Posts Tagged ‘score’

Tips for a better credit report and score

October 20th, 2008

To get a good credit score the first tip is to pay your bills on time. It does not matter how bad your credit history is you must pay all your bills on time. This will help build a positive payment history on your credit report. This is the second most important factor when calculating your credit score.

It also matters how much time has passed between derogatory items on your credit report and when your score is calculated. After an amount of time, allegedly four years, negative items on your credit are not weighed as heavily. Thus it is very important for you to build a positive payment history.

The next tip is to remove any inaccurate information. Unfortunately our credit reporting system has many flaws. Often a divorce will result in bad credit. The divorce judge will divide the debts between both parties. Then if one of the parties defaults on a loan, even though they were court ordered to pay, it will be reported on both parties credit.

You can also have bad credit due to a lender mistake. It happens all the time, where the amount due changes and due to a mistake on the lenders side you are never notified and keep making your regular payments. Yet the whole time your credit is being ruined with derogatory marks.

You can also have a negative mark due to stolen identity, or just a credit reporting error. These are very common, where someone somewhere makes a mistake but your credit pays the price.

These are all inaccurate marks on your credit report. You should dispute and remove all of these marks.

Congress passed legislation to protect people just like you that find themselves in this situation. The Fair Credit Reporting Act says that inaccurate information must be removed.

To dispute an inaccurate mark you can hire a credit repair service. They will draft a dispute letter and send it to each credit bureau that is reporting the inaccurate listing. Or you can do this compose a letter yourself, however you should know that credit bureaus often do not conduct investigations based on one dispute letter.

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Court orders credit bureaus to clean up consumer credit reports

October 4th, 2008

We just covered this issue again last week in the members area. Old zombie debts that just live on and on, often outliving you. Our credit system is very unforgiving. If they don’t get you for 7 years from the bankruptcy, they’ll try to get you for another 6-10 through erroneous reporting, either on the suppliers end or the credit bureaus end.

It’s a vicious cycle and is it a wonder people give in and hire credit repair attorneys?

This court order is going to make some consumers and credit repair agencies very happy- and make their jobs easier when it comes to deleting negative trade lines that were part of a bankruptcy.

The issue is millions of debts that were included in a bankruptcy are being reported incorrectly as delinquent or past due with a balance. The debts, however, should be listed as “included in bankruptcy” with a zero balance. This can have a major impact on your credit score.

According to the WSJ; Erica Noe of Burke, Va., says an old debt on her husband’s credit file cost them their home — in part because it prevented them from being able to refinance their interest-only adjustable-rate mortgage last year. Her husband, Kenneth, had filed for Chapter 7 bankruptcy in 2002; in that proceeding, the court discharged his prior debts. Nevertheless, they were unaware that a previous $7,000 credit-union loan remained on his report, pulling down his credit score for several years.

“We thought that once we filed for bankruptcy, it would go away,” says Ms. Noe. “But it didn’t. It affected everything.” The 31-year-old nurse says they didn’t find out about the error until they tried — but failed — to refinance their mortgage. When the rate reset, the Noes’ monthly mortgage payments shot up by about $1,000; they lost their home to foreclosure last November. “It was a snowball effect,” she says. “Unfortunately, everything just kind of worked against us at the same time.

“I tried to fix the error on the report by calling the credit union and telling them to stop reporting,” she says. Currently, their lawyer, Robert Weed, is filing a separate lawsuit against Equifax and the credit union. Equifax declined to comment on an ongoing suit.

A recent court order requires the three major credit-reporting bureaus — Experian Group Ltd., Equifax Inc. and TransUnion LLC — to clean up the credit files of millions of consumers who have filed for Chapter 7 bankruptcy. The problem: Old debts, which are typically forgiven by the courts in a bankruptcy filing, are still being reported as active on many consumers’ credit reports.

The changes could be particularly important to borrowers now, as consumer credit tightens across the board. It is perhaps more important than ever for people to make sure their credit scores are accurate and as high as possible.

This ruling is expected to clean up the credit files — and potentially boost the credit scores — of an estimated six million to 10 million people who have filed for Chapter 7 bankruptcy but still had errors in their files, according to plaintiffs’ attorneys. Consumers with so-called zombie debt — old loans they may have paid off years ago that can resurface when an aggressive debt collector erroneously demands payment — are also likely to get some relief, if those debts also were discharged under Chapter 7 protection.

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How this credit crisis will affect you

September 21st, 2008

I’m a credit expert by trade, so needless to say, I have pretty good credit. I’ve worked hard to build great credit and maintain it. No matter what happens with my finances, I’ve always made my credit a priority.

If someone told you, what you did today was going to affect you for the next seven years, would you think twice before doing it? I know I would but many people just don’t think of their credit in this way. They think about “now” and not “later”. Well, later is here!

With the recent credit crisis in the country, even those with really good credit are going to feel the pinch. Banks are tightening up their purse strings and for good reason. Major financial institutions are collapsing all around us. NINJA loans have ruined our economy and deregulation of big banks has collapsed the finance industry.

Just when we thought it had gotten as bad as it could with record breaking foreclosures, it got worse. Much worse. If you thought those feeling the pinch were people who got themselves into mortgage trouble and you were safe, think again.

People with good credit, even great credit are going to be affected by this downturn. Reports this week claim that getting even simple loans whether secured or unsecured is going to be much harder. Now, more than ever, you need to start thinking about the state of your credit. Even if you’ve always had pretty good credit, now you must shine.

This is especially true if you’ve got credit card debt. It wont be so easy to transfer balances to other lower rate credit cards to save some money. Lenders are going to proceed with great caution and that’s going to affect you personally.  Those with poor credit are really going to be in a bind. Even a simple payday loan wont be so simple. People are going to find there are few resources to turn to for their lending needs.

Now is the time to do an audit of your credit. Make sure you’re ready when the time comes to apply for a much needed loan, line of credit or refi.  The credit repair field is going to be booming! While the FTC gives us some great tips to fix our credit, unfortunately people don’t bother until they need credit. Now is the time to clean up your credit so it’s ready to roll when you need it.

Get your credit reports, grab a cup of coffee and start that audit. Look over all three credit reports and highlight any problems you see. Make a plan to send investigation letters to these questionable items and by all means, don’t apply for needless loans. Those hard inquiry’s will only lower your credit score further. Wait until you are in a good position before you apply for a loan. Don’t waste the inquiry, especially now.

Clean up your credit the best you can then make a solid plan to refi, get out of debt or purchase a big ticket item.

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Digging yourself out of debt

September 7th, 2008

If you’re like most of us, right now you are struggling to pay your bills and make the most of your paycheck. With unemployment at an all time high, gas prices over 4.00 a gallon, it’s no wonder people are watching every penny.

But… are you? This is a great article I found over at CareOne with tips to take responsibility of your financial mess and set up a solid plan to dig yourself out by taking responsibility for your financial mess.

Stop Making Decisions Based Solely on Emotions

Advertisers and retailers count on you basing a purchase solely on emotions, stop letting them! Before you purchase something, as yourself this question: Do you really NEED it? I stress need not wants because too often we get the two confused. Clothing is a great example for this question. You need clothing, you don’t need Banana Republic. Old Navy, Target and Wal-Mart work just as well.

Quit Worrying About your Credit Score

This is one of the top questions posted in our Community. Everyone wants to know how it will affect their credit score. Guess what, it doesn’t matter because you should not be concerned with getting more credit in the immediate future anyway. More debt does not help you pay off what you already have; it only makes your situation worse. Focus your energies on creating a budget and finding a part time job.

Stop Blaming the Banks

Yes, they gave you the credit cards, yes they raised your rates, and yes they charged over the limit fees…but guess what? You filled out the application, you made the charges, you probably didn’t read the fine print on the back of the agreement because I know I sure didn’t, and you ran up the balance. Deregulation of the banking industry was good and it was bad. The bad part is it put credit cards in the hands of a lot of people who did not really understand what the banks could do. Stop blaming, start paying.

Take Responsibility for Your Actions

I blamed my problems on everyone else. The sad part is I always had money for other things besides my bills. I made sure I had enough to buy cigarettes or go out on the weekends. I could always just pay my credit card bill late, or my car payment, or my student loan. Time to grow up. How many of you smoke? How many of you eat out for lunch every day? How many of you buy lotto tickets or gamble? This money can be put to better use.

Bottom Line:
Think before you buy
It is not the bank’s fault
You did it, now it’s time to dig yourself out

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bad credit means you’re a bad driver

September 3rd, 2008

Most of us are aware that lenders check our credit and consider our credit score but more and more insurance companies are doing it as well. Insurance companies tend to assume that a bad credit report may also indicate that you’re a bad driver.

According to Esurance Over 90% of U.S. insurance companies, including Esurance, use credit-based insurance scores to establish eligibility for payment plans and to help determine insurance rates. (In case you’re wondering, credit-based insurance scores predict how likely you’ll pay your bills in the future.) Actuaries and research analysts have found that the scores help predict your accident potential. If you have a high credit score, you can generally expect lower auto insurance rates than someone with a low credit score.

People with bad credit pay up to 50% more for car insurance! That’s nothing new however, as insurance underwriting has been using credit scoring to determine rates for some time. On the flip side, people with good credit are going to benefit from lower premiums. That’s great news for the percentage that have good credit but considering that almost 70% of credit reports contain errors, even those who think they have good credit may not.

Do it yourself credit repair and an annual audit is definitely worth your time whether you have good credit or not. Since one out of four credit reports contain errors, you may be paying more than you should, regardless.

Hiring a credit repair company may not be a wise investment for a few minor blemishes. In that instance, do it yourself credit repair is financially beneficial. It’s cheaper and it makes more sense if you’re just questioning a few items. Paying up to 39.00 a month wont make much sense for a few blemishes. Your trying to lower your car insurance premium so another monthly expense makes little sense.

The DIY method can payoff big and could cut your car insurance rate by up to 50%. That’s a substantial savings worth your time By taking a look at your credit reports, you can identify any potential issues that may affect your credit history.

It’s not clear whether the insurance company you are with uses a FICO credit header or a different  type of score but the bottom line is, they are interested in your credit score and not how much debt you have or home loans outstanding. They care about overall credit history and the score gives them that.

many people feel that using a credit score to determine car insurance rates is discrimination because people with low income or prior credit issues are targeted for the higher premiums. The jury seems to still be out on whether the insurance industry will come up with something more fair and balanced for all.

It just goes to show that taking care of your credit is becoming more important and affecting more aspects of your overall financial health. It’s a task worthy of undertaking to save some money. If you haven’t taken a look a t your credit in at least a year, you need to review all three credit reports to make sure they are in deed accurate. If you do have bad credit, take DIY steps now to remedy those issues and hopefully lower your car insurance premiums.

Be sure to get at least three insurance quotes before you settle on one. Ask the insurance company if they use your credit to determine what rate you’ll pay. You can also find out more about your state insurance laws at http://www.iii.org/media/companies/state_org/insur_departments/

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Do it yourself credit repair including debt settlements

August 28th, 2008

Credit repair can be a very dirty word. Especially on the credit industry front. Credit repair companies are under siege for marketing and targeting people in serious trouble and for good reason. There are so many credit repair companies on line that claim to be able to increase your credit score or guarantee you perfect results.

It’s simply not true. You cannot guarantee what you cant control and thats the credit bureaus and collection agencies. You cannot promise a consumer that you can work magic on their credit, collect the money up front and then not deliver. That’s fraud.

What you can do is do the work yourself to bring your credit up to the best possible status. No one has better interest in your credit reports than you do.

There are good credit repair companies but I honestly only trust Lexington if you prefer to hire someone. I’ve already told you before, its the only credit repair company we promote and for good reason. They are lawyers who really do focus on nothing but credit repair and debt settlement. Their entire firm focus is credit repair so they do nothing but credit repair all the time. When you do something that much, you get really good at it.

If the do it yourself method is for you then I urge you to educate yourself with the process before you delve in. You can avoid costly mistakes by learning how the system works and how to use it to your benefit. By just taking  little time to educate yourself about the topic, you can make great headway.

First, order your credit reports and review each one. Once you identify the negative items then start a strategy to target the items. Determine if you plan on disputing an old paid off debt thats negative or plan to attack one that still has a balance due. Both have very different strategies.

If the debt is negative but paid then you can start by sending your investigation to the credit bureaus and wait for their reply. The bureaus have 30 days to complete your investigation and send you the results. If the bureau is unable to confirm the items accuracy, the item will be removed. If they confirm it as accurate then you move on to the furnisher of information and ask that they provide you with the proof they provided the credit bureaus. They must be able to show you proof or the item will be removed.

If the debt still has a balance then understand that disputing it to the credit bureaus may wake sleeping dogs. The bureau will send the dispute onto the furnisher of information who will realize you are out there. that may cause them to start pursuing you very aggressively. But if you know the debt is not accurate or has been sold several times to collection agencies then you may stand a very good chance of having the item removed. Finding those records will not be so easy.

This is a solid strategy against debts that have gone to third party debt collectors and you should always try to remove anything thats being reporting from  a collection agency because the rating is always negative. A paid collection account still looks bad so your purpose should be to question negative paid off collection accounts and collection accounts that still have a balance. The difference is you will move onto the collection agency reporting the item if the bureau verifies it as accurate. 

More often than not the item will have some inconsistencies in it that will result in a deletion. If by chance the item is 100% verifiable then consider debt settlements to pay the agency in exchange for total removal. They do it all the time and its actually quite simple.  Be sure they provide the agreement to delete IN WRITING!! If you don’t, kiss your money goodbye and your credit rating.

for more tips on deleting items from your credit reports visit our credit library.

Hot tip

debt snowball method, you put as much cash as you can toward eliminating your smallest debt, while paying the minimum on all other debts. When the first debt is paid off, you roll the amount of that payment to the next smallest debt, creating a “snowball” of increasingly larger payments on a decreasing number of bills. The reward? A feeling of accomplishment that many practitioners say helps them stay on track to pay off all their debt.

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Credit notification moves onward and upward

August 21st, 2008

It’s not bad enough that lenders make us feel like yesterday’s trash when our credit scores don’t meet what they consider “golden”, but often you’re not even told if you’re getting a good deal or not-  when it comes to the rates and terms.

Many consumers have no idea what a good rate is or isn’t, especially if they don’t use the credit system a lot. Now, a new change may make that easier for all of us by making the lenders tell us that we are getting a good or not so good deal.

People who deal in the credit system on a regular basis often lose touch with this fact, but it’s not your everyday Joe that knows if he’s getting a good deal or not. This change would make the lender tell you that you may not be getting the best deal so you’d at least be able to make an informed decision or go elsewhere before you sign on the dotted line.

 

proposed federal regulation that would force lenders to tell consumers “This isn’t our best deal” moved a step closer on Monday.

Now, lenders offer loans at whatever rates they like, without explanation. Consumers with the cleanest credit reports and highest credit scores tend to get the best rates.

Under the proposal, lenders that decide to offer higher-rate loans based on consumers’ credit reports would have to notify consumers of that fact. The notification would have to come before the deal was done.

The change, jointly proposed by federal regulators in May 2008, is intended to:

  • Make lending more transparent.
  • Give consumers the chance to review and fix credit report errors.
  • Let consumers take steps to improve their credit before committing to a loan.

In short, it requires lenders to say, “Hey, consumer, we’re giving you a bum deal because you have bum credit.” Continue to read the rest here.

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Piggybacking will survive new FICO enhancements, for now

August 13th, 2008

If you’re a serious credit enhancer, like many of us, you were well aware that FICO (the universal credit score company) was going to release its new scoring module in 2008 and get rid of piggybacking account holders.

Piggybacking means that you allow others to piggyback off your credit rating as a card holder or authorized user and they get your good credit rating. Brilliant isn’t it.

As with anything else, shady businesses started taking advantage of this and were charging people to allow piggybacking and thus making a profit from it and claiming it as credit repair. Not only did it cause a great deal of controversy but it ruined it for a lot of consumers who were using the method to rebuild their credit by surfing off someone else’s good credit rating, say a spouse or brother.

Well, apparently FICO received such an uproar about removing this method that they have come up with a solution (so they think) and are going to have it continue on. Long live piggybacking! Let’s just hope the scurges of the world don’t ruin this for us all too.

Piggybacking became so controversial. Consumers used to be the ones taking advantage of this little loophole in the credit system, but like everything else, shady businesses came along and were offering it as a new form of credit repair and guess what, it was legal…

In a nutshell, these businesses were charging a consumer with bad credit to surf off a guy with good credit and quickly improve his credit rating overnight. Suddenly the guy with bad credit could easily have a credit history of very good credit using the other guys credit history. The good guy gets paid, the bad guy pays and everyone benefited.  

It didn’t take too long for consumer watchdog groups to catch onto this, and the worst part was that it appeared a “legal credit repair method. You can read more on piggybacking schemes here.

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