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Recent reports suggest that the average credit score in America is falling and could soon drop below 700. That’s a problem because, as we all know, your credit score determines whether or not you will be approved for loans and mortgages, as well as what interest rate you’ll pay on any new debt.

Luckily for those who are feeling the effects of this unfortunate trend, there are tons of ways to improve your chances of boosting your credit score using credit repair services. But before you sign up with the first company to come along (or even worse — end up spending money on a good old-fashioned scam), it’s important to know exactly what these services entail and how they work.

What Credit Repair Services Are

Credit repair services differ from one another in terms of the tools they use to assess your credit score. These tools include:

Credit reports. Usually, there are three credit reports available year around: Experian, Equifax and TransUnion. But some companies have their own proprietary database (such as Fair Isaac Corporation, known by its initials FICO). This is because they believe the data that is included in their databases are more comprehensive than what is available in most other vendor’s databases (a fact disputed by other companies who use FICO data). Credit reports include information about your spending habits and your history of timely payments.

Usually, there are three credit reports available year around: Experian, Equifax and TransUnion. But some companies have their own proprietary database (such as Fair Isaac Corporation, known by its initials FICO). This is because they believe the data that is included in their databases are more comprehensive than what is available in most other vendor’s databases (a fact disputed by other companies who use FICO data). Credit reports include information about your spending habits and your history of timely payments. Credit score algorithms . These complex mathematical equations are often considered to be a reliable representation of the risk of giving you a loan based on your past credit experiences. The formulas used in these algorithms were created by the Fair Isaac Corporation.

. These complex mathematical equations are often considered to be a reliable representation of the risk of giving you a loan based on your past credit experiences. The formulas used in these algorithms were created by the Fair Isaac Corporation. In-house credit analysis . These companies typically charge between $200-$500 for a detailed review of your entire credit report and an opinion as to whether or not there is any chance that your debt load could be lowered through some type of bankruptcy filing (which will lower the amount and frequency of your payments).

. These companies typically charge between $200-$500 for a detailed review of your entire credit report and an opinion as to whether or not there is any chance that your debt load could be lowered through some type of bankruptcy filing (which will lower the amount and frequency of your payments). Debt collection services. These companies help you negotiate with creditors who are harassing you via phone calls, letters or legal claims.

While many people find these services helpful and want them taken care of, credit repair services offer no guarantees. Remember, they are middlemen that assist clients in negotiating with creditors. Be wary of any company that offers guarantees as part of its service. Also, most credit-related services charge a fee for their services (usually around $150-$200) and occasionally ask for a one-time payment.

Credit Scores

Credit scores are numbers that are generated by the Fair Isaac Corporation or some other third party provider. These scores usually only work to measure the likelihood of granting you a loan based on your recent credit history and payment history. These scores can fall anywhere between 300 and 850 (although the Fair Isaac Corporation recommends a minimum score of 620 to be considered acceptable).

As mentioned above, your credit score can vary depending on what kinds of decisions they use to calculate it. There are a handful you should be aware of.

The FICO score is widely considered to be the most accurate credit-score algorithm because it considers how your payments are made (i.e., through credit accounts or by direct debit) and the age of your accounts (the older an account, the less likely it is likely to have information that can trigger a high score).

is widely considered to be the most accurate credit-score algorithm because it considers how your payments are made (i.e., through credit accounts or by direct debit) and the age of your accounts (the older an account, the less likely it is likely to have information that can trigger a high score). The VantageScore is another popular credit score that uses an algorithm based on data in your credit report. However, this credit score is not as effective at predicting future behavior and behavior changes are the main reason for any improvements in your credit.

is another popular credit score that uses an algorithm based on data in your credit report. However, this credit score is not as effective at predicting future behavior and behavior changes are the main reason for any improvements in your credit. The TransUnion Credit View Score (VPR) is the company’s version of the FICO score. This algorithm is designed by TransUnion to assess the likelihood of defaulting on payments. Designed more specifically than VantageScore, this score is easier to understand and its conclusions are less likely to be disputed by clients.

is the company’s version of the FICO score. This algorithm is designed by TransUnion to assess the likelihood of defaulting on payments. Designed more specifically than VantageScore, this score is easier to understand and its conclusions are less likely to be disputed by clients. The CCR Score is used by Experian in assessing your credit risk. This scoring system uses five factors that help determine how likely you are to pay on time and it ignores all factors that might have been included in your credit report.

The Bottom Line

Each credit bureau have their own scoring model and algorithms that contribute to the accuracy of the scores generated by its proprietary databases. Luckily, the Fair Isaac Corporation (which created the FICO score) has made most of its algorithm available to anyone who wishes to purchase it. It can be found at fairicor.com/score/. You can also request a free credit report from Experian or TransUnion and download a copy of your FICO score from your Experian Credit Report or TransUnion Credit Report.

In order for you to obtain accurate information about how these scores are determined, Fair Isaac Corporation publishes that information on their website.

Here are some examples of the most popular scoring algorithms:

FICO Score Formula: The following formula can be used to predict the likelihood of defaulting on a loan based on a variety of factors. It predicts this high likelihood by considering your payment history and credit history. This equation is based on the number of credit accounts you have, the age of your oldest account, the length of time you have had each account and what type of payment is made (check, cash or automatic withdrawal).

The following formula can be used to predict the likelihood of defaulting on a loan based on a variety of factors. It predicts this high likelihood by considering your payment history and credit history.