Browsing Category: "Credit Score"
Credit Repair Tips To Improve Credit Scores
Credit Repair Tips To Improve Credit Scores
Credit Repair is something every consumer can do on their own, however; the consumer needs to do it right and take their time and ensure they understand the process. There are many people who attempt the repair and make their situation worse because they dive in and don’t learn what items should be disputed and what items should be left alone. Do thorough research. There is also a new site that I am, anxiously, awaiting it’s launch and sounds like it will be an incredible one stop, step by step learning site on credit repair. You can sign up to be notified of their launch here. This is their blog but the sign up form is listed there and you will be notified when they launch.
Learn the steps and you can improve your credit scores within a very short amount of time.
Don’t Wait To Start To Rebuild Your Credit
No matter how bad your credit is or how many negative items are currently reporting, you need to start getting positive information added to start to Improve and Rebuild Credit. Even if your situation is so bad that you may not raise your score, you will still be minimizing the damage to your score.
Credit cards are a very powerful weapon you can use to start to rebuild. If your credit score is less than 580 and/or if you have current negative items, you are very unlikely to get any lender to give you an unsecured credit card. This means you will be limited to a secured credit card. You can read more about a secured credit card on this post and also see 3 options for them that do not have annual fees.
Now you may be tempted to wait until some negative items are older or until things seem a bit better but I encourage you to think about this differently.
1-Whenever you open a new account, it has a negative effect on your credit score. That negative effect will last about 6 months and then you get a decent score improvement and will continue to add positive points to your credit score from that point on.
2-The older the account gets, the more value.
So waiting does absolutely nothing to help you. By starting now, you are actually helping your score much more in the long run.
Now What Do I Do?
Now that you have moved forward and got a secured credit card, you need to handle it in a certain way to have the most positive impact on your credit score.
Keep your balance under 30% of your credit limit. If you open a $300 dollar secured card, you should never have more than $90 on it at any given time.
There is a little wiggle room here. If you ever need to use your entire balance, it is true your credit score will take a hit but the good news is that it isn’t long lasting. When you pay it down, your credit score will bounce right back up. If you have maxed out your cards and are at a point where you need your score to boost up, make sure you pay it down 60 days before you need to see the score increased. The reason is because not all lenders report every month, some report every other month so you need to allow time for it to reflect the new balance on your credit report.
It will also be hard for you to judge the impact of a maxed out card vrs a low balance but in some cases that can affect your credit score by 150pts!
Maybe you have no intention of actually using the card but you really need to use it periodically. Even if you use it and send off a check the same day.. use it regularly.
How Many Credit Lines?
For the best credit score you should ultimately have:
- 2-3 credit cards
- Car loan
- Mortgage
I realize a car and a mortgage may be way down the line but everyone has to start somewhere. Get your credit cards, use them wisely, give it some time to show you can handle the debt and get your credit score above 600 and you are more likely to then add a car loan. Pay on that and your score will go up even more and you can now move on to your mortgage.
Statutes of Limitations Can Change The Entire Ballgame
First read this post which will explain the Statute of Limitation and its importance.
Briefly the Statutes of Limitations (SOL) limit how long a debt is considered legally collectible. In most cases, all debt is out of SOL long before it is due to fall off your credit report. The time limit varies by your state and the above link will show you the SOL for each state.
If I Pay My Collections Will I Improve My Credit Score?
Not once single ounce. Once an account goes to collection the damage is done. It doesn’t matter if you pay it or not. The exception to this is if you are in the market for a mortgage. When you are approved for a mortgage you can not have outstanding debt. There is usually an exception for medical bills. Your mortgage lender will tell you what you need to take care of.
Also note the Statute of Limitations again. If your type of debt is out of SOL, it is considered legally uncollectible.
Read this for more information on paying off collections.
This post does not cover the dispute process that can improve your credit score. You can read more about disputes here and here..
Credit repair is doable but again, be careful and do your research on all steps to make sure you do it correctly. There is a lot of bad information floating around the internet.
Credit Problems? Why Have A Clean Credit Report?
Credit Problems? Time For A Clean Credit Report!
It is so easy for people to judge others who have Credit Problems. They may have a Clean Credit Report and have never faced a life circumstance that turned your financial world upside down. But you can’t think about that nor worry about it. Whether you used your credit cards with reckless abandon or you faced a horrible situation such as being laid off, divorced or a medical problem-it is ok. There is a chance to fix your credit in the near future. If only these individuals would learn not to spend money that they do not have then their finances would never reach a state of ruin. It is too easy to be on the outside looking in and offering these simplistic explanations. There is so much more to the story.
Why should you repair your Credit Problems?
There are several reasons why you really need to be proactive and start to begin the process of getting a Clean Credit Report.
1-Saving money on interest – When you have a low credit score, you will pay more in interest on all loans you have. This can add up to thousands and thousands of dollars in even one year.
2-Lower Insurance Rates – Do you realize that when you have a low credit score, you pay more for even auto and home insurance? Part of the underwriting process is to check credit and it is an automatic higher premium. Even if you have a perfect driving record, you will pay more!
3-Higher Security Deposits – Cell phone companies, utility companies, internet companies etc will check credit to determine a deposit. The worse your credit is, the higher a deposit you will have to pay. Usually after 12 months of on time payment, you will get your deposit back.
4-Paying Cash – There is nothing wrong with paying cash for everything and this is a goal to shoot for but what happens when the car breaks down or you have an emergent need and do not have the cash available? With a low credit score, you will be unable to qualify for credit. You should always have an emergency back up and this is a huge reason to correc those Credit Problems and shoot for a Clean Credit Report.
5– Purchase Power – Lets face it. Having bad credit either makes it impossible to purchase a car or house. It can even make it impossible to rent an apartment! Why continue to deal with that vrs just starting the credit repair process?
6- Positive Factor – Think of how much better you will feel when you have great credit and don’t have to always worry about what may happen next. This is huge.
Well Then Where Do I Begin?
Read the posts here on Improve Credit and this one on Credit Disputes. It will help guide you in the right direction to start on the path to having a Clean Credit Report and ending your Credit Problems.
How Is My Credit Score Calculated?
The FICO scoring model looks at more than 20 factors in 5 categories.
1. How are your bills paid? 35 percent
What is most important is your past history of paying your bills. Do you pay on time? Do you pay late? Do you pay them late consistently? The biggest emphasis is on the recent history so 10 late payments 6 yrs ago will not have the impact that 1 late payment in the past year will have. Accounts that have been sent to collection is worse than late payments and declaring bankruptcy is the ultimate negative on your report/score.
2. The amount of credit you have vrs the amount charged. 30%
A whopping 30% of your score is determined by this which is good and bad. Good because it is something you can work at the make an immediate increase in your score. Bad because many people can’t just pay down their debt at will so they can’t do anything to improve their score on this front.
What they do is look at the available credit you have and then how much you have charged. So if you have $20,000 and have $15,000 charged to those accounts, you’re using 75% of your available credit. This is not good. They want to see it under 30% to give you the best boost in your credit score.
They do look at other factors such as car loans, mortgages etc as well but it is the credit card ratio that can really kill your score.
People who are always near the max of their cards limits are perceived as a much higher credit risk.
3. Age of credit history 15%
Unfortunately, there is nothing you can do to change this or alter this. The age of your credit is what it is. The older your accounts are, the better. Keep this in mind before you close an old card that you don’t use. It is better to keep it open and use it yearly and pay it right off to keep it active.
The third factor is the length of your credit history. The longer you’ve had credit — particularly if
4. Types of credit 10%
What they want to see her is both revolving credit and installment credit. Revolving credit is credit cards while installment is a set amount that you pay down and when paid down, the loan is closed-like a car loan or mortgage.
5. Applying for credit 10%
Every time you apply for credit, you will see an inquiry on your report. Generally, each inquiry will lower your score slightly. But more than that, if a potential creditor sees you have recently requested credit from several other places, they are much less likely to approve you. The FICO model does allow for you to do some comparison shopping for something like a car. If you go to several dealerships to see who can give you the best rate, as long as they are within a short amount of time (a few days), they will only ding your score for one inquiry. The final category is your interest in new credit — how many credit applications you’re filling out. The model compensates for people who are rate shopping for the best mortgage or car loan rates. The only time shopping really hurts your score, Watts says, is when you have previous recent credit stumbles, such as late payments or bills sent to collections.
Now it is important to understand that credit reports are not perfect. They do contain errors and it is up to you to check your credit report and check carefully for any errors.
If you believe you may be in the market for a new car or mortgage, you should check your report a few months before so you can fix any errors you may find. There is nothing worse than finding what you want and then have your credit bite you.
TaTaa
My FICO 26% Off Credit Report and FICO Score
FICO has extended a special to get your credit report and FICO score at 26% off by using the code listed at the end of this email.
To take advantage of this special click here. When you get to the page, click on tab shown in image below:
On the next page, click as shown below:
Now, you will follow through and select the report/reports you would like. When you get to the check out page, enter the code 26Until2010. The cost will only be $11.80 vrs the nromal $15.95 per report so jump on this now. Perfect report to get at the beginning of your process of Credit Repair and Improving your credit so you can see what your real FICO score is before you start your disputes.
How To Improve Your Credit Score
How To Improve Your Credit Score?
It isn’t always easy getting those bills paid and now you know there is damage but wonder what steps you can take to improve your credit score. Even if your credit score is ok, you can only benefit from taking a few steps to raise your credit score. The higher your score, the lower interest you will pay on your loans. If buying a home is in your horizon, you especially want a score as high as you can get it. The very first thing you need to realize is you can improve credit. You should understand you are not alone. In the US, there are over 30 million people with credit problems severe enough that obtaining a loan or a credit card would be very difficult, if not, impossible. You can, however, take some steps to change your score.
What Is Your Credit Score?
The first step you need to take in fixing your credit score is to know what your scores are today. See pull credit report for details on how to pull your credit report and where to pull your credit report from. Now, your score will range from 350-850. Remember that with some simple steps, you will start to see your credit score rise.
1) Pay down your credit card balances. Your goal here is to reduce your credit card balances so you have are using less than 30% of your available credit.
2) Lightly use your credit cards. It is important to use your cards but use them lightly. Also remember that credit card companies report balances are different times each month and it is rarely right at the due date. So if you rack up a big balance and plan on paying it off, you need to realize that the account may be reported while the balance is high, therefore reducing your credit score.
3) Verify your credit card limits. If your credit card lender is a limit that is lower than you actually have, this may have a negative effect on your score. If it is incorrect, make a quick call to your lender and they should be able to update your credit limit with their next update to the CRA’s.
4) Get out that old card. The older your credit history is, the better it is for your credit score. So it is very important to not stop using your oldest cards. If you stop using the cards, the card issuer may stop reporting updated information to the credit bureaus. So use the card every few months and then pay it off when the statement arrives.
5) Get some goodwill love. Some people believe this is easily achieved and others have had no success but it is still worth a try. If it works for you-great. If not, you have only wasted a short amount of time. If you have a good history with the lender, they might agree to delete a late payment from your credit report. Your goodwill request should be made in writing. Another solution for accounts that have a serious history of late payments etc is to ask that they be “re-aged.” If you have an account that is open, your lender may agree to delete any prior delinquencies as long as you make several payments on time. Be sure to get any agreements in writing.
6) Credit Disputes. When you get your credit report, you should go through it carefully and dispute items that you don’t agree with. I always suggest you mail your dispute certified return receipt. ALWAYS. You can simply dispute using the reason ‘Not Mine’. The older the negative item, the easier it is to get removed. Also a small amount is one that some lenders do not bother taking the time to investigate, therefore they do not respond to the credit bureau within the 30 day time limit and the item must then be removed from your credit report. If you have credit with a lender that has joined another company, you may have more success as oftentimes the merge creates a mess of their records and they can’t verify the loan. Credit Disputes can rapidly improve credit.
7) Blast significant errors. Credit scores are calculated off of the information from your credit report so it is important to really check carefully. You should realize that there are many items in your credit history that do not impact your credit score.
Things that do improve your credit score and are worth disputing or correcting:
- Charge-offs, late payments, collections or items you find on your credit report that are not yours.
- A lower credit limit than you actually have.
- Accounts that show “paid charge off”, “settled,” “paid derogatory,” or other labels other than “paid as agreed” or “current” if they were paid in full and on time.
- Accounts you listed in a previous bankruptcy but are still showing as unpaid.
- Items older than 7 years and are showing negative status.
Things you really don’t need to worry about includes:
- Your name is not spelled right. (unless there is a concern for identity theft)
- An old address or an incorrect address.
- Incorrect employer information.
- Account that is closed but is listed as open. (don’t fix this, leave it showing as open as this is better for your score.)
Other actions to beware when you’re trying to improve credit scores:
- Don’t ask a lender to reduce your credit limit. Lowering your credit limit, will reduce the available credit that is so important. Remember you need to keep your balances under 30% of your total available credit. This value is worth 30% of your score so it is important to follow this.
- Don’t make a late payment. If you have a bad credit history with a lot of late payments, adding another one isn’t going to hurt your score much but since the goal here is to improve your credit score, you need to avoid any late payments at all. When your score gets in the 700 range, one late payment can lower your score by 100 points!
- Consolidating your accounts. You need to be careful when doing this. Remember you need to keep your total utilization of credit down under 30% so whether you have one card maxed out but all others are open or small balances on several cards, keep that number under 30%.
- Don’t apply for new credit, if you have plenty. If you do not, you should get an installment loan if you do not have any. Remember to have a variety of loan types.
Improving your credit is easier the lower your score and the older your negative items. Once your score reaches the 700 range, you are in a good zone and probably won’t benefit much but you should always pull your credit reports at least once a year and review it for any errors. Paying attention to the above items can help you Improve Credit right away.
8 Things That Affect Your Credit Score
Does It Affect Your Credit Score?
Have you ever closed a credit card account because you weren’t using it, only to find out that it made your score drop 100 points? There are many things that you may not realize affect your credit score.
There are certain things you should know about how certain actions hurt or help your credit score. You may be surprised at what you will learn.
Your Credit Limit is Reduced By The Lender:
1/3 rd of your credit score is based on credit utilization. If your card issuer lowers your credit limit, this also lowers the amount of available credit which therefore raises utilization. Ideally it is best to not go over 30% of your available credit. If your amount is lowered, and your utilization goes over 30%, you will notice a drop in your credit score.
Closing Your Credit Card
Be very careful before you close a credit card. When you close a card two things happen:
1-It will eventually fall off the report. You get points on your score the older your report is so it is better to keep an old account open and sitting then to close it and lower the age of your report.
2-When you close a card, you risk lowering your utilization. Again, if you go over 30% of your total available credit, your score will be adversely affected.
Lower Your Balances
Paying down your balances or paying off a credit card is a, very effective, way to see an almost immediate rise in your credit score. The rise in your score is due to the fact that you have lowered your utilization of credit. You should aim to have less than 30% of your total available credit used.
Multiple Inquiries
Multiple Inquiries are not favorable and can be seen as a credit risk. It is best to only apply for credit with lenders that you know you meet their requirements. Try look at www.whogavemecredit.com to see what credit was given by what lender.
Adjustable or Sub Prime Mortgages
These kinds of loans do not reduce your score as those details are not released to the CRA’s. It is advisable to refinance when your credit score qualifies you as you will usually pay less interest.
Debt Relief
Whenever you sign up with an agency that works to settle debts for you, this will lower your credit score. There are times, however, when this has to happen to get you back on track. If you must use a debt relief agency, you should work hard to get back on top of things. The sooner you can pay things off, you can truly begin the track upwards.
Getting Some Goodwill Love:
A Goodwill Letter is when you send a letter to your creditor and ask them to remove a bad mark. Whether this is a late payment or an entire tradeline. Some people report good success with this and others say it has never worked. It is always worth the effort. If it is removed, your score goes up.. if not, it stays the same-no loss.
Paying Late
Remember that nothing is reported to the credit bureau unless it is over 30 days late. So while paying late is seen internally by the company you have credit with, FICO doesn’t see any late payments unless they are 30 days + late.
As you can see there are actions you can take that ultimately affect your credit score. Some actions will cause a credit score raise but other have the opposite effect. Remember to think through all of your actions.
