What is a Good Credit Score?

Myths of Credit Repair pt. 10

noreply@blogger.com (Malinut) — Sun, 26 Oct 2008 01:52:00 +0000

Myth #10 really forms the basis of what a credit repair company does. Unfortunately, there is a lot of negative and inaccurate information about it.

Myth # 10: It is illegal for creditors to take a negative, accurate listing off my credit report. The law requires that these items remain on the credit report for at least seven (7) years.

The truth is that negative information, of any type, does not have to be on a credit report for seven years, seven days, or even seven seconds. The creditors and collection agencies report it to "punish" you for your misdeeds. The law states is should not stay on the credit report greater than seven years with the exception of Ch. 7 bankruptcies which may stay on for ten years.

Here is where the confusion starts. The Federal Trade Commission says that accurate, negative information cannot be removed from a credit report. They are partially correct. The "whole" statement should be that negative information that is ACCURATE, TIMELY AND ABLE TO BE VALIDATED can legally remain on a credit report. Note that it is not required to be left on however.

Considering that 79% of ALL credit reports contain errors and that 25% are significant enough to be refused credit, what is the chance that there is inaccurate and negative information on your report? Yes... about 4 out of 5.

Let's discuss the three points in detail...

Accurate - While the credit reporting agencies are supposed to verify the information they provide when a credit report is requested, it is pretty obvious that they do not do a very good job. The vast majority of the time, the negative, inaccurate information is on your report causing you to pay higher interest rates on mortgages, auto loans and credit cards, as well as higher insurance premiums until YOU find it and make them remove it. It's like being guilty until you prove yourself innocent which, by the way, they make as difficult as possible.

Timely - As far as timely, negative trade lines are supposed to drop off about 7 years from the date of last activity (as found on your credit report as "DLA"). While sometimes these trade lines are removed automatically, often times you have to request their removal. Unfortunately some debt collectors will purchase old debt and then report it as new debt, just to hurt your score. For instance, suppose you have a hospital bill that you last paid 1-02. It is quite old and should be dropped from the report within the next several months from now (10-08). Besides the fact that it is affecting your score very little because of the age, it is past the statute of limitations for legal remedies in many states. Some unscrupulous debt collectors will "buy the debt" for 5 to 10% of it's value (due to it's age) and then report it as a new debt that restarts the clock injuring your credit score. This is illegal and highly improper, but that does not stop some of them.

Able to be validated - There are court cases that outline what it takes for the creditor or debt collector to prove that the debt is accurate, timely and that the debt belongs to you and that you agreed to be responsible. Many times, the collection agencies cannot provide the proof and the negative trade line must be deleted. Remember: it is their responsibility to prove you're 100% legally liable for the debt, not your responsibility to prove you are not.

As you can now see, the issue is not as cut-and-dry as you have been led to believe. In addition to what I have mentioned already, there are also issues with how the creditor arrived at the amount you allegedly owe, was it documented correctly, are any interest charges or fees appropriate, can the debt collector legally collect in the state you are in and much more.

If you are going to attempt to dispute your own negative items, I suggest you become very familiar with all the laws and acts that govern fair credit reporting and fair debt collections. Because of the time and difficulty involved, you can see why many people are using credit restoration organizations. In fact, Congress recognized that there is a legitimate need for this service and passed a law, the Credit Repair Organizations Act, to oversee these companies.

Hope this was helpful. Check back soon for more credit related information.

ScottScott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 9

noreply@blogger.com (Scott Swinford) — Sun, 04 May 2008 04:52:00 +0000

Myth #9 is often heard from credit card companies who are more interested in their profits than your financial well-being.

Myth #9 - Nonprofit organizations like Consumer Credit Counseling Service (CCCS) can help me restore my credit.

Nonprofit debt counseling services assist people who are over their heads in debt and seeking an alternative to bankruptcy. CCCS are funded and controlled by credit grantors and credit bureaus. When you are working with CCCS, your creditors will often note this on your credit report. This is a huge red flag for prospective credit grantors. Some of the very worst credit reports that we see are participants in the CCCS or similar programs.

Next time: is it legal to remove negative, accurate listings from a credit report?

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 8

noreply@blogger.com (Scott Swinford) — Mon, 28 Apr 2008 17:18:00 +0000

I have heard this myth from many different people, some of them in the mortgage and real estate field. I have even seen a couple self-proclaimed credit gurus write about this in their articles and blogs. It's no wonder that it's a widespread myth!

Myth #8 - If I build enough good credit, it will offset my bad credit and make me credit worthy.

Any amount of bad credit is devastating to your chance of being approved by a creditor. The approval is almost never inthe hands of a human sitting across the desk from you. It is a computer achieving a point total. The slightest amount of negative credit will cause an auto loan interest rate to skyrocket. Generally, even a little recent bad credit (regardless of the amount of good credit) will cause you to be declined.

Next time: will credit counseling help me restore my bad credit?

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 7

noreply@blogger.com (Scott Swinford) — Tue, 25 Mar 2008 03:18:00 +0000

Here is a myth that can get you into big, big trouble. Do not attempt this!

Myth #7: I can create a totally new credit file by getting a federal tax ID number or changing a few numbers on my social security number.

This fraudulant scheme has proven to be complex, and most importantly, illegal. Lying on a credit application is a criminal offense and withthe linking of computer systems, it is virtually impossible to get away with. It is in your best interest to hire adequate representation and face the music by confronting the credit bureaus armed with the rights Congress has granted you through the consumer protection laws.

Next time: will a lot of good credit offset my bad credit?

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 6

noreply@blogger.com (Scott Swinford) — Thu, 13 Mar 2008 02:23:00 +0000

I know that busting this myth is going to cause some pain for the credit reporting agencies, but that's OK. Maybe once we blow away the smoke and crack their mirrors, the consumers won't take their bullying anymore.

Myth #6: The credit bureaus are a branch of the government. They are infallible and above reproach.

False, false and false! The credit bureaus are publicly traded companies in business to impress the stockholders. They are NOT government agencies! In fact, they are one of the most regulated industries because of public outcry due to their history of abuses and mistakes.

A recent survey reported that more that 79% of credit reports contained mistakes or errors. It is because of these errors that the government has stepped in with legalisation that allows consumers to challenge the bureaus and force the removal of inaccurate, outdated, or unverifiable information.

Unfortunately, even with the legislation in place, it has become very difficult for the average consumer to get incorrect information corrected or removed.

Next time, we'll talk about getting a totally new credit file as a way to improve your score.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 5

noreply@blogger.com (Malinut) — Sun, 09 Mar 2008 05:28:00 +0000

Myth #5 involves the 100 word statement that you are allowed to have placed on your credit report. Many credit repair "experts" tell you to include a statement since it will help explain why something appears on your report. They advocate a statement such as "I was sick for 4 weeks and unable to work, that's why I have 6 late payments the in June of 2004".

Myth #5 - The credit bureau allows me to submit my 100-word explaination. Creditors will read my statement and take it into consideration.

True and False, in that order. Yes, you can submit a statement that will appear on your report. There is NO creditor that I know of that reads these statements and bases their decisions on them. In fact, they can be considered as a voluntary admission that the negative items on your report are yours. If you have these on your report, you should write to the credit reporting agencies and have them deleted right away!

Be back again soon with more credit myths.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 4

noreply@blogger.com (Malinut) — Sun, 02 Mar 2008 04:40:00 +0000

The following myth is a common belief held by the Federal Trade Commission. In fact, they have publicly stated that there is NOTHING that a credit repair company can do that you, the consumer, cannot do yourself.

Myth #4: Disputing a credit report is easy. Any consumer can do it themselves.

This is essentially true. What they don't tell you is that getting the results you desire can be very tough. In fact, for a layperson, the whole process can be difficult and infuriating.

The Federal Trade Commission receives more complaints against credit bureaus (Experian, Equifax and Trans Union come to mind) than any other type of business. In February 2003, these three bureaus paid fines totaling 2 1/2 million dollars for ignoring consumers requesting information regarding their file. Remember that these companies are primarily interested in protecting their profits, not answering your questions or disputes. Investigating consumer disputes consumes these profits. Sparking a mass number of lawsuits, these companies do everything in their power to impede your progress in credit restoration.

Restoring your credit is much like rebuilding your own transmission or representing yourself in court. It is possible, but you have to be willing to invest the time to learn the processes, assume the risks of inexperience and realize that it will probably take you longer and you will be less effective than a professional.

When you think about the costs of a good credit restoration company, think of it as an investment rather than aanother bill. I have seen past clients balk at paying a couple hundred dollars a month for half a year to fix their credit, but will continue to pay hundreds more a month in excess on auto loan interest, credit card interest, mortgage interest, and if they are renting, they pay the landlord to live in a home with nothing to show for it in the end.

We need to think of credit restoration in terms of return on investment. Would you be willing to pay $1500 now to improve your credit and save $150,000 over the life of your next mortgage? Of course you would. That would be like purchasing $100 bills for $1. How many do you want????

Unfortunately some people feel that the initial cost is too high or that they are unwilling to sacrifice for a short time to get through the program. Using the example above, it's like purchasing 2 quarters for $1. How many times can you afford to do that?

If you have questions about credit restoration, feel free to send email to scott@USCCRAonline.com. I am always willing to help. If the initial outlay seems too much right now, let's sit down and take a look to see where we can cut. Sometimes another pair of eyes can help see the forest through the trees.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 3

noreply@blogger.com (Scott Swinford) — Fri, 29 Feb 2008 03:05:00 +0000

Myth #3 is very commonly heard. It may be because the credit reporting agencies and your creditors continue to spread this "rumor" to make you pay higher interest rates. In fact, they spends MILLIONS of dollars to perpetuate many of these myths so that they can make BILLIONS of dollars from the unsuspecting public. Pretty good return on investment, if I must say so myself. Too bad it's just wrong!

Myth #3: There are items such as bankruptcies, foreclosures, and tax liens that are impossible to remove from the credit report.

There is no type of negative listing that has not been removed from a credit report thousands of times.

Let me repeat that a little louder......

There is no type of negative listing that has not been removed from a credit report thousands of times.

And Yes, I can back that up with copies of credit reports directly from Experian, Equifax, and Trans Union. If someone tells you any different, they are either uninformed or do not have your best interests in mind. Either way, if they are working for you, you need to find someone who knows and understands the system better.

If you need help fixing your broken credit, you need a professional. When you find them, be prepared to pay a fair price for what they are able to do. Remember, an increase of 30-40 points in your score could be a savings of thousands of dollars a year on your mortgage, auto loans, credit cards and insurance.

Once again, a great return on investment. Except this time, YOU can benefit! And that is ALL RIGHT!

Next time we will discuss the myths of disputes.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt. 2

noreply@blogger.com (Scott Swinford) — Wed, 27 Feb 2008 03:04:00 +0000

For myth #1, we spoke about paying off a past due account and what could potentially happen to your credit score. For myth #2, we'll discuss what can happen if a negative item is deleted.

Myth #2: If a negative item is successfully deleted from my credit report, it will just come right back.

False, like ALL our other myths. The credit bureaus have spread this misinformation through the news media and government agencies. In truth, the credit bureaus will often temporarily delete a negative listing if they have not heard from the credit grantor for 30 days since an item was disputed.

Should the grantor submit verification a week or two later, it can be re-inserted. This is known as a soft delete. Most of the time, the grantor does not respond and the negative item is permanently deleted. If the creditor verifies the item, the account can still be deleted using the laws regulating the verification process.

Next time, we'll talk about items that are allegedly impossible to remove from a credit report.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Myths of Credit Repair pt.1

noreply@blogger.com (Scott Swinford) — Mon, 25 Feb 2008 02:33:00 +0000

As promised, I am going to spend the next couple weeks talking about Credit Repair Myths.

If you have already been reading this blog, you will know my true feelings for most credit repair organizations. It's not very positive! Lets just say that some of the people doing credit repair have as much business doing that as I do performing open-heart surgery. And I'm a mortgage loan guy!

I hope you will stay tuned, as some of them defy common sense. Like the one today!

Myth #1: When I pay off a past-due account, such as a charge-off or a collection, it will show "paid" and will no longer be a negative mark on my report.

WRONG. It is difficult to fully restore your credit without paying your outstanding debts. However, paying off the debt can actually hurt your credit score.

Remember that negative items can stay on your report for 7 to 10 years (while most items are 7 years, chapter 7 bankruptcy can stay on for 10). This clock starts ticking at the date of last activity and can reset after new activities. Also keep in mind that your scores take into account how recent a negative item is. For instance, a collection from 5 years ago does not depress your score as much as one from 5 months ago will.

With that said, when you pay of the outstanding debt, you can change the account status from "collection" to "paid collection". Charge-offs, judgments and others work the same way. While this sounds positive, look at the whole picture. For example, lets say you have a $50 collection that is 2 years old.

Since you have now paid the collection, it reports as "paid", which is good. But, it also starts the clock over for the 7 year "penalty period", which means it brings the date of last activity current. Being that a newly reported paid collection hurts the score more than a 2-year old open collection, you have just succeeded in lowering your score.

It almost goes against common sense. That's why it is best to have professional help, as you do not want to inadvertantly want to make your credit worse by trying to do "the right thing". Paying off your debts is great, but make sure it is done at the correct time and in the right way!

I'll be back with more credit repair myths soon!

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Who Can You Trust With Credit Repair

noreply@blogger.com (Malinut) — Sat, 23 Feb 2008 04:26:00 +0000

If you have found this blog, I applaude you! If you have read all the posts, in order, you really deserve a round of applause.

The idea that I had to create a blog talking a little about what a good credit score is has developed a life of it's own. Well, actually I have just put a lot more of my life into it than I originally anticipated.

OK, getting back on track, hopefully you have read my last post about who not to trust with your credit. I am pretty secure in saying that there are many companies and individuals in the credit repair industry that should not be there. I have seen and spoken with them. I have seem some of their "helpful" posts on message boards and I have had bad dreams because of them. Alright, maybe not that bad, but...

As I said before, the Federal Trade Commission says that you do not need a company to do credit repair for you, that you can do everything yourself. Personally, I find that it is best to leave the serious issues for the professionals, but many small problems can probably be handled by yourself or with the assistance of your loan officer.

What do I mean by "small"? Items such as misspellings of your name, incorrect addresses, wrong social security number or date of birth, duplicate entries, or even inaccurate entries that you have proof of the inaccuracy.

When it comes to the potential removal of collections, foreclosures, repossessions, judgments, charge-offs, and even bankruptcies, I would always pick the professional. Not only would I want things done correctly, but the money that is "lost" to higher interest rates while you are using the "home credit dispute kit" can often make the cost more than reasonable.

The company that we use, after a long time of searching, is called US Consumer Credit Restoration Association (USCCRA). Note: before we go on, in the spirit of full disclosure, I have become an Executive Consultant for USCCRA. My personal opinion was that when I finally found a company that I trusted, I wanted to affiliate myself with it.

Here are a few reasons why I trust and recommend them.

The company and member services have been in business for 17 years. During that time, they have had ZERO complaints. This is very unusual for credit repair services that often have a number of complaints due to unsatisfied customers.
They use attorneys who are willing to litigate as necessary. The credit reporting agencies understand that and investigate their disputes differently than someone who writes multiple disputes with thinly veiled threats on their own.
When you sign up with their association, you are entitled to a number of membership benefits. These include financial counseling, tax advice, an attorney to assist with wills and small legal issues with reduced rates for larger issues, discount health benefits, and much more.
They do not just focus on removing bad tradelines, but help you add positive tradelines also. Most credit repair organizations do not concern themselves with the rebuilding process, but rather leave the clients to figure it out for themselves.

There is much more, but for sake of brevity, I will leave it out. If you are interested, I'd be more than happy to send you a complete list of benefits. Just drop me an email.

With the tightening of the credit markets, this could not have at a better time. We are seeing more and more clients with credit issues hurting their credit scores, which complicates things because good scores are more important than ever.

To wrap up, I hope you have enjoyed the previous posts. If you have learned something, that's even better.

Future issues are going to focus on some of the more common credit repair myths.

Stay tuned!

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Who You Should NEVER Trust With Your Credit

noreply@blogger.com (Malinut) — Tue, 19 Feb 2008 05:00:00 +0000

So far, we have covered a lot of ground when it comes to your credit report. Hopefully I have covered everything well enough that you, my reader, has a better understanding of credit, credit reports and the credit scoring system. If nothing else, just remember that so many things hinge on having a good credit score; home loans, auto loans, credit cards, insurance, and, in many cases, employment.

In yesterday's Parade Magazine was an article titled "Beware of Quick Credit Fixes". While good advice in general, the information contained in the article was misleading. I'm sure it is intentionally misleading. Here is the article....

Beware Of Quick Credit Fixes

Many companies say they will solve your credit woes, but can they deliver? “If anyone claims they can erase bad credit, give you a new credit identity or remove bankruptcies, judgments, liens and bad loans from your credit file, it’s a scam,” warns Frank Dorman, a spokesman for the Federal Trade Commission. You needn’t pay someone to correct misinformation: Write your own letters. And no one can erase negative information from your record if it’s accurate. “While something is in dispute, it’s temporarily taken off your record, but it will reappear,” says Cate Williams of Money Management International, which provides debt help. If you’ve made credit mistakes, only time and good behavior will fix them. For genuine help (often free), call the National Foundation for Credit Counseling at 1-866-479-6322 or visit www.nfcc.org.

Here is the truth behind the article and a few good reasons why these gentlemen would say what they did.

* If anyone claims they can erase bad credit, give you a new credit identity or remove bankruptcies, judgments, liens and bad loans from your credit file, it’s a scam

Bad debt cannot be "erased". If you owe it, you should pay it.

If someone offers you a "second chance" by getting a new social security number or an Employer ID Number, run. They are trying to scam you and what they are suggesting is illegal.

Bankruptcies, judgments, liens, and bad loans CAN be removed from your credit file and ARE EVERYDAY! If the collectors or creditors cannot show evidence that they acted properly and that the debts are absolutely yours to the satisfaction of the courts, they cannot be listed on the credit report. Case after case is won everyday because they could not show proper proof!

* You needn’t pay someone to correct misinformation: Write your own letters

I agree 100% that you should be able to do this for yourself. I also agree that you should birth your children at home and you can build your own house. They did it 100 years ago, you can do it now. Disagree? OK, but to be as effective as the legitimate credit repair companies (yes, there are a few, but many are scams), you need to be proficient in the FDCPA (Fair Debt Collection Practices Act) and FCRA (Fair Credit Reporting Act), as well as case law and standard procedures for disputing your reports.

Don't have the time it takes to do this? Pay a professional that does it day in and day out. The savings that you will see because of better credit will more than pay for itself.

* And no one can erase negative information from your record if it’s accurate. “While something is in dispute, it’s temporarily taken off your record, but it will reappear,” says Cate Williams of Money Management International, which provides debt help

If it's accurate; that's the issue. Being that 79% of all credit reports have inaccurate information and the law requires that it be properly VALIDATED, many tradelines are removed from the reports because your accuser did not follow the law.

While tradelines are in dispute, they often remain on the report, buy they are notated to be in dispute. If, and only if, they are PROPERLY validated, can they return.

Look up Money Management International (http://www.moneymanagement.org/) and you will see that they provide bankruptcy counseling and education. Why dispute it when you can file a BK and have THAT on your credit report for the next 7-10 years (since they claim you cannot have it removed, but we know better).

To make things far worse, Consumer Credit Counseling Services is a division of MMI. For those unfamiliar with CCCS, they are paid by the credit card companies to help you set up a payment plan to pay off credit card debt. Of course, if you file for BK, it will probably have to be a Ch. 13 repayment plan instead of the Ch. 7 plan in which your debt was wiped out (and the credit card companies OPPOSED with millions of dollars worth of lobbying). Looks like MMI can get, er... help you either way.

* If you’ve made credit mistakes, only time and good behavior will fix them. For genuine help (often free), call the National Foundation for Credit Counseling

For genuine help, look for a group that is not trying to perpetuate lies (as above) in an effort to sell you books and counseling. Call me cynical, but here is a bit from their website under the "Who We Are" section.

More than one-third of all consumers who come to an NFCC agency for counseling are able to manage their debt on their own after receiving financial education and counseling.

So, if I am reading this right, greater than 60% of the people who come to this agency for education and counseling are unable to manage their debt on their own after they get help? Any other programs that they would like to recommend with a 2/3 failure rate. Do these people think that we, as consumers, are stupid? Never mind, this speaks for itself.......

Here is the TRUTH as to why you see articles such as this. These groups, as well as the credit reporting agencies, make money from you and off you. These groups all work together to report negative items on your credit reports. The three major credit reporting agencies are in existance to be a clearinghouse for negative information that they can sell. When they report positive things about you, it is only incidental.

The CRAs are essentially rumor mills. They take whatever information that your creditors want to send them and then resell it when someone asks for a composite picture of your financial status. They DO NOT validate anything unless you discover a problem and call them on it. As a side note, consumers did not even have access to these reports until just a few years ago. Before that, we couldn't dispute any of the rumors.

Statistically, 79% of credit reports have errors and 25% are serious enough to have credit denied. The others are often enough, depending on the error, to decrease your score which means you pay higher interest rates that you deserve. Can you see why the credit card companies (and others to be fair), want to try to convince you that there is nothing that can be done about negative information on your credit report? It's all about the $$$.

For interesting reading, do a search on Evan Hendricks and see what he has found out about these organizations and what he told congress about his findings. It is almost to wild to be believable, but it's true.

Next time we are going to talk about who you can trust to help you clean up your credit report.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

How To Dispute Inaccurate Entries

noreply@blogger.com (Scott Swinford) — Fri, 15 Feb 2008 04:44:00 +0000

With an estimated 79% of credit reports having inaccurate entries, it is very possible that you may have to dispute one or two (or more).

For sake of brevity, we will assume that the errors are inaccuracies due to errors and that you are not disputing collections or other negative reporting in an effort to have it removed to increase your score.

First things first, always dispute via mail, not by telephone or via the internet. You will want to have a record of all your disputes.

Next, make a copy each of the credit reports that contain errors. Using a highlighter, indicate where the errors are located on each report. You should have three copies of your reports, one for each reporting bureau, that you are marking the inaccuracies on.

For each of the three bureaus, write a cover letter with a brief description including what the error is, an account number is applicable, and why you feel the report is incorrect. Be brief when describing the errors by using phrases such as "not mine", "incorrect balance", "duplicate account", or "account closed", etc. Provide any proof that you have to substantiate your claim.

Make sure the dispute letter includes your full legal name, address(es) for the past two years, social security number, and date of birth. To facilitate the process, the bureaus often request a copy of your driver's license or other government issued picture ID.

Once you have packaged everything, make sure you send it Certified Mail, Return Receipt Requested. Although a little more costly and more difficult, you now have a record that the Credit Reporting Agency received the package.

Normally the CRA will respond within 30 days, although it may take up to 45 if you received your report through http://www.annualcreditreport.com/.

Once you have received a response back, make sure you review the report carefully. There should be a summary of your dispute(s) and a resolution indicating "deleted", "verified", "changed", or one of several other possible outcomes.

If the issues are still inaccurate, repeat the process and provide additional documentation if possible. Be aware that some items could have been deleted because the creditor was unable to verify the information within 30 days. If is possible that they could report the deleted information again and have it show up on your credit report. If this happens and is in error, simply dispute it again.

I have been very nice so far in telling you how to dispute errors. Sometimes you have to play hardball with the reporting agencies and your creditors. Many people think that they have to prove their innocence, but in reality, it is your creditors responsibility to prove your guilt. Or in this case, that the information they are reporting on you is absolutely correct.

There are times that you may need the assistance of a professional to deal with creditors who refuse to correct errors. While this may unfortunately require some financial outlay, the long-term cost of errors on your report could be significant, especially if they are causing your credit score to suffer.

Until next time....

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

What Do Credit Repair Companies Really Do?

noreply@blogger.com (Malinut) — Wed, 13 Feb 2008 05:28:00 +0000

It seems like you cannot get through the day without seeing an ad for a credit repair company. With your credit score being more important than ever to get you low interest rates on your home, car, and credit cards, not to mention lower your insurance costs, we are much more aware of how a poor score can affect us.

According to a booklet released by the Public Information Research Group, 79% of all credit reports have errors and 25% of those are significant enough to be denied a loan. That seems like a very large number, but in my experience, is correct. Add in the fact that most people are either too busy to dispute errors, are unaware of their rights under the various Federal Statutes, or in many cases both, and you have a great reason to turn to a credit repair company.

A reputable company will help a consumer correct the errors on their credit report and will often attempt to remove collections, late payments, charge-offs, foreclosures, repossessions, and bankruptcys. They do this by disputing the tradeline or public record with the credit reporting agencies (Trans Union, Experian, and Equifax). The statutes state that what is on a credit report must be accurately reported and must be verifyable.

Note: the issue is not whether or not the remark is correct, but whether or not the creditor can verify it properly as correct. For example, Bob has a $200 collection from Low-Life Collection agency that they purchased from HIR (high interest rate) credit card company for 15-20 cents on the dollar. Low-Life then calls Bob several times a day at home and at work, and even calls relatives asking for his whereabouts. Their simple goal is to collect as much from Bob as they can; as anything they get over $30 is profit. Bob then hires All-Star Credit Repair to dispute the collection. They simply write Low-Life a VALIDATION letter asking for all the documentation required by statute to prove that this debt is Bob's. They also tell then, in writing, not to contact Bob except by mail. Low-Life has 30 days to respond after they receive the letter.

What often happens is that Low-Life bought only the personal information and amount of debt, not the original paperwork with Bob's signature and the other required information to validate. They then decide that it is easier to lose $30 than to fight a battle they will probably lose and leave Bob alone. All-Star Credit Repair then sends a letter to the Credit Reporting Agencies stating that Low-Life cannot verify the debt and telling them (not asking, but telling) to remove the notation from Bob's credit report at once or they will file suit (and probably win the $1000 that the statute provides).

Sound complicated? It can be! The issue at hand is not whether Bob owes the money, because he does, but it is removed from his credit report because it cannot be validated. This should improve his scores and help him get better interest rates.

Is this something that you can do yourself? Yes, it is. In fact, the Federal Trade Commission says that the consumer can do everything that a credit repair company can do. That is true, and it's also true that you can rebuild your own transmission if you have the time to learn the proper way to do it and have the know-how to get it done right the first time.

If a credit repair company sounds like a good idea to you, you should know the truth. Many of the companies just send out dispute letters that you can find on the internet. They will keep disputing tradelines until the creditor forgets to reply in 30 days or less and then will fight to have it removed from the credit report. Again, something that you can do, but I would not recommend that tactic. The credit reporting agencies have been known to mark these types of repeat disputes as frivilous and not address them.

Unfortunately due to the need for credit repair, many people have just "hung out their shingle" after buying a repair kit and website for a few hundred dollars. Many of them have no idea of how to do anything except send multiple letters hoping to get results. Again, something that you could easily do without spending hundreds or even thousands of dollars.

If you are looking for a legitimate credit repair company, look for someone who will restore your credit. I don't mean look for someone who calls themselves a credit RESTORATION company, but one who not only removes negative information, but gets you positive tradelines and credit that will help restore your good credit. They are hard to find, but they are out there.

The company that I am affiliated with is a credit restoration association which means they do much, much more than just send frivilous letters. When you join, you are assigned an attorney and a paralegal who work for you. You are also eligible for a new checking account, a line of credit and helped with getting additional positive credit. And this is only one benefit of being in the association. You are also eligible for a discount healthcare program, legal advice and a review of your last two years taxes to see if you are due additional money back (and a lot more). All this is included in the membership cost which is less than what many other companies charge.

I included this information to show you that there are legitimate restoration services available, but you just need to know where to look. There is a lot of opportunity to get taken advantage of by some of the unscrupulous companies that pop-up to make a quick buck and then disappear.

As they say, let the buyer beware.

Scott

Use Extreme Caution: Falling Scores Ahead

noreply@blogger.com (Scott Swinford) — Mon, 11 Feb 2008 03:49:00 +0000

In our last post, we spoke about some things that you can do to increase your score. Today, we are going to address some things that you will want to avoid if at all possible.

Again, I cannot address everything that could possibly happen, but if I give you an idea of what happens and why, you should understand what some of the outcomes of your actions could be.

Let's start with the simple and most obvious....

Late payments - even one 30-day late can drop your score 50-100 points. The higher the initial score, the bigger the drop. Add in multiple lates or a 60, 90 or 120 day late, and your score can really suffer. Let it go into collections, or have a repossession or foreclosure, and you will see a big drop in score. Bankruptcy..... Ouch! A Chapter 7 can stay on your report for 10 years.

Maxing out the cards - having a credit card at the limit can be hard on your score, especially if interest, lates charges, or even your charges put it over the limit. Since most card companies are "nice" enough to not deny charges and "embarrass you", they we let you charge over your limit, hit you with OTL fees and then report the high credit above the limit, thereby dinging you repeatedly.

Canceling cards - for the most part, you do not want to cancel a credit card unless the yearly fees are too much or you have only had it a short time. If you have had a card more than 2 years, it is better to pay it off and put it away to use once every couple months on something you NEED and them pay it off again. When you cancel a card you have had for a while, you can decrease the average length of your credit history and possibly increase the utilization of all your cards. Let's say you have a $6000 total balance on 3 cards with a $5000 limit each. You are at 40% utilization. If you cancel one card, you are now at 60% utilization and your score will fall.

Here are some examples of things that people do with good intentions thinking it is correct. As you will see, some of these go against common sense.

Refinancing the car - Most would think that this is a good idea, especially if you can get a better interest rate. Because of the length of credit and utilization factors in figuring the scores, it can decrease the scores for a while. Example: I have a 3-year old car that I financed for $25,000 and now owe $15,000. I exchanged my tradeline with 36 months reporting and a 60% utilization to a new tradeline with zero months reporting and a 100% utilization. Scores drop!

Paying on collections - Since many collection agencies do not report every month, the damage the collection does to your score can become less and less due to the rule of recency (recent events carry more weight than past events). Also, they can no longer be reported 7 1/2 years from the date of last activity (DLA on your report). Example: I have an open collection from 3 years ago for $50. I feel guilty and send the collection agency a check because I feel that is the "right thing to do". When the pay-off is reported, my score goes down because a recent paid collection hurts me worse than a 3-year old open collection AND the date of last activity becomes current. It's not the "right thing to do". If they are hounding you and you are sure it is your debt, get it in WRITING that they will DELETE the tradeline BEFORE you pay them anything. If they refuse, well..... that's for another day.

Applying for multiple credit cards - If you are like a lot of people, you tend to use credit cards more than usual around the holidays. What better way to get everyone you know a great gift that they will remember. Since you will want to spend more than your available balance this year (because you are still paying for last Christmas) you call your card company and ask for a limit increase. Inquiry #1. Since they refuse because all your cards are close to the limit (decreasing your score), you apply for a credit card at Bob's Department store because they are offering 15% off your purchase today. Inquiry #2. Since you only get a $200 limit, that's maxed out pretty quick. Next stop is Fred's Convenience Mart where you apply for a new credit card because you get a free cell phone. Inquiry #3 AND #4 (for the card and cellphone service). Of course they have a great sale going (don't forget phone accessories) so you charge $300 on a $400 limit card.

OK, let's total up the damage for the day.......

4 inquiries on the credit report

2 new cards to decrease the overall length of credit

1 new cellphone bill

$500 worth of credit at 29.99%

A 50 point drop in score which triggers the universal default clause on two of your other cards raising the interest rate from 19.99 to 31.99%

And an additional $250 a month that you now owe on your already strained budget.

Merry Christmas, huh? Although this last example does not defy common sense, many people do not think about the repercussions of their holiday spending.

If you understand what credit scores are based on and manage it accordingly, you should do fine. Unfortunately, many consumers are very much in the dark when it comes to their credit. That's the reason for this blog; to help you better understand credit and how to make it work FOR YOU.

Next time we'll be talking about credit repair companies and what they really do.

Scott

How Do I Improve My Credit Score?

noreply@blogger.com (Scott Swinford) — Sat, 09 Feb 2008 04:57:00 +0000

How to improve a credit score? Pay your bills on time and keep your credit card balances low!

Ok, be back tomorrow.

If it were only that simple......... Actually, that's pretty close.

Although I do not have the time or energy to go through every way to improve your score, I will discuss several easy fixes and a few that are very important.

A little background. A credit "score" is a number assigned to your report at exactly the time you request the report. Think of it as a snapshot, because that's all it is. It can change subtly even throughout the day. It is a quick and easy way for creditors to size you up and see how well they can anticipate that you will pay your debts. In this case, they really do use past performance to predict future events.

Your report is "graded" in five areas. If you understand how it is graded, you may start to see what you can do to improve. The areas are as follows with the percentage of weight they hold in the overall scoring.

35% - Payment history. Do you make your payments on time? Ideally there would be no late payments. If there are lates, a 30 day is better to have than a 60 day or a 90 day or a 120 day or a charge off or a repossession or a foreclosure, in that order. Hence, if you are short on cash, always pay your mortgage then installment loans (auto loans) and then credit cards. A mortgage late is much worse than a late on a credit card.

30% - Balances or amount owed. Because the bureaus do not know your income, they don't know how much is too much debt. What they look at is the current balance versus the credit limit. For instance, if you have several cards with an $8,000 balance and combined $10,000 limit, you are at 80% utilization. There are several "levels" when your score is concerned, but below 15% utilization gives you the best score. While you can achieve this by paying your cards down, in a pinch you can also request a limit increase (don't start charging again...).

15% - length of credit history. This is why most people with 800+ scores are older. They have had the same credit cards for years and years and that helps bring the "average length of credit" up. The lesson here is to not close credit card accounts that you have had for several years, as your score may drop. Your best bet is to use them and then pay them off every few months to keep them reporting (keeping your balance low or zero). This is why your scores go down when you pay off your car (low balance vs. limit and many months reporting) and buy a new one (high balance vs. limit and few months reporting). You can "piggy-back" as an "authorized user" on someone elses accounts for now, but that option will soon end, so there is no reason to discuss it further.

10% - Types of credit. You will have a better score with a variety of credit types. Allegedly the scoring model likes to see one mortgage, one to two installment loans (auto or personal where you pay the same amount each month) and two to three revolving accounts (credit cards where payment is based on % of balance). While I have not found these numbers particularly true, the variety is positive. Also, "allegedly" the bureaus look at the type of cards you carry. An American Express is better than a card usually reserved for poor credit borrowers or a "store" card such as Sears or Penneys, etc. The same is true for the "I'm desperate for a personal loan" shops also, as they tend to cater to less credit- worthy borrowers.

10% - Inquiries. Suffice it to say that the scores take into account the number of inquiries to see if you are "desperate" for credit. In other words, do not apply for a bunch of credit cards unless you do it at the exact same time (and expect you score to get hit hard). Fortunately, the scoring system takes into account that you may shop for a mortgage, so multiple credit pulls in a several week period only count for one inquiry. Multiple pulls for an auto loan over about a one week period only counts as one. EACH inquiry for CREDIT CARDS counts as one! While they show up on your credit report for two years, they only affect it for about the first three to six months. Now the really good news.... when you pull your own report through annualcreditreport.com or another similar company, it does not hurt your score. This is called a "soft" inquiry, much like when credit card or other companies check your credit to send you those pre-approved offers in the mail. By the way, to stop receiving those, go to www.optoutprescreen.com and follow the directions.

I hope this helps a little. Next I will give you some suggestions of what NOT TO DO that could hurt your credit. You may be very surprised!

Scott

How To Read A Credit Report

noreply@blogger.com (Malinut) — Fri, 08 Feb 2008 03:39:00 +0000

Since the format of a credit report varies depending on the source, it would be impossible for me to give you detailed instructions on how to read your report. I will give you some general information that will hopefully allow you to figure out your particular report a little easier. As a rule, all the reports have the same information, it just may be in different places.

When you first look at the report, you should see your personal information. Make sure that it is all correct down to the spelling and middle initial. You should also see a current address, date of birth and social security number. Once again, review all this IDENTIFYING information. This how you know this report is about YOU!

Next you should see your "tradelines" or a list of your creditors. Sometimes they will be in alphabetical order and sometimes they will be in order from the highest to the lowest monthly payment. Usually ones with a balance will be listed first with closed accounts following.

You will see the name of the creditor and an account number. Make sure these are correct. Sometimes you will see the creditor listed twice with slightly different account numbers if you are looking at a "tri-merge" account like a mortgage officer would get. If the high credit and balance is the same, it is probably a reporting issue with one of the credit bureaus. You can ask that it be corrected, but in the mean time if someone is looking at your credit for a loan, point out the error so they do not assume you have to pay it two times.

The next columns to the right usually include date reported, date opened and date of last activity. Make sure these are correct, especially if you have been making payments and the date reported is not recent. These are important if you have derogitory information, as the longer ago it was, the less it effects your score.

To the right of that you should see high credit, type of account, current balance, and terms. High credit is your limit expressed in dollars (10,000). Type is usually mortgage (mtg), Installment (inst) such as a loan with a preset number of payments, Revolving (rev) such as a credit card, Auto (auto) which is self explanitory, Collection (coll), open, Lease (leas), or even Education (edu) for student loan.

Current balance is the amount owed the last time it was reported and terms is the minimum required payment. Terms also includes a number such as "72" for a 6-year auto loan or "360" meaning a 30-year mortgage.

Continuing to the right you may see columns for Past Due, Months Reviewed, and 30, 60, and 90+. This lists amounts past due, months reviewed (it should say 12 for a 1-year old account, etc.) and may then have numbers under the 30, 60, and 90+. This is the number of 30, 60, and 90+ day lates that the account has.

The last columns are usually called status and, if it is a trimerged account, it should say source. Status fairly self-explanitory and includes comments such as "as agreed", "current was 30", "paid", "collection", "charge off", "inactive", "paid collection", "settled" for less than owed, and even "bankruptcy". The source is just the credit reporting agencies that are listing the account. They are Trans Union (TU), Experian (XP) and Equifax (EF).

Below each tradeline, you may see a comments section. Usually this is pretty easy to understand and may include dates of late payments, original creditors in the case of a collection, or other notes.

Below the tradelines area is usually "Public Records" that would include any reported liens, judgements, bankruptcies, etc. There should also be date filed, status date, amount and identifying information including court, docket number, action type, amount and status.

The next section is usually inquiries into your account for the last two years and who inquired. They may be broken down into "hard inquiries" which signifies you applied for a loan or credit card or "soft inquiries" which you either pulled yourself or by an existing creditor to check up on you. It could also happen before a company send you a pre-approved offer of credit. While a hrd inquiry may lower your score, a soft inquiry will not.

Confused yet? If you need to, read each of the above paragraphs while looking at your report. Again, while they all do not look the same, this information should be generic enough to help you understand it a little better.

Also, many times the issuing company will give you a guide on how to read their particular report. These can be very beneficial if they give you a good breakdown of what area contains what information.

Check back frequently or add this to your rss feed, as you do not want to miss even one post.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Are Free Credit Reports Really Free?

noreply@blogger.com (Scott Swinford) — Thu, 07 Feb 2008 01:16:00 +0000

Yes! And no! It just depends on what "free" site you get it from.

You can go to http://www.annualcreditreport.com/ to get a free copy of your credit report from each of the three bureaus once a year. The positive thing is that you do not have to get them all at one time; you can order one every 4 months and be able to check the accuracy of your reports year-round at no charge.

There are other reasons to use this service. First, it is monitored by the Federal Trade Commission and mandated by the government to ensure that everyone has access to their credit report. Second, it really is free of charge and there are no strings attached.

The only negative to this service is that you will have to pay for your scores if you want them. If you are just curious and want to spend $20 or so, feel free to spend your money for them. I tell my clients that what is on the report is much more important than the scores that they see.

Many people don"t realize that there are no less than four DIFFERENT scores depending on who is requesting them. The score that you buy is considered a "consumer" score. Your mortgage lender sees a different score, as do auto dealers and insurance agents who have their own scoring system. Again, buy your score only if you need to.

There are a number of other companies that offer your report to you for free. Most of them require that you sign-up for a credit monitoring service or purchase other materials from them. Most offer a 30 day trial period which allows you to get a free copy and them cancel your subscription before you are charged. While this really violates the spirit of them giving you a free report, rest assured that a large number of people do just that.

What if you keep the service? I have one that I personally use and have been very happy. It costs me about $15 a month, but allows me to get a fresh report ONCE A DAY. While that may sound unnecessary (it really is), your report can actually change day-to-day depending on when your creditors report. The service that I use emails me whenever I have hard inquiry (one that I would initiate with a creditor). If I am notified of inquiries and I have not applied for credit, I may suspect possible ID theft.

They also notify me of major changes right away and even send me an email once a month to tell me that there was no new activity if I had no changes or inquiries. All things considered, I have been very happy and the service has been worth what I pay, if nothing else but for peace of mind.

There are a number of different companies that offer the reports. You will see links above, below, and to the right of this post that are results similar to what you would find on a Google search for "credit reports". Just make sure that the service you use offers a good value and be sure to read the fine print.

So, YES, free credit reports can really be free. Others, while they may cost a little bit, may offer a good value for their price.

If you have not read the previous posts, I suggest that you do now. While I am trying to make each report "free-standing", you may miss good information if you don't read them in order.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

Errors on My Credit Report? Not a Chance!

noreply@blogger.com (Scott Swinford) — Tue, 05 Feb 2008 15:17:00 +0000

Guess again....

In the 2004 report "Mistakes Do Happen: A Look At Errors In Consumer Credit Reports" published by the National Association of State PIRGs, it was noted that 79% of credit reports surveyed contained "either serious errors or mistakes of some kind".

79% of ALL credit reports contain errors in case you just glanced over that part!

Additionally, here is what they found.....

25% of the reports contained serious errors that could result in the denial of credit, such as false delinquencies or accounts that did not belong to the consumer;
54% contained personal demographic information that was misspelled, long outdated, belonged to a stranger, or was otherwise incorrect;
22% of the credit reports listed the same mortgage or loan twice;
8% (almost) were missing major credit, loan, mortgage or other consumer accounts that demonstrate the creditworthiness of the consumer;
30% contained credit accounts that had been closed by the consumer but remained listed as open.

From my own personal experience, I have seen several other issues that can affect the creditworthiness of my clients. These include:

Accounts paid in full that show current balances. Many times the last reported date is not current to reflect the actual balance.
The same tradeline reported in 2-3 different ways due to the way the account number is truncated. Sometimes the current balance is different even though the reporting date is the same.
Tradelines that were discharged in a bankruptcy that still show open. They are usually reporting "in collections" as opposed to "bankruptcy". What many clients don't know and what many bankruptcy lawyers may not tell them is that it's THE CLIENT'S responsibility to make sure the bankruptcy is shown on the credit report.
School loans that are double reporting. I have seen this a lot where loans are consolidated by another company, but the original creditor does not show them as "paid". In one instance, I had a doctor who had over $350,000 worth of student loans inadvertently reporting.

What can YOU do?

First, if you are reading my posts in order, you already have your FREE credit report from http://www.annualcreditreport.com/. If not, go get it now.

Next, check it over thoroughly. VERY THOROUGHLY! Make sure you check all the areas I wrote about in my last post, including spelling of your name, date of birth, social security number and ALL the tradeline information.

Lastly, if you find errors (and I'm sure you will), make note of what credit bureau is reporting them. It could be Experian (XP), Equifax (EF), or Trans Union (TU). Write a dispute letter to EACH of the three at the address shown on your credit report. Keep it simple when listing the errors, like as follows:

Cap 1 acct# 1234-5678-9876-5432 balance is incorrect

Home Mortgage Co. acct# 852147 paid in full as of 1-07

You get the idea. Now sign the letter! Below your signature, print your name, current address, date of birth, social security number, and, if you have lived somewhere else in the past two years, that address and the dates. You should also include a copy of your drivers license to prove your identity.

If this sounds like a lot, there are dispute forms available on the internet for free.

Remember, YOU are responsible for checking your report to make sure it is accurate. The Federal Government has laws to ensure that you have the ability to correct errors, but they have to be found to be corrected. With the creditors and credit reporting agencies processing MILLIONS of transactions per day, mistakes are bound to happen.

Just think of it as a small price to pay to help the loan process flow better and maybe help you get better interest rates on your home, car and credit cards.

Hope this helps. I'll be posting more soon.

Scott

What is on Your Credit Report?

noreply@blogger.com (Scott Swinford) — Mon, 04 Feb 2008 15:23:00 +0000

Although it may seem obvious, everyone's credit report is different. In fact, since most people have three different individual reports (Trans Union, Experian and Equifax are the main ones), each person can have three different scores.

Why is that? Each report is simply a collection of both good and bad reports (for lack of a better word) from each creditor. Often times, a creditor, let's us a credit card company for example, may report to Trans Union and Experian while another credit card company may report only to Trans Union and Equifax. This would give us three different reports with different scores for the same person. Hope that makes sense!

So that you can follow along, you may get a copy of your personal report at http://www.annualcreditreport.com/. You are allowed to get one copy from each of the three bureaus every 12 months.

So, what type of information shows up on a credit report? Information that help a lender verify who you are and what type of risk that you may present by offering you a loan. Some of the info, both good and bad, is as follows:

Full name
Current address
Date of birth
Social Security number
Previous addresses
Current and/or previous employers
Credit Score (if purchased)
Factors of why score is what it is currently (if purchased)
Tradelines, both open and closed, with partial account numbers
Date opened, date of last activity, date reported
High credit (limit), current balance, account type (mortgage, auto, revolving) and terms (number of months to pay off)
Amount past due, number of months reviewed and number of 30, 60, & 90+ day lates
Status ( paying as agreed, 30 days late, charge-off, etc.)
Bureaus which are reporting the tradeline
Public records
Inquiries from last 2 years

As you can see, there is a lot of information on them and it can become quite confusing.

Here are some examples of what is NOT on your credit report....

Sex
Religion
Color
Race
Creed
Sexual orientation
Height and weight
Hair or eye color
Name of Doctor or treatment center for account in collections EXCEPT when you get your own personal report. Mortgage lenders and car dealers simply see "medical".

Hope this helps. I'll be posting more soon.

Scott

What is a Credit Score?

noreply@blogger.com (Scott Swinford) — Sun, 03 Feb 2008 22:46:00 +0000

What is a credit score?

Good question. Glad you asked.....

A credit score is a number, usually between 350 and 850 that is assigned to your credit report at that particular moment in time. It involves a complex mathematical algorhythm using what data is available on your credit report from each individual bureau.

Ok, that was complicated. Think of it as a snapshot of risk that lenders use to determine how well you will make your monthly payments in the future. The higher the score, the lower the risk associated with it.

Fair & Isaac and company (FICO) designed the score to determine the risk that any person might have a 90 late tradeline within the next 24 months. The results were pretty astonishing, as it was found to be a pretty good predictor.

While the formula is "tweaked" every so often, a new version will start appearing in the late spring or early summer of 2008 according to our sources.

So, what are the risks with each score? The first number is the score and the second set is the odds that this person will have a 90 day late in the next 24 months. For example, 1:100 means that 1 person in 100 will have the late.

Greater than 800.................... 1:1,292

Around 700.............................. 1:123

Below 600................................. 1:8

As you can see, the higher the score the less risk to the lender and the better interest rate that the borrower can get.

Next time, we'll talk about what is found (and not found) on your credit report.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.

What is a Good Credit Score?

noreply@blogger.com (Scott Swinford) — Sun, 03 Feb 2008 04:07:00 +0000

Hello and welcome!

Over the next days, weeks, months, and maybe years, we are going to discuss what a good credit score is and how to get one. It's really not as difficult as you might think, but you have to understand the scoring methods to get all the points possible.

As we spend some time on this topic, we will discuss the following:

* What makes up a credit score

* What is shown on a credit report

* How many credit reports have errors (Hint: it's well over 50%)

* How to get a copy of your credit report FREE with no strings attached

* How to read the credit report

* How to improve your credit score

* Why you should improve your credit report

* What NOT TO DO. Things that can make your score drop. This may SURPRISE you.

* What credit repair companies REALLY do for you and how to do it yourself

* How to dispute incorrect entries

* Who to trust when you need help correcting your report.

* And much, much more!

Since the issues began in the mortgage market, good credit is more important now than ever. While it was possible to purchase a home with poor credit and little money down in the past, those days are over for now. Currently, if you have poor credit, you maybe required to have a hefty downpayment, if you are able to get a mortgage at all.

Check back frequently or add this to your rss feed, as you do not want to miss even one post.

Scott

Scott Swinford is an Executive Consultant for the US Consumer Credit Restoration Association and a Certified Mortgage Planning Specialist in Northwest Indiana. If you have any questions, you can send email to scott@USCCRAonline.com.