Credit Reports and Scores
What you need to know about you credit reports and scores, how to get free reports and scores, how to read and analyze your report in order to repair your credit.
As credit-wise consumers, we have been told over and over that we should never disclose our personal financial information to other individuals without good reason. Identity theft and credit scams are rampant and consumers need to practice discretion when it comes to their top secret personal information in order to protect themselves and their finances.
The Fair Credit Reporting Act was established to protect the private information of consumers by limiting who is allowed to access credit reports and conduct credit inquiries. In order to understand how the protection works, consumers need to understand who is and who isn’t allowed to review their personal credit profile.
Here is an outline of the accessibility of your credit report to others:
Credit Card Companies
Since credit card companies offer lines of credit to consumers, they have a right to determine the risk you may present for defaulting on your legal obligations. The credit card company uses your credit profile and score to calculate a rate of interest on the card before issuing you credit approval. By signing the credit card application, you give Read more…
If you have been turned down for financing, you typically had to remain in the dark as a consumer when the rejection letter came. Consumers have a right to request a free copy of their credit report after being denied financing but were essentially left to their own devices when it came to figuring out why they had their application turned down.
However, starting this week, the Dodd-Frank Financial Reform Act will change the way rejections work. A new rule is being implanted that requires lenders to explain in greater detail why a consumer received a denial. Lenders are now required to display credit score information used to make the rejection decision. Consumers will be able to see their credit score range as well as the credit history data that was used in the decision process. The rule also allows consumers to be told about the factors that contributed to the decision, including negative information that affected the consumer credit score. The lender must also disclose which credit reporting agency provided the information.
On July 21, the new Consumer Financial Protection Bureau will officially launch and will be responsible for enforcing the new rules. Consumers will now have Read more…
Credit report disputes aren’t always successful. Sometimes you believe something shouldn’t appear on your report, but the bureau disagrees and continues to report the item you disputed. If you can’t get an item taken off your report, you can tell your side of the story.
Your Right to a Personal Statement
The Fair Credit Reporting Act, the law that covers credit report disputes, gives you the right to add a 100-word personal statement to your report. You can use this brief paragraph to explain why an entry is has been listed on the report. For example, a fraudulent account may have been reported in your name, but the bureaus refuse to remove it because the card issuer continues to say that it belongs to you. Your 100-word statement would explain the identity theft and state that you tried to dispute it but were unsuccessful.
Personal statements don’t necessarily have to explain errors on your report. They can also be used to explain why you fell behind on payments, e.g. a long period of unemployment or an injury. The personal statement can be used to explain that you aren’t a deadbeat and you have a legitimate reason for falling behind on your payments.
Make sure your personal statement doesn’t cast you in a bad light. You don’t want to say something like “I was young and didn’t realize late payments would affect me.” That type of statement probably won’t give the lender a good Read more…
Most consumers realize they have a credit score – a number that indicates whether you have good or bad credit. It’s a number creditors and lenders use to decide whether to approve your application and what interest rate to give you. But, there are several other scores businesses use that aren’t as publicized. Some of them are not even available for consumer use.
Your credit card issuer has a wealth of information about your shopping habits and uses this information to determine just how risky of a borrower you are. Creditors may use your behavior score to determine your limit, to raise your interest rate, raise your annual fee, or cancel your credit card all together. Using your card at certain places, like pawn shops, can make you seem riskier.
Because card issuers don’t share the score, or the factors that influence the score, it’s impossible to raise your score. Cutting back on your plastic utilization used to share your behavior score can negatively affect you too – creditors may misinterpret the reason you’re using your credit card less.
Banks use your bankruptcy score to predict the likelihood that you’ll file bankruptcy in the near future. They may use your bankruptcy score to charge you higher Read more…
The PLUS Score may be an unfamiliar term for many consumers but it can be an integral part of repairing your credit and improving your knowledge as to how make your credit work for you. Experian, the consumer credit reporting agency, created the PLUS Score as a way to help consumers better understand how to manage and repair their credit scores.
The PLUS Score is consumer-friendly credit score that was created by Experian to help consumers understand what is having an impact on their present credit score. It PLUS model also provides detailed information about what consumers need to do in order to see their credit scores increase.
How PLUS Score Works
The PLUS Score is calculated from the data on an Experian credit report. The calculation is relative to the methods utilized by lenders when making credit decisions. The PLUS Score ranges from 330 to 830. Much like a traditional credit score, the higher a consumer PLUS Score is, the less of a credit risk they pose to lenders. While most creditors will pull a consumer’s FICO score when making decisions, the PLUS score can be Read more…
When two people get married, a lot of things combine, but credit histories and credit scores aren’t one of them. So, if you’re marrying someone who has bad credit, you don’t have to worry that their bad credit will drag yours down simply because you’ve been joined in holy matrimony. You do have to worry, however, if you’re applying for joint credit together, if your spouse has access to your accounts, or if your spouse has bad spending habits.
Applying for Joint Credit
Now that you’re married, there may be times when you apply for a credit card or loan with your spouse. For example, you may get a joint credit card if your spouse can’t qualify for one alone, to help your spouse repair their credit, or to make household accounting easier. Unfortunately, your spouse’s bad credit may keep you from qualifying for the best credit cards and you could wind up with a high interest rate, high fee credit card.
Applying for mortgages or car loans together will also prove difficult. Lenders have various ways of considering a joint applicant’s credit score. They may take an average of your scores or they may consider only the lowest credit score. Rarely, if ever, do they only count the highest credit score. This means you could qualify for a smaller loan, have a high down payment requirement, or have to pay a higher interest rate on the loan.
Adding a Spouse To Your Accounts
There’s a possibility that your spouse has bad credit because they have bad credit habits. If you add this spouse to your credit card accounts, their bad credit habits will Read more…
It’s becoming common knowledge that employers include credit checks as part of the application process. However, there’s also some misinformation being spread about how employment credit checks affect you. Get the facts on credit checks before you go job hunting so you know what to expect.
Employers don’t check your credit score. One of the biggest myths out there regarding employment credit checks is that employers check your credit score. This simply isn’t true. Employers check your credit report, which is a document that contains your credit history over the last seven to ten years. They’re not looking to see if you have good credit or bad credit. Instead, they’re looking to see if there are specific items on your credit report that could affect your job performance.
Not all employers check credit. Not every employer has a need to check your credit. Employers most often check credit for executive positions and positions where you’ll be dealing directly with money. If an employer needs to check your credit to continue the application process, you’ll know about it ahead of time.
Employers that check credit don’t necessarily check for all applicants. Just because your friend tells you he had a credit check with an employer for a certain position doesn’t mean you’ll have one, too. Remember that employers typically check for specific positions, so if you’re not applying for a position that requires a credit check, there’s a good chance you won’t have to go through credit screening.
You have to give your permission before an employer can check your credit. By law, employers are required to get Read more…
Every consumer in the US that has established a credit history has a credit report listed with three of the credit reporting agencies: Experian, Equifax, and TransUnion. The credit report lists all of the activity and accounts a consumer has with creditors including mortgages, personal loans, credit card accounts, and other lines of credit and obtaining it is the first step of credit repair. Activity is reported by the creditors for each consumer whether it is positive (ie: pays on time) or negative (ie: missed payments). That information is then used by other banks and lenders to determine the creditworthiness of a consumer. A lot of good reported information will reflect responsibility with credit. Too much bad information on a credit report shows lenders a consumer may be a risky proposition. Bad credit histories will lead to higher interest rates and even rejections on credit applications.
There are a lot of advertisements that mislead consumers into thinking they can easily get a copy of the credit reports for free by signing up with select companies. The problem is that many of these ads aren’t entirely true. While you can get a free copy of your report, you also have to sign up for costly credit monitoring or other service that requires monthly payments for membership.
Obtaining Your Report Without Obligation
All consumers are entitled to a free credit report each year from the three credit bureaus. You do not need to register for membership with any company to receive the free report. If you want to request copies of your credit history, use the following contact information: Read more…
In the years before the mortgage industry meltdown when it was relatively easy to get credit, a credit score of 700 was considered to be good to excellent. Many lenders would be happy to approve loan or credit applications for consumers with a 700 score without so much as a blink of an eye. However, because of the latest recession and the enormous amount of defaults occurring among consumers, the rules changed pretty fast. It’s important to understand how these changes affect your credit score and your credit repair work.
Is It Enough to Be ‘Good Enough’?
While a 700 credit score is certainly not at the bottom of the barrel, it is no longer considered the get-to score by those working to improve their credit. In years past, creditors were happy with a 700 or higher but because of the increase in defaults and the overall loss of profits in the mortgage and banking industries, lenders are very wary of taking risks. Borrowers now need to come to the table with provable credit worthiness.
A score these days of 720 or higher is the new standard and many lenders are very strict with their requirements. Mortgage lenders especially are looking closely at income levels and credit scores before making a loan commitment at the best interest rates and terms.
How Flexible Are Lender Requirements?
With 720 being the new credit score target, some lenders will not be Read more…
Credit card issuers offer a range of credit cards with great terms and not so great terms. Your credit score affects which credit card you’re ultimately approved for and, often, whether your credit card has good terms or bad terms. If you’re wondering exactly why you should repair your credit, access to better credit cards is a great reason. If you’re working toward creating a better score, here’s what you can look forward to.
More Likely Approval
One of the hardest parts of having bad credit is that you never know you’re your credit card applications will be approved or denied. But, when you have good credit, you’re more likely to have your credit card application approved. You can apply with confidence rather than fear. Applicants with low credit scores have fewer options when it comes to choosing a credit card because few credit card issuers offer credit card for people with bad credit scores. With bad credit, you may have to accept high interest rates or annual fees that you can often avoid with better credit.
Lower Interest Rates
Credit card interest rate is often the most important factor when you’re choosing a credit card. You’ll notice that many credit card advertise a range of APRs, for example from 9.9% to 21.9%. The credit card issuer decides your interest rate once they’ve checked your credit history. If you have a good credit score, you’re more likely to get the lower interest rate, which means you’ll have lower finance charges on balances you don’t pay off. Read more…