Archive for the ‘free credit score reports’ Category
Monday, August 4th, 2008
No, I’m not talking about your political persuasion. I’m talking about your spending habits and how they’ll affect your credit score.
If you’re very conservative, you’re very careful about how you spend – you may even pride yourself on waiting until you have the cash to make a major purchase. Thus, you have no credit cards, no car loan, and no account at the appliance or furniture store.
Unless you’ve inherited real estate or bring home a phenomenal income, it probably means you don’t own a home – and at some point in the future you will need to apply for credit.
You might walk into your local mortgage company office feeling pretty good about yourself and feeling confident that you’ll get the mortgage you want at the lowest possible interest rate – because you’re a responsible person and have no debt.
Nothing could be farther from the truth!
Strange as it may seem, lenders want you to have debt. They want to see that you have a history of paying bills on time, and if you have no bills, you have no history.
In the past, we were able to help people get mortgage loans by showing the lender all their receipts for rent, phone bills, power bills, etc. But in today’s “running scared” mortgage market, that might not work.
So what should you do? First, get your free credit report and see what your FICO scores actually are. It’s always best to know where you’re starting from if you intend to go somewhere.
Next, begin building your credit. You may have to begin with a secured credit card, but since you have no adverse history, you may be able to obtain a card with a low credit limit from a mainstream source.
Once you have the card, begin using it to make small purchase. Or use it for a few large purchases – such as gasoline! When the bill arrives, pay it in full and continue charging those purchases. In a few months this activity will show up on your credit report.
Then, get another card and do the same thing – but be careful not to exceed 30% of your available credit on any one card during any one payment period. The amount you owe is reported as the amount on your monthly statement, so use the statement, not the calendar, to determine how much you can spend in a given month.
After you have a few month’s history with your credit card, ask to have your limit increased. Not because you want to use it, but because your credit report will then show more available credit that you aren’t using.
Check your credit report again regularly – and have fun watching those FICO scores as they go up and up!
Saturday, August 2nd, 2008
It really is kind of scary to realize that strangers can pull your credit report and thus access your credit history – and that they use it to create a picture of your life.
All they need is your social security number – and that isn’t hard to get any more.
From that they can determine many things to some degree of accuracy.
For instance, they’ll see how many different addresses you’ve used over the past 7 years, how many new accounts you’ve opened, how many times you’ve gone shopping for major purchases, and even who you might have helped out by co-signing a loan.
The top portion of a credit report includes names, nicknames, old and current addresses, Social Security number, birth date, and current and previous employers.
Thus, a prospective employer looking at your credit report will see if you’ve been job-hopping. That’s something you’d rather they didn’t know, because it will definitely hurt your chances of being hired. He or she will also see if you move from city to city with regularity – and if you do, will weigh the odds of you leaving after they invest the time to train you in a new position.
They’ll know if you pay your income tax on time, because the report will show any tax liens, along with bankruptcies and judgments.
They’ll even know if you’ve changed spouses, because your credit report shows who shared responsibility for each debt.
Looking at your financial life gives people an impression of you, and of how you conduct your life in general. Of course that’s nobody’s business – but it’s a fact.
Strangely enough, the Big Three credit bureaus don’t always have the same information, because they compile their data independently of each other. That’s one reason why it’s important for you to obtain a credit report that shows the findings from Experian, Equifax, and Trans Union.
Usually, when a lender pulls your credit report he or she will find that the big Three have each assigned a different score – sometimes as much as 40 points apart. Some lenders will act based on the middle score, while others will go with the lowest score.
Because of this discrepancy, it’s in your best interests to know what information each credit bureau has – and is sending out in response to inquiries. (Remember, if you find an error on your credit report, you need to notify each of these credit bureaus, not just one.)
Conversely, if you’ve been a victim of identity fraud, you can contact one and it will notify the others.
Get your free credit report today – see if the world has an accurate picture of who you really are.
Friday, August 1st, 2008
approved. The reason for this is because lending is altogether a different market now. If you are trying to get a house, you definitely better have good credit, but that’s not all. Lenders are going back to what was called the plain old vanilla loans. In other words there is not much creative financing anymore. Here are some examples.
Stated loans have been loans designed for individuals that are self employed and could not show much income. In a lot of cases self employed people write off as much as they can on there income tax returns. So this type of loan was invented for them. Well IRS is trying to get rid of these loans. I am sure you can imagine why.
No Doc Loans
This type of loan was for the excellent credit borrower. With this loan you did not document anything, no income or work history. You just got a loan based on your excellent credit history. This loan is no longer being provided.
Limited doc loans
These types of loans are loans where you state you income without proof, but you verify your assets. This loan is still around but is difficult to get done, due to there not being a market for the loan. You need at least a 720 plus score to get one of these.
Most banks are requiring a 680 credit score just to get in the door with this type of financing. IN the past a 650 was considered a good credit score, but you better have at least a 680 middle credit score to get this type of financing. Plus you will need a minimum of 5% down.
FHA mortgage loans
These types of loans are typically not credit score driving. Now you have to have at least a 580 credit score to get most banks to underwrite your loan. We are starting to see a pattern where the credit score requirement is being raised to 620.
So you can see you may of thought you had good credit scores, but due to the bar being raised by the market, you might have problems especially if you financing needs to be creative.
Friday, August 1st, 2008
Obviously, you won’t be able to walk into your local mortgage company office and get a loan unless your credit score is exceptional and your verifiable income shows that you can comfortably make the payments.
Gone are the days of “sub-prime” mortgages, and gone are the days of “stated income” for borrowers with high credit scores. Gone are the offers of “zero down” loans and creative financing options that allowed sellers to carry back a note for part of your down payment.
Lenders are being darned careful right now.
So what can you do if you want to begin building equity in a home – but your credit score is marginal and available funds for a down payment are scarce?
You can look for lease to own properties, and seller-financed homes.
Borrowers aren’t the only ones affected by this crisis – homeowners who need to sell are also in a bind, because the pool of buyers who will qualify for loans is getting smaller and smaller as lenders tighten their requirements.
Thus, those who can will begin entertaining the idea of seller financing and lease to own arrangements.
This could be good news for prospective homeowners, but it could also mean that home ownership will cost more. Traditionally, seller financing comes with a higher interest rate than those we’ve seen in the past few years. That means you’ll get less house for the same payment. Also, wary sellers might want a larger down payment than you are able to make.
These sellers will also want to see your credit report, but will likely be a little more flexible than mortgage lenders.
That leaves “rent to own” or “lease-purchase” arrangements. Under these situations, you won’t be on title, so won’t get the tax benefits of home ownership until the purchase is completed. Still, you’ll be locked into a purchase price, and if inflation continues, that could be a good thing.
Also, these sellers won’t be as fussy about your credit score, because they know that if you default, they’ll get the house back immediately rather than having to go through the long and expensive process of foreclosure.
But do be careful. Many “rent to own” properties are owned by companies seeking to take advantage of the current crisis, and their contracts are strict. For instance, they may require you to get a loan and cash them out within a set time frame. If you can’t do it, you’re out of the house and all payments made toward the down payment are kept as “liquidated damages.”
Making regular on-time payments to these companies will help raise your credit score, and the extra you pay will force you to build a down payment, so a lease purchase could be to your benefit.
Just be sure to read the fine print – all of the fine print.
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.
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.
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 CreditScoreQuick.com.
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 CreditScoreQuick.com 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.
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 Helilum.com 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.
CreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.
Friday, July 25th, 2008
Two of the most common credit mistakes appear at first to be smart moves:
• Closing Credit Card accounts you aren’t using
• Avoiding having any credit cards at all
It doesn’t seem sensible, but it’s true. In order to have a high score, you need to have plenty of credit available – credit that you aren’t using!
The Fair Isaac Corporation’s credit scoring system says that having low credit balances compared to the amount of credit you could be using makes you a good credit risk. This is based on percentages, so if you had $20,000 available and only used $5,000 it would show that you used only 25% of your available credit – but if you closed some accounts and now had only $10,000 available, it would show that you are using 50% of your available credit – and thus lower your FICO score.
Similarly, having no credit cards not only means that you have no ready credit available, but offers no verifiable record of your payment history. Never mind that you’re so careful with money that you either pay cash or go without. That kind of responsibility doesn’t count in the world of credit scoring.
Creditors want to know that you pay your bills on time, so having a couple of credit cards that are in good standing shows your financial reliability.
High Credit Card Balances are the next mistake. According to Fair Isaac, your balance should never be more than 30% of the credit limit on any one card. So avoid the temptation to move all your high interest balances over to a low interest credit card – unless you can do it and still stay under the 30% mark on the low interest card.
Perhaps the most dangerous mistake of all is Co-signing for loans. You do it to help a friend or family member, but that act of kindness can come back to bite you – hard. Not only do you add debt to your credit report, the fact that the person couldn’t get credit without a co-signor means that there’s a good possibility that they aren’t responsible with money – and that before long, late payments will begin to show up on your credit report.
Late payments will drop your score a full 100 points – and that could mean the difference between you being able to qualify for a loan or not. At the very least, it will mean that when you need personal credit, you’ll pay higher interest rates.
Unless you’re co-signing for a child who is living with you and you can not only monitor bill paying, but pay the account yourself if your child doesn’t – just don’t do it. Letting a friend or relative ruin your credit is not a good way to maintain a good relationship.
Thursday, July 24th, 2008
You probably never thought that transferring credit card balances from one credit card to another credit card would affect your credit score. It may sound like a good idea to transfer high credit card balances to lower interest rate credit cards banks. In some cases this is a good idea, but it really depends on some circumstances. When your credit score is determined, one of the factors in the credit scoring process is the amount of debt owed. This accounts for 30% of your credit score. I am going to discuss two scenarios, one that will not affect your credit score and one scenario that will.
Let’s assume you have a credit card with a balance of $6,000 on it. The interest rate on this card is killing you and you have found a better deal to pay off the card quicker. The new card has approved you for $7500 credit limit and 0% interest on balance transfers for 18 months. This sounds like a good idea. So you transfer the balance to the new card for the low interest rate.
Here is the problem:
When you owe more than 30% of the allowed credit limit on a credit card, this will drop your credit score. With this scenario you have almost used up all the credit they gave you. This is not wise at all. The balance you owe compared to the approved credit limit it way too high. You have 80% of the card limit already used up. This will affect your credit core
Let’s assume you have a credit card with a balance of $6000 on it. Plus you just got approved for a credit card with a credit limit of $25,000. They are offering the same deal on transfers as above, but they gave you a higher credit limit. This is the ideal situation and will not affect your credit score. The reason is the balance owed compared to credit limit is around 24%. This is considered low risk to most credit scoring risk models.
This principal can be applied to all credit card balances. You should not have your credit card balances charged up more than 30% of the allowed credit limit.
Disclaimer: This information has been compiled and provided by CreditScoreQuick.com 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.