July 20th, 2008
Surely our credit card companies have learned from extending credit to people in general. Extending credit to adults vs. extending credit to kids is there any difference? I would assume with the way credit reports look these days, there is not much difference. Adults are failing to pay back credit card debt just like our youngsters. Is it because of a lack of education, have we failed in this area? Once you get a credit card whether you are a young adult or older should you charge a vacation on it? Is it ok to buy a TV, stereo, and furniture if they are offering 12 months no payments and no interest on credit? These are some questions being asked everywhere. I think the banking industry missed something by offering got ahead and get now and pay later. If you are young and have not been taught about credit cards you can get in trouble with all these sales pitches real quick.
If you are on your way to college, and get offered student credit cards should you accept them? I personally believe that you need to start building your credit once you hit 17. That does not mean you get full access to your credit cards. Parents need to teach there kids about proper credit card management. If you go out and charge something on your credit cards you need to be prepared to pay it off that month, no exceptions. If you charge something on your credit cards and can’t pay it off that month you are living beyond your means.
With all the changes in how Fair Isaac calculates credit scores now, if you are young and just starting out there are two ways to establish credit.
· Secured Credit Cards
· Student Credit Cards
If you decide to go to college it will be pretty easy to get a student credit card. This is a great way to start the credit building process on your own. If you are not going to college, then secured credit cards is the other option. Secured Credit Cards do require a deposit from you, but it will get the credit building process going for you. Once you have a good 12 month payment history you will start getting all kinds of pre-approved credit card offers. Remember this and don’t forget, “Don’t charge more on your credit card than you can afford to pay off that same month.” If you spend carelessly on your credit cards you will find yourself in debt real quick and debt is like a dark cloud hanging over your head.
I personally believe there needs to be a credit education course in our schools now, to better educate everyone about the consequences of mismanagement of money. Id you don’t learn how to manage your money properly you will find your self either filing bankruptcy or debt consolidation at a early age. These types of situations will ruin your credit reports and credit scores.
Having credit is a fact of life and everyone needs to be aware of the affects of credit card debt.
CreditScoreQuick.com
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July 20th, 2008
Perhaps. It depends upon your immediate plans. If you’re getting ready to buy a house or a car, or if you need another credit card, then no, you definitely should not. But if you have no impending need to apply for credit, and you worry about identity theft, then it could be a good plan for you.
Many older consumers are good candidates for this. They’re at an age where they aren’t likely to want a new house or a new car – at least not any time soon. Generally they have several credit cards, many that they aren’t using, which gives them excellent credit. And, sad as it is, elders are often the target for identity fraud.
But first, what does “freezing your credit report” mean? Simply stated, it means that no one, not even you, can access your credit report.
This move helps prevent identity theft because thieves trying to use your credit will run up against a brick wall. When a would-be creditor tries to run a check, they’ll be denied. And when a creditor can’t find out if you’re a smart money manager or not, they’ll deny the credit.
The down side is that you’ll have to pay $10 to each of the three credit reporting agencies: Equifax, Experian, and Trans Union. If you have a spouse, you’ll also have to pay $10 each for your spouse. You’ll also have to fill out paperwork.
However, you can get a “free freeze” if you’ve already become a victim of identity theft. You’ll have to send a copy of the police report in lieu of money.
Because the credit bureaus fought for 4 years to prevent Congress from passing a bill allowing individuals to freeze their reports, they aren’t making it easy for you. You’ll have to mail certified letters, present utility bills to prove you are who you are and you live where you live, and give other personal information.
Later, when you want to purchase a house or a car on credit, you’ll have to go through a reverse process to “thaw” your reports. You’ll pay the $10 per person per credit bureau over again. That’s the second “down side” to freezing your credit report.
Only you can decide if this is the right move for you. But anyone who has gone through the hassle of putting their lives back together after a brush with identity theft would probably tell you that paying those “freeze and thaw” fees is well worth it.
CreditScoreQuick.com
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July 19th, 2008
 As new graduates embark into the world of independent living, most are ill prepared to deal with their own finances. It’s a shame that “Money Handling” isn’t a required course in all High Schools and Colleges, because starting off on the right foot can lead to a much more pleasant life than starting off wrong.
When you have a good credit score, lenders see you as a low-risk person. As a result, they’ll offer you lower interest rates, lower minimum payments, less paperwork, and more borrowing options. Poor scores have the opposite effect.
In fact, with a bad credit score you could be denied jobs, car loans, mortgage loans, insurance, or even rental housing. If you can get insurance, with a poor credit score you’re apt to pay rates that run more than twice as high as they would be if your score was good. And if you can get loans, you’ll pay 4 or 5 times as much interest as you would with a good score.
Creating a good financial reputation (credit score) isn’t difficult, but it does require a little discipline. And it does take time, so start early. The longer your record of responsible money management, the easier your life will be.
This means saying “no” to most of the credit card offers that come your way, and working hard never to use over 50% of the credit available to you. It also means paying each of those bills by the due date, and paying a bit more than the minimum payment. Strive to keep your non-mortgage debt down to 15% of your income, even when it means delaying the purchase of a new toy or a classy addition to your wardrobe.
One good way to make sure you pay your bills on time every time is to create a chart that shows each bill and the date it’s due. One caution: don’t assume that the due dates will be the same each month. Read each bill when it comes in and adjust the payment date accordingly.
Budget your payments and adjust your discretionary spending accordingly – so that you’re never in a position to make a late payment. Even if that means skipping Saturday night out.
Next, begin to build your net worth. Check in to automatic savings, deducted from your paycheck before you even see it. Small amounts add up, and they will raise your credit score. In fact, having both a checking and a savings account will earn you a score 4 times higher in that category than having a checking account alone.
If automatic savings aren’t available, discipline yourself to make that deposit from each and every check.
Lastly, be sure to check your credit score often – so if there’s a mistake you can get it corrected quickly!
Posted in credit cards, free credit score reports | 1 Comment »
July 19th, 2008
Q:
Hi Mike,
I have some questions about leases with apartment complexes. My husband and I are in a lease currently that is up in 5 months. We just ran across an opportunity on a house that we cannot let go. The apartment complex will not let us out of our lease; they said we would have to pay almost $7,000 in fees to break the lease. We have excellent credit and fill like this is absurd. I told them they could easily rent it out again. My question is if I let the lease go and not pay the money will it go on our credit report. I don’t want anything to affect our good credit history. My husband and I have credit scores in the 700’s according the lender that has approved us. Any suggesting would be greatly appreciated.
Tanya Riddle
A:
Hi Tanya,
I personally think apartment complexes can be a thorn in your side. But on the flip side they need some kind of commitment from people as well. I do though completely understand your situation. If your break your lease, two things will happen. First the rest of the lease plus fees will be reported on your credit report. Also when you start the loan process the underwriter will need to verify good rental history, usually for 12 months. The apartment complex will state that you are breaking a lease. So my advice would be either pay it off, or finish out your lease. Also in the long run you will pay for it, and so will your good credit scores.
CreditScoreQuick.com
CreditScoreQuick.com
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July 19th, 2008
Q:
Hi mike,
I have a question about why I only have one credit score. I recently pulled a copy of my free credit score report through your site, and only got one score back from Equifax. I thought you got three credit scores. I don’t have any credit cards and any outstanding loans currently. I do have past history but it has been years. I decided a while back to pay cash for everything. I thought you would have credit scores from past history.
Angela Pickerall
A:
Hi Angela,
We see this quite often. There could be several situations going on here. Without actually seeing your credit report I will gives some scenarios. The first problem I see is you don’t have any new or existing credit reporting. So the current credit scoring models don’t have anything to score you on. The current FICO scoring model likes to see the following to calculate your credit scores with each bureau.
• Payment History
• Amounts owed
• Length of credit history
• New credit
• Types of credit used
All of this goes into factoring your credit score with each credit bureau. Its looks like you are lacking all of this, and this is why you don’t have 3 credit scores. Yes one might be scoring you because a creditor is reporting to that bureau only. This is the second scenario. Some creditors only have contracts with certain credit bureaus. They may not have contracts to report information with all 3.
CreditScoreQuick.com
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July 19th, 2008
You paid for your credit report on-line with your credit scores. You print it out, and the question is now what? Do you even know how to read or decipher what is on there? You might be asking yourself what is a good credit score, and do you have good enough credit to get the best terms and rates on any loan.
Every lender has its own criteria for lending someone money. Every insurance company, employer, credit card companies, and bank sets its own credit report and credit score standard. So what is a considered a good credit score by most standards.
Fair Isaac’s credit score model is like a standard amongst other credit score models. What does this mean? This means that there are other credit score models used to determine your risk, but most of them designed there credit scoring model after the FICO score model. FICO scores range between 300 (very bad) to 850 (very good).
About three years ago all the credit bureaus got together and came up with a credit scoring model called “Vantage Score.” These credit scores range between 501 to 990. But when it comes to credit scores the most widely used is the FICO score model.
As you can see there is a wide range of credit scores. You might be asking yourself what is considered good still. Well a good rule of thumb is to have at least a 680 credit score. There are 3 credit bureaus and each report there own credit score. Equifax, TransUnion and Experian are the three bureaus. Lets assume your Equifax credit score is 720, Experian is 660 and TransUnion is 680, your middle credit score is what most banks use. So you credit score used is 680. Usually with this type of credit score you can get approved for just about any loan. That does not mean you will get the best rates and terms though. If you are looking to get the best rate and terms you will need at least a 720 plus middle FICO score.
All loans are based on risk, and the credit scoring process is a mathematical solution to determine whether you will pay back the creditor or not. The lower your middle credit score the higher risk you are to all creditors concerned.
Remember some creditors have there own internal credit scoring process. So your credit score will not be the same with everyone. My advice would be to always pay your bills on time and keep your debt low. These are the two biggest factors in the credit scoring process.
CreditScoreQuick.com
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July 18th, 2008
With all the hustle and bustle, what else could we possibly worry about now? Life is hectic enough without having to worry about someone accessing your credit information and stealing your identity. I remember during the 80’ you did not hear about all of this. The only worry we had was Russia sending over a nuclear bomb. With the evolution of how information travels, and a paradigm shift in theft, we have to stay on top of our credit reports. Thank goodness technology allows us to access our personal information fairly quickly.
Until recently if you wanted a copy of your credit report, it took an act of congress to get one. Plus the credit report you got was almost impossible to read. Luckily with the new Fair Credit Reporting Act (FRCA) you are entitled to a free credit report once a year. This opened the gates of other credit report offers which will provide you with your credit scores. The free credit report you get once a year gives you a 3-1 credit report with no credit scores.
With the internet presence and the ease to access personal information you cannot afford to check your credit report only once a year. Did you know that identity theft could be happening to you right now? If you waited a year to access your free credit score report 12 months from now your good name would be ruined. So yes with the internet technology two things have happened, it opened up avenues for identity thieves. The internet also opened the ability to access your personal information securely and fast over the web.
The internet is safe as long as the site you are visiting is secure. Believe it or not most identity theft does not take place over the web. It takes place in places like your trash and at companies that have your personal information on file.
So identity theft has added extra stress to our lives, but if you stay on top of your credit report it’s definitely a piece of mind.
CreditScoreQuick.com
Posted in free credit score reports | 2 Comments »
July 18th, 2008
 Wrong information can be just as damaging as no information, and there’s a whole host of it surrounding the lending industry. Much of it involves credit scores.
Sadly, because many Mortgage lenders and bank representatives never take the time to actually learn about credit scoring, much of the bad information comes directly from sources you should be able to trust.
For instance, some will tell you that you should close open accounts. No! You should not. You definitely shouldn’t open any new accounts or even apply for new accounts when you’re trying to build your credit score, but if you close accounts you now have, you could actually lower your score.
This is because your debt load is measured against the credit you have available to you. When you close an account, that credit is not available, so your debt ratio goes up, making your account balances seem higher.
For instance, if you have 4 credit cards, each with a limit of $5,000, and you have balances of $3,000 and $4,500 on 2 of the cards, and zero balance on the other two, you are using only $7,500 of $20,000 available, or 37.5%. If you close the two unused accounts, you’re now using $7,500 of $10,000 – or 75% of your available credit.
The truth: If you can pay down your debt, definitely do it. But once the accounts are paid, leave them open.
You’ve also heard that inquiries on your credit lower your score. This is true if the inquiries come from specific retailers, but not if you check your own score. Mass pre-approval inquiries are also ignored when your credit is calculated. Retailer inquiries lower your score by only about 5 points, so don’t be careless, but don’t panic if there’s been an inquiry.
A good rule of thumb when you’re working on getting a Mortgage loan is to not shop for cars, furniture, appliances, etc. until your loan closes. The credit inquiries could damage your score just enough to hurt you – and even paying cash isn’t a good idea. Keep your bank balances as high as possible until there’s no chance that the lender will make a last minute check.
Next is the use of credit counseling. At one time this did affect your score, but a study conducted 3 years ago showed that people using credit counseling did not default on their debts any more than other people. The most current FICO formula ignores credit counseling all together.
BUT – credit counseling can still be risky. Sometimes counseling agencies make payments late or pay lesser amounts – and these mistakes will affect your score.
CreditScoreQuick.com
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July 18th, 2008
 No credit can sometimes be just as damaging to you as “no-good” credit.
It sounds crazy, and many who have always responsibly paid cash for everything become more than a little angry when told they can’t get a mortgage loan because they have no credit. At least folks who have had bad credit know the reason why they’re having trouble.
The fact is, if you have no credit, lenders have no way to determine if you’re a responsible bill-payer. You have no reputation – no history to offer to show that you do indeed pay your accounts on time. That makes them nervous.
If you find yourself in the position of needing to either build or re-build credit, you’ve probably been told that you must first establish a record of paying debts on time – by getting a line of credit somewhere.
Where? Who is going to give you that line of credit? A company that offers a secured line of credit, that’s who.
In this instance, you offer some kind of collateral or deposit for the amount of credit desired. This gives the lender security in case of default. It could be a deposit into a savings account, a certificate of deposit, or a money market account.
Secured credit cards are a very effective way to build or re-build credit, but there are two things you must consider.
First, use the line of credit, but pay it off on time each month. Don’t use it to go further in debt. The goal here is to show a history of responsible money management. It might be tempting when money is tight to just let the lender take your security – but that will only serve to damage your credit score.
Second, look before you leap. Different lenders have different policies, so investigate each one you’re considering. Read the fine print and ask questions. Make sure you understand the interest rate that will be charged if you don’t pay the balance in full each month. Learn their grace periods, their penalties for late payments, and any other fees that may be associated with your account.
After 6 months to a year of responsible use, many lenders will increase your limit, which will further improve your credit score. When you continue to pay off the balance each month your credit repot will show that you have more credit available than you are using, and you will be seen as a responsible money manager.
Author: Marte Cliff
CreditScoreQuick.com
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July 17th, 2008
 Lately credit repair companies around the country are getting hammered by the FTC and the Better Business Bureau. These companies are claiming that they can increase your credit score and remove collections from your credit report. The funny thing is they charge you up front before any services are rendered. The FTC states that credit repair companies are not suppose to collect money from you until the services have been rendered. This is not what is going on, along with the promises they make to remove stuff that you owe. So the question is what exactly does a credit repair company do? In this article I will discuss the facts and get through all the smoking mirrors that credit repair companies sell.
Can you remove collections?
The answer is you can only remove collections that are not yours by proof and collections that have been on your credit report for more than 7 years. No one can remove a collection on your credit report that you owe, unless it’s been over 7 years. Some collections report longer, but the standard is 7 years.
Can credit repair companies increase your credit score?
Credit repair companies can help you increase your credit score by requesting you do get a secured credit card. Most credit repair companies will require you to do this if you don’t have any good credit reporting. It was not the credit repair company that increased your credit score; it was the new secured credit card that starting reporting on your credit.
Can credit repair companies remove bankruptcies, judgments, and tax liens?
Credit repair companies cannot remove any of this, unless the bankruptcy has expired. Depending on what type of bankruptcy it was, it could be on your credit report up to 10 years. Judgments will stay on your credit report for 7 years from date of entry. Tax liens can remain on your credit report until paid.
By disputing collections you owe, does it remove them?
If you dispute a collection you owe, you are wasting your time. You are to only dispute inaccuracies on your credit report, disputing items you owe does nothing for you.
So the question is what exactly does credit repair companies do? I believe most of them are in business to just take your money. Some of these companies do provide good credit repair education, but if they tell you they can remove stuff you owe, they are lying to you. I have yet to meet someone that has gone to a so called credit repair company and have had success in getting there credit repaired. If you have credit issues on your credit report, you can repair your credit for free. The how to repair your own credit involves money management and the establishment of new credit if you have none. How to do this for free is on the web. You can go to the FTC and also our site blog as well.
CreditScoreQuick.com
Posted in credit education, credit repair agency, free credit score reports | 1 Comment »
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.
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