Archive for July, 2008

Fair Isaac’s FICO score 08 will restore Authorized user accounts.

Thursday, July 31st, 2008

This is great news, due to the fraud in the credit repair industry; credit repair companies were buying authorized user accounts to boost their client’s fico scores during the credit repair process. Fair Isaac found out and put an end to allowing authorized user accounts improve your over all credit score. The problem with this move was there are over 50 million legitimate authorized credit card users. With the new FICO 08 this could potentially bring the fico scores down for those legitimate account holders.

Scientists with FICO released news today that they have discovered a way to restore authorized user accounts to the calculation of FICO 08 credit scores while materially reducing the impact to the credit score tampering.

This technology breakthrough resolves an industry problem that has perplexed lenders and concerned banks. Fair Isaac states that they have developed technology that will reduce any impact on the FICO 08 score from intentional tampering, while allowing the scores of spouses and other genuine authorized users to benefit from their shared credit history.

This new technology rollout should be done within a couple of weeks. Fair Isaac stated they are working with the credit bureaus closely to bring FICO score 08 to the public soon.

This is good news; because the way it was would affect a lot of people. Potentially with the older FICO 08, you would be penalized for being an authorized user on a credit card. With this new roll out, it will help those that legitimately are authorized users.

Who looks at your credit score?

Thursday, July 31st, 2008

Everyone knows that mortgage lenders and car dealerships / lenders look at your credit score. It’s their way of deciding if they should lend you money, and if so, at what rate and terms.

The better your score, the lower the interest rate and the longer the repayment period.

But who else is looking?

Telephone companies and satellite Television providers are two of them. And why? Because they’re providing a monthly service and want to know if they can count on you to pay that monthly bill. I know – they can simply discontinue service if you don’t pay up, but the paperwork costs them money and they’d rather not deal with it. In addition, some of these companies invest in free equipment at the outset of your service, counting on your monthly payments to return that investment.

If you simply stop paying after just a few months, they’re out the cost of that equipment as well as the cost of processing paperwork.

Insurance companies are next. Using statistics gathered over the years, insurance companies have come to believe that customers with high credit scores are not only more likely to pay their insurance premiums in a timely manner, they’re less likely to file claims.

Is this because those people with high credit scores are more responsible in all facets of their daily lives? Or could they be fostering a belief that people with poor credit scores are more apt to file bogus claims? I don’t know the answer to that, but since so many people do file insurance claims that have no bearing on the truth, it could be that they have some statistical information to indicate that they are.

Finally, there are your future employers. With the high cost of training employees, employers want to hire correctly and avoid turnover. So they’re looking at things they never did before.

For instance, you’ve probably read stories about prospective employers Googling applicants’ names to learn more personal information about them. Many’s the foolhardy person who has lost out on a position of responsibility because a prospective employer either saw a foolish video on U-tube or read blog posts indicating that the person they were considering is a bad choice. In other cases, past employers have refused to give referrals because of “bad-mouthing” they received on an employee’s blog.

It’s no wonder that they check your credit report to determine your levels of personal responsibility. Managing your money well really is a sign of responsible behavior – and that’s a trait that every employer wants to see in every employee.

Order your free credit score today – and find out what everyone else knows about you!

A Free Credit Report Could be Worth Thousands

Thursday, July 31st, 2008

How can a free credit report be worth thousands to you? By giving you a heads-up about how the world views your financial reputation, and giving you time to make needed changes before you need credit.

Your credit scores dictate the kind of terms you’ll get when purchasing a home – or even when purchasing a car, appliances, or furniture. So taking steps to ensure that score is high well before you need to apply for credit will save you thousands of dollars in interest over the years.

You may be thinking that you pay your bills on time and don’t owe an excessive amount, so of course your score will be just fine. And you might be right – but not necessarily.

Your credit report could contain errors – and if it does, it takes a few weeks to a few months to correct them. Remember that old saying about computers: “garbage in, garbage out?” Well, when it comes to data entry, it’s very easy to put “garbage in.” Most data entry personnel are minimum wage workers who don’t really care about accuracy. They just care about putting in their time and getting a paycheck.

If they enter one digit wrong on a social security number or a credit card account, so what? So plenty if you’re the person whose credit report now shows an unpaid account that doesn’t even belong to you! And that’s just one example of the errors that can occur.

The second, even more terrifying reason why your credit report could be inaccurate is identity theft. “You” could be thousands of miles away, opening new accounts and running up balances with businesses you’ve never even heard of.

Reading your free credit report will either give you peace of mind or spur you to action:
• If there are accidental mistakes, you’ll have to prove that they really are mistakes.
• If some other person is using your identity you’ll have to get started on all the red tape of stopping them, and then getting their transactions removed from your credit report.

Both of those situations require time, so get started watching your credit scores long before you need them.

Even if you don’t need new credit today, or even this year, keeping an eye on your credit scores right now will save you from frustration, delays, and disappointment when you do need it.

Request your free credit report today – you won’t be sorry!

FHA down payment assistance gone now.

Wednesday, July 30th, 2008

Over the years FHA has allowed Charity programs such as Home Down Payment Gift Foundation and others provide gifts from the seller. FHA requires that the buyer make a 3% investment in the purchase of the home. So if the buyer is buying a house around $150,000 they would be required to have an investment of $4500 dollars. With the 3 rd party charitable companies this allowed the seller to gift this requirement in a couple of faucets. The buyer could roll the cost into the note, or the seller could just pay it. When it came down to it, this program was just a red tape way of the buyer getting out of the FHA 3% investment requirement. HUD was claiming that homes that were foreclosing 20% were FHA loans that participated in Down Payment Assistance.

The problem with this program was if the home the buyer was purchasing had any equity it was absorbed up in the down payment assistance cost. Typically the buyer had to roll the cost into the note in order for the seller to participate. Essentially this program caused equity problems down the road.

The great situation about this program was it allowed low income families into to homes with little or now money out of pocket. You could get into a home with typically $500 out of pocket. This program helped thousands of families realize the dream of home ownership.

With the new bill that was passed today, the FHA buyer is now required to have 3.5% of there own money to buy a home.

Along with all the tightening up on credit scores and credit reports, now you will required to save to get a mortgage. This is the way it was prior to the late 90’s.

So my advice like always is to save your money and pay all your bills on-time.

My Credit Scores have dropped due to new credit cards-Why?

Wednesday, July 30th, 2008

The venture to build a good credit score  is sometimes aggravating and exhausting. If you have never had credit or let all your credit go to collection, the first step on building your credit scores is building or rebuilding your credit report. Anyone that understands this process will tell you your first step is to get some secured credit cards. There are some matters you need to know that will drop your credit score though. Here is what you need to know.

Secured Credit Cards
This type of credit card is a great way to establish credit regardless of your situation. Reason behind the success of this card is because it reports to the credit bureaus as good revolving credit. This card does require a deposit of your own money into the banks account, typically around $300. The good news is with a little payment history you are on your way to save because you have higher credit scores now. It’s a small investment to save lots of money down the road.

Too much credit too quick
If you apply for too many credit cards to quick, your credit score will drop. The credit scoring models look at this as high risk. I would just apply for two credit cards only, that is all your really need.

Credit History
When your credit scores are calculated the length of credit history is a factor as well. If you just applied for credit cards your credit scores could drop, but they will eventually go up. There are all kinds of factors in the credit scoring process, and if its new credit it will take some time to see improvement in your credit scores. But remember this is the quickest way to increase your score though.

Clearing the Confusion about Inquiries and Your Credit Score

Wednesday, July 30th, 2008

If you’ve ever applied for a mortgage loan, and if your loan officer was on the ball, you were told not to go shopping for a car or furniture for that new house. You were told that looking is fine, but do not give a sales person your Social Security number for any reason.

You were warned that inquiries on your credit report would lower your score, and could even prevent you from getting your mortgage loan.

This is true – and borrowers who are barely squeaking by with a credit score at the lower levels of acceptable can cause themselves to lose out on the mortgage.

At the same time, you should have been told not to withdraw funds from your checking or savings accounts to make a large purchase in cash, because your mortgage lender will check your balances to make sure that you have the required balance in the bank to pay your down payment and have a few months’ payments left over.

These warnings have led many to believe that any and all inquiries will lower your credit score, and that is not true. “Soft” inquiries will not harm you, because they don’t indicate that you’re trying to obtain credit.

These would be inquiries you make yourself, inquiries from potential employers, and inquiries from companies who routinely check credit as a preliminary step before sending out letters soliciting your business. Likewise, an inquiry from a creditor with whom you’re already doing business will not affect you.

These may or may not show up on your report, but don’t worry about them.

Checking your own score periodically is a very good idea – in fact, Fair Isaac, the inventor of the FICO score, recommends that you do so. Checking will allow you to catch errors early on, and will alert you to signs of identity theft – one of which is inquiries from creditors you don’t recognize in cities where you don’t live.

If you live in the Midwest and you see an inquiry from a car dealer in Seattle, it’s time to find out why. “You” may now live in Seattle and not even know it.

When you see such an inquiry, or see something strange – such as an incorrect address for you or your spouse – don’t dismiss it as a mistake. Contact the credit bureau immediately and find out more. Let them know that you may be a victim of identity theft and need the information.

Why not get a copy of your credit report today – right here at

Should you Consider Debt Consolidation – and Will it Hurt Your Credit Score?

Wednesday, July 30th, 2008

Lenders often encourage people to consolidate credit card debt by taking a second mortgage on their homes – thus spreading payments out over more years, generally at a much lower interest rate.

Sometimes the same company that issued your credit card will encourage you to switch to a home equity loan. They love it because this is a secured loan – unlike credit cards, which are unsecured. They also love spreading your payments out over a longer period of time, because then a larger percentage of each payment is interest (otherwise known as profit to the lender.)

The lender will point out that home equity loans are tax-deductible, so you’ll be saving money. Be careful with that one, as the rules have changed and you may have to prove that the home equity loan was used to make improvements on your home.

So… Should you do it?

The first question you must ask yourself is this: “Do I have the discipline not to turn right around and run up my credit card debt again?” If the answer is no, then no – you should not do it.

What will this new loan do to my credit score? That depends on question #1 – along with the amount of the new credit line you actually use.

For instance, if you have $50,000 equity in your home and are granted a second “revolving credit” line of $35,000, you have just acquired a higher amount of available credit – which is good for your FICO score.

However, if you use every bit of it, that’s not so good. FICO scoring is a bit of a mystery, but the overall consensus is that you should never use over 30% of available credit on any one account.

Can you eliminate those high credit card payments by using 30% of the credit available from your revolving home equity loan? Then it’s a good idea. From that point on, use your credit cards, but pay them off each month when the bills come in. And of course, never charge more in any one month than 30% of their available balances.

Get your credit report right here at and read it carefully. Add up the balances you owe, and consider how large your home equity loan would be. If it all makes sense, then check with several Second Mortgage lenders to compare interest rates and programs before you make a decision.

FICO credit score Q & A

Tuesday, July 29th, 2008

Hi Mike,
I noticed that there are different kinds of credit scores on the web. I was looking to get my actually FICO credit score. Not sure if it really matters, but do you guys provide a FICO score at your site? If you do could you pleas send me to the correct area.

Latisha Williams.

Hello Latisha,
This is a great question. If you are in the market to buy something, getting your FICO score report is a good idea. The other credit score offers will not hurt anything either. Most of the Banks use the FICO credit score model to determine your creditworthiness. If you are looking for your FICO score you can go here.

Mike Clover

Raise Your Credit Score Through Smart Spending

Tuesday, July 29th, 2008

We’ve already discussed raising your credit score by paying down your debt – and we talked about ways to bring in more income.

The other “best practice” is to simply quit spending so much. You may think you’re already spending as little as possible – that there’s simply no place to make another cut. There’s a slim possibility that you’re right – but it’s very slim. Most of us spend on things we don’t really need.

Adopt a new habit – when considering any purchase that requires use of your credit card, set it aside for a day, or at least for a few hours. A good way to force yourself to do this is to hide your credit cards in a block of ice, so there’s no temptation to just grab the card and go.

Then take a conscious vacation from spending. Set a time frame of say, 30 days, during which you won’t buy anything but groceries and the absolute essentials – like toothpaste.

Now look for “leaks” in your expenses – ways that you spend money without giving it much thought. For instance:
• Lunch. If you work in an office and routinely go out for lunch, you’re wasting as much as $250 per month. Begin “brown-bagging” it and get the double benefit of eating healthier foods while saving money.
• Snacks – if you stop for a soft drink and candy bar or chips on the way home – stop it! They’re bad for your body and your finances both.
• Espresso – do you really need a $5 cup of coffee on your way to work?? If so, get a machine and make it at home before you leave.
• Services you don’t really need: Like 400 channels on your cable TV when you really only watch about 3 of them. See if you can get your plan changed – or just drop it entirely and begin using the library to borrow books or movies.
• More airtime on your cell phone plan than you actually use.
• Gasoline. This is such a huge expense now that eliminating a few trips will save you big money. If it’s possible, carpool or take public transport to work. If not, always bundle your errands to do before or after work so you don’t make a special trip out for them.
• Magazines you don’t read. Next time you get a renewal notice, take the money you would have sent for the magazine and send it to your credit card account instead.

If you try, you’ll find even more places where you can cut $1 here, $5 there, and even $100 somewhere else. Stop those financial leaks and you’ll be well on your way to a beautiful credit report.

Pay Your Debts to Raise Your Credit Score

Tuesday, July 29th, 2008

Sounds simplistic, doesn’t it? Just pay down your debts, your credit score will raise, and all will be fine. But if you’re in debt, there’s probably a reason – such as spending in excess of your income.

If you want to build a good financial reputation – otherwise known as a good FICO score – you’ll have to make the effort to bring your spending in line with your income.

You have two simple choices, and they should be used in combination with each other:
• Earn more and use the extra to pay down debt – or stop going further in debt
• Spend less

Start with earning more. How many extra dollars per week or per month would it take for you to begin paying off credit cards? $10, $50, $100, or maybe $500?

Remember, even an extra $10 per month paid on a credit card account will make a difference over time. This is a simple example, because it doesn’t take into account that the money will be paid in a little at a time and will begin reducing the amount of interest you pay from the first “extra” payment onward. Your savings will actually be more than the following example.

But look at it this way: If you’re paying 18% interest, and you pay an extra $10 monthly for one year, that’s $120 less that you’ll pay interest on the next year – That’s $9.60 per month, or $115.20 per year that won’t slide out of your checking account into the hands of a credit card company.

So how can you earn that extra money? Here are a few suggestions:
• Take a part-time job in addition to your regular job. Here are a few that could easily bring in an extra $10 or $20 per week without taking up much time:
o Put up and take down signs for a real estate agent
o If you’re good with a camera, take property photos for that agent
o Walk dogs for a neighbor who works long hours
o Pet sit for people on vacation
o Clean offices at night or on the week-end
o Hire on to shop or do yard/garden work for an elderly neighbor
o Do on-line blogging for pay
o Do on-line surveys for cash
• Begin doing extra tasks at work – take on more responsibility – work a little harder and longer than anyone else – and then ask for a raise.
• Begin looking for a new job that pays more
• Go through the attic and start clearing your clutter – through eBay
• If you can write, sign up on a site like and enter the writing contests
• Put some Google Adwords links on your own web pages
• Teach a class about something you do very well

The most important thing is to immediately set aside all funds generated from these extra activities – and use them to pay down debt. It won’t help you if you increase your spending to match the additional income.

Author:Mike Clover is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.