Thomas Mathews asked:




Before I reveal to you “whats a good credit score” you need to know that all 3 credit bureaus have a credit score for you and they will usually vary 10 to 40 points depending upon the number of bad credit items that are on each specific credit report.

Why does each credit bureau have different scores for you? Because not all creditors report to all 3 credit bureaus; therefore, you may have more bad credit items on a report than the other two, thus the report with the most bad credit items on it will have the lowest score.

Most mortgage lenders look at what is known as the Fair Isaac or FICO Score. A FICO score can range from 300 (very bad) to 850 (very good). The median is 723, according to Fair Isaac statistics. Recently, the 3 main credit bureaus, Experian, TransUnion and Equifax have developed their own combined score to compete with lenders that use the FICO score and they are trying to encourage lenders to use their new scoring system that they call the “Vantage Score”. It ranges from 500 (very bad) to 990 (very best) and like the FICO score it is based on the review of all 3 credit bureau scores along with their own proprietary formula.

So whats a good credit score?

The bottom line to having a good credit score irregardless of whether it is an Experian, TransUnion, Equifax, FICO or Vantage score is – the more “bad credit” items that you have reported on your 3 credit bureau credit reports the lower your credit score will be on your FICO and or Vantage score. It is that simple.

The key to achieving a good credit score is to be able to get any and or all of the bad credit items removed from each of the 3 credit bureau credit reports. More on how to get that done later.

How Is A Good Credit Score Calculated?

Your credit score is simply a number representing your life as it relates to your past and existing debt. Each credit bureau, FICO and Vantage has it’s own proprietary algorithm that they closely guard but there is general information available as to how they all calculate their score for you. Like it or not Creditors use your credit score no matter where it comes from as the indicator of your creditworthiness. Your credit score is calculated using five key categories.

How the Scores Are Calculated

1) 35% of your Score is devoted to Payment History. This would include missed payments, collections, bankruptcies and the like. The older the information the less of an impact on your overall score.

2) 30% of your Score is based on Utilization. This is the amount of credit you have in used as compared to your available credit. The recommendations point to less than 10% of your available credit be utilized.

3) 15% of your Score is impacted by your Credit History. Effectively how long you’ve had accounts open and obviously takes some time to build.

4) 10% of your Score is based on Inquiries. If you apply for various forms of credit and then don’t get that credit it will impact you negatively. Checking your own credit does not impact this number.

5) 10% of your Score is determined by Types of Credit. This would be different forms of credit such as mortgages, auto loans, revolving credit and installments.

Did you notice that there Is something Missing? You’ll note that there is no consideration for your actual income in this model. Interesting to say the least don’t you agree? Your income doesn’t have anything to do with calculating your credit score. Lenders do.

Whats a Good Credit Score?

How many times am I going to make you ask me “whats a good credit score” before I answer? OK, ok. The short non-scientific answer is 760 or above. That’s the score that is going to get you the best interest rates possible on a mortgage, auto loan or many other forms of credit. That doesn’t mean that each lender will offer you the same rate if you have that magical 760 score. It will depend upon the amount of money a particular lender has available at the time that you apply for your loan that will dictate what the loan rate they will offer you.

If your score is 760 or above then I recommend that you monitor your credit scores and if drop for some reason you will know immediately and you will be able to do what needs to be done to get it back to that magic number. Why is that important? Because if you allow it to drop within 30-60 days you’ll see many of your loans and or credit card rates slide upward. How can that happen you ask? The “fine print” on every loan or credit card agreement will usually allow the lender to adjust your rate without notice if your credit score changes.

If your credit score is far below the magical 760 score then you may want to learn how you can force all three of the credit bureaus to give you a good score. There’s a way to do that. Let me know if you are interested.

Lydia

Shayne Sherman asked:




Many people are confused about the difference between judgments on credit reports and a lien, and on the methodology of clearing it up. A judgment against you is simply the result of you losing a case in court. Your creditor goes to court to get a judgment against you for the debt you may owe him. Your creditor takes you to court because there, a judgment can be recorded and enforced and the only other option would be to write off the debt or send it to collection and lose most of it to fees.

If recorded, judgments become matters of public record and if you have property, a title search will turn up items for public record. After a judgment, the creditor can file for discovery of your assets and the judge can order for the sale of your assets. This happens unless the creditor is happy with payments from you in which case they might agree to subordinate their lien position.

A judgment against you lowers your FICO score considerably and you need to remove a judgment from your credit report as a matter of urgency. Check statute of limitations (SOL) for collection judgment because yours may be expired. Also, get a debt negotiator to dismiss the judgment in exchange for money and make sure your negotiations with the judgment creditor are put in writing and are signed. Ensure that the form completed by the judgment creditor is filed in court and reported to credit bureaus. Lastly, you need to understand garnishment laws by state, exceptions, and judgment laws in your state and looks up previous judgment records and if you believe, you were sued in error. If that is the case, you will have to set on a procedure called “motion to vacate” a judgment because about 80% of judgments are awarded in error.

Ann

Martha W Woodard asked:




If you’re thinking about owning a house, there’s a very important point that loan officers look at when deciding the loan rates of your loan. Your credit score. A credit score is a numerical description of your financial trustworthiness and usually range from 300 to 850. A high number shows potential lenders that your credit habits are admirable. It indicates you make your payments on time as agreed and are responsible with financial matters. You don’t max out your credit line. And there’s few or no derogatory marks on your free 3 credit bureau report. If you show a high rating, lenders are more willing to approve a loan request. It also means getting lower interest rates. But usually your credit score doesn’t come with these free annual reports. It needs to be ordered separately through the 3 credit bureaus. But there are free methods to obtain a credit score for free from the three bureaus. But it usually means signing up for a free trial membership to their credit monitoring program.

Which credit score to get

Each credit bureau produces their own score numbers, but you want to view is your FICO score. This is the score that most lenders utilize in making important loan decisions. Currently Equifax offers a FICO score. You can also go directly to FICO and order it there. FICO is a separate entity from the 3 agencies. The idea behind this is that creditors desire a large difference between your credit limit and your credit debt. But it won’t raise your rating. If your goal is to boost your rating, then you should go with the thirty percent formula and use less than 30 percent of the limit.

First get rid of the big mistakes

Significant mistakes on files gotten from the credit report on line offers include any errors that isn’t yours. Other items are accounts listed as unpaid or were in collections more than seven years ago. Derogatory marks prior to seven years are supposed to be removed from your files. In the case of bankruptcy filings, it lasts for ten. But continue using your oldest card accounts that don’t have bad marks. Just make a small purchase each month and pay it off each month.

Check the credit limits as well

Sometimes vendors report a smaller amount to the credit bureaus than the correct one. Ask the lender to correct this information. Also if there’s late payments indicated on your files, ask the vendor to delete them. Anything the credit agencies can’t confirm as accurate after a given period has to be erased from your report. ‘nudge nudge’ ‘wink wink’. But don’t go overboard with this method. Otherwise your claim will be seen as frivolous. First try disputing some of your oldest accounts with bad marks. Then wait a few months and challenge a few more.

Carla

Marc Sumner asked:




There are a number of ways in which you can have a collections agency reporting to your credit report. Most of the time it’s due to past due bills that were either overlooked or just never paid. You should know there are ways that you can try to fight this to attempt to raise your FICO score. This will in turn raise your buying power because you’ll be able to borrow more if you need to.

Every person has the ability to get one free copy of their credit report each and every year. All you have to do is make a request for it and it’s available to you either by mail or within a few seconds online. Most people don’t understand that you can dispute charges on your credit report.

What happens when you dispute these different collections charges on your credit report is that they will have 30 days to respond to the dispute, otherwise it’s marked as invalid. Most companies will respond to these disputes so all you will need to do is to negotiate with these collection companies and let them know you will pay off your debt sooner if they can remove this from your credit report.

What you should understand is that collection agency reps main goal is to get you to pay off the debt. So getting them to remove this shouldn’t be a problem if you can work out something with them to pay off what you owe.

Remember that 1 in 4 credit reports contain some sort of error that could be lowering your credit score without you knowing it!

Gladys

John Rasor asked:




Let’s say you are what most people would consider a good person. You help out in the community, volunteer to help others and even show up on the front row for church every Sunday. You recently applied for a home loan and to your surprise were denied. How could this be? You’re a good guy or gal, and deserve this loan, right? Could you be on the credit bureaus blacklist?

Since there is no such thing as a “blacklist” within the credit scoring system the answer is no. You are not on a blacklist. Your credit history are based on nothing more than factual data that lenders have provided about your pay habits.

Your fico score has absolutely nothing to do with your age, marital status, race, sex, nationality or religious beliefs. Your occupation and length of time on the job also have nothing to do with how your credit score is calculated. Only information present on your actual credit report make up your credit score.

Pretend for a moment that you are an underwriter working through a mortgage loan application. What would be of the most importance to you? Ironically, underwriters look at the same thing that the credit bureaus do.

1. Payment history is a biggie. This tells the tale of whether or not you can handle what you currently have on your plate. If you are consistently 30 days late on your car payment, why would you think you are worthy of a home loan?

2. Credit history is also important. The age of your accounts reveals your experience with credit. Multiple accounts like credit cards, student loans, car payments with several years of history, especially with perfect payment status will surely pass the test for an approval.

3. Your debt load makes a difference in how you handle available credit. If all or even a few of your credit cards are maxed out a red flag pops up. People in control of their finances typically use credit cards sparingly or always pay them off in full each month.

4. Recent inquiries can wreak havoc if you’ve had too many. Multiple credit card applications make it look like you are in desperate need of more credit, or just credit in general. Its ok to have a few inquires with multiple mortgage companies within a 14 day window. The bureaus only look at these as one inquiry since most people will shop around for the best home loan.

It always makes sense to obtain a copy of your credit report either before you make a mortgage application or if you are declined credit as a result of a low credit score. There are several arguments for this statement. One is identifying potential errors and fixing them before your lender pulls their copy. Another is having the upper hand when applying for a mortgage. If you have a great credit score use it as leverage and tell the lender up front. Request terms based on it and make that lender wait to pull your actual credit report until you have received multiple offers.

Debra

Gressly Stevens asked:




When it comes right down to it you already know that there are many reasons that you are judged by your credit every single time you try to make a financial decision and even for employment anymore. This is why you have to check your credit rating at least twice a year. There are many things that you have to understand about credit and why you have to keep yours under control and check it from time to time. Here are some helpful credit tips for you.

1. Understanding your Report

It would do you very little good to pull your credit report twice a year if you have no idea what it means and how to read it. There are two basic categories that will consume the majority of your report, the paid on time side, and the not paid on time side. The paid on time side will be listed first and it will have all the different debts, credit cards, and loans that you are currently paying on and you are on time with. The not paid on time side will be all the different debts that you have ever paid on late, even if it was just one payment.

2. What to look for when you check your credit rating

Your actual rating is also known as your FICO score. This is what you are judged on and when you check your credit rating you need to be looking to see what is on your report. You need to make sure that your report is correct and all the debts listed are yours. If there are debts on your report that do not belong to you, then you need to contact the credit bureau and get these debts off your report.

3. Changing your Rating

The best way to change your rating when it comes to credit is to pay off debts on the not paid on time or delinquent side of your report. You do not have to pay off the largest debts to get your rating to go up. If you have any smaller debts on this side of your report you can pay them off one by one and this will help you to raise your FICO score and get to the point where getting financing is easier.

Tim

Irena Bocheva asked:




Are you trying to obtain a mortgage or auto loan, but fear being turned down by creditors? Do you want to apply for a business loan, but don’t want to pay thousands of dollars on high interest? Whatever you specific situation is, you are not alone-more than 35 million Americans are struggling with issues related to bad credit score. Getting turned down on your loan, employment or lease application are just some of the side effects of having a low FICO. The growing significance of your FICO makes having a good credit score a necessity.

Here are 3 simple tips that will help you raise your score in less that a month

1 Face your credit problems NOW.

A lot of people postpone solving their bad credit issues until it’s too late. The collection phone calls, the tons of unwanted mail, the fear of applying for loans-deal with the issue NOW. The problem with bad credit is that the more you procrastinate action, the more your credit problem spins out of control. Don’t pretend that the problem doesn’t exist-face it.

2 Approach your credit problem with a clear plan of action.

Order a copy of your credit report and highlight all negative items in it. Which are the most harmful negative accounts in your report? There are various credit repair strategies which are tailored towards each type of negative account (collections, legal judgments, late payments, past due payments, tax liens etc). What works for late payments (pay them in full and send “goodwill’ letter to creditors) does not work with collection accounts (pay only the settlement amount and negotiate for the removal of the negative item). Familiarize yourself with the different credit strategies and start applying them to the most harmful accounts in your report.

3 No proof-no guarantee

There is one simple rule in the world of credit repair-try to keep everything in written form. Always use certified or registered mail, make copies of your correspondence with credit bureaus and collection agencies. Always ask for written verification of every deal you strike with a credit bureau or collection agent. If you don’t keep written proof of your efforts, you might be simply wasting your time.

How raise your credit score fast? The KEY is knowledge about the inner workings of the credit system and the various loopholes in it. Once you start thinking outside the box, you will be surprised to find how easy credit repair actually is.

Viola

Sam C asked:


My credit took a hit 2 1/2 years ago when I went through extended unemployment and found myself deliquent for almost 6 months on my accounts. I have since turned this around and I have a perfect on-time payment history for all my credit accounts since. This is apparent if I check the 3 major credit bureaus w/ my free govt’ mandated report, but if I were to check myFICO it would reflect my deliquency. Which do employers check?

Donna