi-million-dollar company, Miller not only talks the talk but he has walked the walk. He has now made it his mission in life to help others who have sunk into the quicksand of negative equity.
Miller explained, “In this day of soaring living costs and financial uncertainty, going from having good credit to bad credit can happen to us all. It’s nothing to feel guilty about. What you need to bear in mind is: although credit score providers like to keep the exact algorithms of how your credit score is calculated a secret to prevent your score being manipulated, we are not completely in the dark about the mathematics involved.”
In essence, a credit score is a measure of how trustworthy you are. Lenders cannot get to know everyone on an individual basis and so rely on providers such as FICO and Experian to supply them with up-to-date information on whether you are reliable or a risk.
Miller said, “If borrowers could manipulate credit scores it would make the system worthless, but the maths behind positive and negative accounts is pretty simple. A credit score revolves around five factors—your personal debt, payment history, credit history, types of credit, and recent credit. Each category interacts and presents borrowers with an impression of your overall creditworthiness.”
Miller explained, “For example, your payment history is the most important category and you need to keep on top of that to keep your score in good standing order. Nothing says ‘unreliable’ more than a missed payment. Your personal debt is used to see if you are an overextended and risky borrower, and your credit history is an indication of how good or bad you are at managing credit.
Miller added, “Types of credit shows the potential borrower what sort of credit you have had in the past, such as mortgages, credit cards, etc. As a rule of thumb, the more varied your credit, the more positive your account. And finally, recent credit will often cause your credit score to dip slightly as lenders wait to see how well you manage the new account, but if you manage it wisely it will pay dividends to your overall credit score in the long run.”
By paying close attention to all five factors, Miller stresses that a negative account can soon be transformed into a positive account.