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Your Credit Is Part of Your Personal Brand — Here’s How to Rebuild it – Personal Branding Blog


We may not immediately make the connection, but our credit scores are a solid part of our personal brand. Our credit history hints at our reliability and trustworthiness; it lets people know how seriously we take our commitments. Some employers now pull credit as part of the hiring process, and a long pattern of neglected accounts can torpedo even the most promising careers.

Medical catastrophes, accidents, or family emergencies can, of course, influence your score. Regardless of the cause, however, poor credit needs to be rebuilt to protect your reputation. The time it takes to rebuild credit depends on multiple factors, but there are two main variables to consider: time and money. When rebuilding credit, the inverse relationship between time and money can gauge the amount of time it takes to increase a credit score. The more cash, the less time it will take — and vice versa.

Credit bureaus are data collection agencies that collect account information from all creditors. Credit bureaus use this information to create a credit score, which lenders use to determine a person’s creditworthiness. The credit score is calculated using six factors: payment history, credit card use, derogatory marks, credit age, total accounts, and hard inquiries. 

Each factor plays a role in your overall credit score. To rebuild credit, a person has to have a positive track record among these factors with account holders. You can talk to a loan coach to look into rebuilding your credit, but you have other options, too.

3 Factors of Rebuilding Credit 

Bankruptcy takes about three months to complete, and it cleans most negative marks from your record after two years of having bankruptcy status. According to Lendvia, “Chapter 13 stays on your record for seven years from the date of your filing. In a Chapter 7 (liquidation), the reporting period is ten years from the date of filing.” These options are available to everyone, regardless of financial standing.

But before you get to that point, look at the three big areas of impact on your credit score. By taking a hard look at how you can improve in these areas, you can move your score in the right direction on your own.

High-Impact Credit Factors

The factors regularly used to calculate a person’s credit score are arranged in categories of impact. Payment history, credit card usage, and derogatory marks are all high-impact elements. They’re high-impact because they inform the bureaus of a person’s record of making on-time payments.

A person’s payment history should show a consistent record of on-time payments for at least a year or two. If that’s not the case, it will take that amount of time to increase this specific area of the person’s credit score.

Credit card use is a measure of how much credit is being used in relation to the total amount available. The higher the utilization rate, the lower the person’s credit score will be. In order to improve this area, a person must keep the amount of credit she uses as close to 10 percent as possible by paying on her credit card balance. A person’s score is positively impacted the longer she shows a low utilization rate.

Derogatory Marks

Derogatory marks are notes on collections, tax liens, civil judgments, and bankruptcies that have occurred and remain unresolved. For these remarks, it’s best to first verify whether they’re correct; if they’re not, file a dispute to have them removed. This may take some time, but it will be worth it. According to the Consumer Financial Protection Bureau, the government doesn’t allow any lender to report incorrect information. This means a debt can — and should — be removed if it’s proven to be inaccurate.

True and accurate derogatory marks must be paid. However, a person can sometimes only pay 30 percent to 80 percent of the overall debt if the account is already in collections or if the lender is willing to negotiate. 

The next credit factor is medium-impact, and it doesn’t have as strong an impact on a person’s overall score as the factors above. Credit age is a measure of how long a person has had accounts open with creditors — the longer, the better. A person could open a secure or nonsecure credit card account to improve this area; closing a long-standing account could impact one’s score negatively, however.

Low-Impact Factors

The last factors are low-impact. Low-impact factors are considered for a reason; if a person wants to rebuild her credit, it’s important to understand them. The low-impact factors are total accounts and hard inquiries.

Total accounts are a low-impact credit factor that’s determined by the number of accounts open. The higher the number of accounts, the more this score is increased. To help rebuild this area, a person should open as many accounts as she can reasonably maintain. The key is to increase the amount of credit available to you.

The final factor on your credit score is hard inquiries. A hard inquiry is a request for your credit information from the credit bureaus, and it negatively affects your score when there are too many — it shows you’re applying for credit often. Most banks believe that history has shown that a person with a lot of hard inquiries is more likely to default. Understanding this logic explains why hard inquiries lower your credit score.

In the end, a person needs time and money to repair her credit score. The more of each that a person has, the better. Although the laws are set, there’s no way to know the specific amount of time it will take to fix a score without understanding the underlying details that created it. However, a person can ballpark the time it will take to rebuild her credit — and boost her personal brand in the process.

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