approved-credit-restoration

Enough is Enough: It’s Time to Take Back Your Credit Power – Here’s How

Tue, 10 Jun 2025 01:29:26 GMT

Enough is Enough: It’s Time to Take Back Your Credit Power – Here’s How...

You've been patient. You've waited. You’ve paid debts that weren’t even yours. And your credit score? Still holding you back.

It’s time to stop hoping for change and start demanding it.

At Approved Credit Consultants , we don’t just talk about results we deliver them. Our $199 Credit Restoration Special is not just a sale… it’s a signal . A signal that change is here, and it’s coming for every outdated address, every unverifiable collection, every bankruptcy falsely anchoring your future.

Here’s What We’re Bringing to the Table:

✅ Address Clean-Up & Identity Fixes
Old addresses, name variations, employers, and phone numbers? Gone. You deserve a clean, accurate report that represents who you are now.

✅ Bankruptcy Attack Plan (60–90 Day Strategy)
Most credit bureaus get their bankruptcy data from 3rd parties—not the courts. And guess what? Courts don’t report to credit bureaus. That means we can legally dispute that data and remove it if it can’t be verified. Spoiler: it usually can’t.

✅ Student Loan Interventions
Whether it’s federal loans (we’ll help you navigate IDR or rehab plans) or private ones (where we challenge inaccuracies and expiration violations), we’ve got tools and tactics most firms won’t even touch.

✅ Evictions & Repos? Game On.
We go straight to the source: demanding original contracts, payment histories, and proof of charge-offs. We hold them accountable—and that’s when removals happen.

✅ Judgments & Tax Liens? Obsolete.
Most of these shouldn’t even be showing on your credit report. If they are, it’s likely outdated, unverified, or just plain wrong. And you know what we do with wrong info? We delete it .

�� Real Talk: You Don’t Need Perfect Credit.

You need powerful credit , the kind that opens doors, secures approvals, and lets you live without fear of denial.

We make that happen—because we do more than dispute. We strategize. We fight. We win.

Ready to Take That First Step?

�� LIMITED TIME: Only $199 (Reg. $249)
��️ Monthly Support: Just $25/month until you're satisfied
⚡ Fast Track Option: $349 upfront + $35/month for urgent removals

�� Visit us at 2828 N Central Ave, Suite 1004, Phoenix, A85004

�� Email: Info@ApprovedCreditConsultants.com
�� www.ApprovedCreditConsultants.com

Let today be the day you say, "No more waiting. No more hoping. It’s time to win."

How To Build Credit The Right Way

Thu, 15 Oct 2020 02:16:40 GMT

Wondering how to build credit from scratch? Worried you haven't started building credit yet? Here is what you need to know to build good credit for the first time.

How do you get a mortgage, car loan, or apartment lease? By presenting the bank or landlord with a good credit history that demonstrates you’ve been financially responsible in the past.

But, how are you supposed to get approved for a loan or credit card if you’ve never had one before?

It’s the ultimate catch-22: No credit card? No credit history. No credit history? No credit card.

If you’re panicking because you don’t know how you’ll get that student or auto loan you need because you don’t have prior credit history, relax: It can be done.

Everybody starts life without credit. We’ll walk you through how to good build good credit fast—even if you’re starting from scratch.

Get help from a family member who has good credit

A willing parent or significant other who uses credit responsibly can help kick-start your credit score by either cosigning a loan or adding you as an authorized user on a credit card account

Take out a loan with a co-signer

The easiest way to build credit for the first time is to open a loan account with a co-signer who already has good credit. A co-signer is simply someone who agrees to be responsible for the loan if you stop paying your bills for any reason.

In most cases, a bank will approve a loan for somebody with no credit history if there is a creditworthy co-signer on the application. In order for this to work, you need somebody who:

Trusts you enough to put their credit rating on the line for your loan
Has good credit themselves

If someone co-signs a loan for you and you don’t make timely payments, your co-signer’s credit will suffer along with your own. If you default on the loan—meaning you stop paying altogether— your co-signer is legally responsible to repay the debt. This situation has ruined plenty of relationships. Proceed carefully.

Another downside to this method is that it requires taking out a loan. That’s fine if you need a loan anyway—for example, you’re buying a car. But you don’t have to pay interest to build credit.

Become an authorized user on someone else’s account

You won’t apply for the card together, but you can ask somebody to add you to their credit card account as an authorized user. Ensure that you’re being added to the account as a fully authorized user, as some companies will issue extra cards in different names but only tie the account to one owner.

One way to check this: Do they ask for your social security number when adding an authorized user? If not, this trick won’t help you build credit.

After you become an authorized user on a parent’s or somebody else’s credit card, you don’t even have to use the card—as long as they keep paying their bills on time, you will start to build credit. (But it goes both ways, if they stop paying, this could actually hurt your credit! Proceed with caution.)

Get a starter credit card

A starter credit card is designed for people new to credit. Unlike many mainstream credit cards, starter credit cards often have:

Lower credit limits ($300-$500 is a common start)
An annual fee
Higher interest rates
Limited or no rewards

Some starter credit cards are also secured credit cards . What this means is that you need to have money in a bank account equivalent to your credit line. So if you want to spend $1,000 on your credit card, you need $1,000 in the bank to cover that. And you make monthly payments like usual—it’s not a debit card, where every purchase you make is deducted from your balance.

Although similar to a debit card, secured credit cards work slightly differently and, unlike debit cards, report your payments to the credit bureaus so you can build credit.

If you’re a full-time college student, try starting with a student credit card. These cards are designed to approve students and you can upgrade them when you graduate. Many don’t have the lowest APRs or best rewards out there, but you’ll have a good shot of getting approved and can start building better credit.

If you have some credit history, but not a lot, certain Capital One credit cards can be among the easiest cards to get approved for.

Just because two cards may be better than one, I would stop there for now. As the result of a new inquiry on your credit report, your score might go down after you apply. But in the long run it should go up.

1. Capital One® Platinum Credit Card

If you have some credit—even if it’s not great—and you aren’t a college student, check out the Capital One® Platinum Credit Card . This card is designed for people with average or limited credit. It doesn’t have an annual fee or rewards, but after a year or so of responsible use you should be able to upgrade it to a no-fee rewards card.

IN A NUTSHELL

Finding an unsecured credit card with average credit can be difficult, but the Capital One® Platinum Credit Card is happy to have your business. You won’t find many perks to owning this credit card, but it’s a great first card for young people looking to build a strong credit history and there’s no annual fee.

CREDIT SCORE REQUIREMENTS:

Fair

Poor500-599

Fair600-699

Good700-749

Excellent750-850

WHAT WE LIKE:

Only average / fair / limited credit is required for approval
Be automatically considered for a higher credit line in as little as 6 months
No annual fee or foreign transaction fees

2. Capital One® QuicksilverOne® Cash Rewards Credit Card

The Capital One® QuicksilverOne® Cash Rewards Credit Card is designed for consumers with fair or average credit but offers a great rewards program. Unlimited 1.5 percent cash back on all purchases. It has a $39 annual fee. This card has the same rewards program as the Capital One® Quicksilver Cash Rewards Credit Card which is designed for consumers with very good credit. You can compare the two versions, Quicksilver and QuicksilverOne here.

IN A NUTSHELL

If you don’t have the excellent credit needed to score some of the bonuses other Capital One credit cards offer, consider the Capital One® QuicksilverOne® Cash Rewards Credit Card. It’s a terrific card for average credit and you can still earn 1.5% cash back on all purchases with a modest $39 annual fee.

CREDIT SCORE REQUIREMENTS:

Fair

Poor500-599

Fair600-699

Good700-749

Excellent750-850

WHAT WE LIKE:

1.5% cash back on all purchases
Be automatically considered for a higher credit line in as little as 6 months
No foreign transaction fees and a modest $39 annual fee

3. Discover it® Secured

Finally, if you have no credit history or bad credit, you’ll have to start with a secured credit card . Perhaps the best secured option going is the Discover it® Secured . This card has no annual fee and a generous cash back rewards program. Best of all, after 8 months, you’ll qualify for automatic account reviews to see if your account can be upgraded to an unsecured card.

4. Store credit cards

Many people’s first credit card is a retail or store credit card. You know, the ones every sales clerk at the mall asks you to apply for when you check out. You’ll get 20 percent off today’s purchase!

Store credit cards have high interest rates and are terrible if you think you’ll use them to go on a shopping spree you can’t afford. But store credit cards typically have lower credit limits than major credit cards. That means stores are willing to approve applicants with less credit history.

If you get a store credit card, make a small purchase that you can immediately pay off. Do this every few months. Never buy more than you can afford to repay and never forget to pay the bill!

As long as you do this, it really doesn’t matter which store card you get, because you won’t be paying interest. But some store cards are better than others because they give you ongoing discounts—not just on the day you sign up. The Target Red Card , for example, gives you five percent back on every purchase—a much better return than even the best major rewards cards, most of which max out at a two percent reward rate.

Apply for a credit-builder loan

Some lenders offer credit-builder loans —small personal loans designed for anyone new to credit. They’ll help you build credit, but come at a cost.

This is a new one, but the lender Upstart will make loans to borrowers without credit histories if they are college graduates and have jobs.

If you take out a small personal loan and repay it on a timely fashion, this will build your credit. Self is a fairly unique program that allows you to take out a loan and re-pay yourself. Loans range from $500 to $1,700 and the term of the loan is either one year or two years. The idea behind Self is straightforward, you open a loan, repay yourself and show the credit bureaus you are responsible with credit. This is likely to increase your credit score, all while keep the fees and interest costs low.

The costs to use Self are either a $9 or $15 application fee and an interest rate between 12% and 16% fixed. This means that for example, if you take out a $525 loan w/ 12 month repayment terms, you’ll pay back a total of ~$591 on the loan (essentially losing $66). Not a bad price for an improved credit score and certainly less expensive than a high interest line of credit.

What about student loans?

If you took out student loans for college, you’re in luck. While federal student loans are available to anyone, regardless of credit score, they still help you build credit as you pay them off.

One or two student loans, however, may not be enough to build credit quickly. If you can, you may want to add one or two of these other credit-building techniques to get your credit score higher in a shorter number of years.

Why do I need to build credit?

If you ever hope to get a home loan or auto loan, you’ll need good credit. Many landlords even require good credit to rent an apartment.

It’s great if you want to stay far away from debt today—but someday you’ll find it’s better to have the credit and not need it than to need it and not have it.

I know a bunch of people who went through most of their twenties without credit. They had no student loans, no credit cards, not even a car loan. They paid in cash and that worked for them. On the one hand, they never had to worry about getting in over their head with debt. But as they got older and started to think about buying a first home (or they just wanted a credit card to take on a business trip), they were years behind others who started building credit in their early twenties—or even younger.

Your credit history may also be used for other things like

Calculating car insurance premiums
Apartment rental applications
Employment screening

I’m not saying this stuff to scare you. Personally I think it’s crappy that some people get passed over for jobs because they paid a couple of bills late. (And some states are going so far as to ban the practice .) But such is the world we live in.

How long does it take to build good credit?

You can build an average or good credit score in just a year or two. But it can take up to seven years to build an excellent credit score of 750 or higher.

It’s possible to build good credit in just a few years, but it requires opening at least a few accounts of each type (loans and credit cards) and being absolutely meticulous about making timely payments. The shorter your credit history, the more a single late payment will set you back.

Most consumers with credit scores in the top 10th percentile (800 or better) have at least 10 years of credit history. That’s because the average age of your credit accounts is one scoring factor. The longer your accounts have been open and in good standing, the more creditworthy you appear to be.

So even if you don’t need credit today, if you want to get the best rate on a mortgage in 10 years, you should start to build credit now.

How can I build credit fast?

You can build credit more quickly by starting with one account, then gradually adding new credit cards or other accounts every six months.

Again, it will take about two years to build a “decent” credit score. But if you add new accounts—and pay them all on time—your score could be quite good in the same amount of time.

The first step to building credit is to open an account that reports your payment history to the credit bureaus.

There are three credit bureaus—Equifax, Experian, and TransUnion. The bureaus maintain databases of everybody’s credit history and package this information as reports and scores to sell to banks, landlords, employers, etc.

For the most part they collect similar information, although each may track this information differently, and there may be discrepancies on your credit history with each. This is why it’s important to check all three of your credit reports at least once a year.

Examples of accounts that do report to credit bureaus include:

Major credit cards (Amex, Discover, Mastercard, Visa)
Store credit cards (Target, GAP, Kohl’s, etc.)
Installment loan accounts (mortgage, auto or student)

Examples of accounts that do not report to credit bureaus include:

Debit cards (regular checking and prepaid)
Utility and phone bills (electric, water, cable, cell phones)
Rent payments—unless you or your landlord subscribe to a rent-reporting service

So even if you have a checking account, an apartment and a cell phone, you may not have a credit history.

Why does having more credit help my credit score?

Since managing multiple accounts responsibly is more difficult than managing just one or two, the credit scoring system rewards consumers who regularly pay multiple accounts.

Credit scores are funny. I know it seems counter-intuitive that someone with more credit cards is a better risk than someone with just one. But it’s true—to a point.

A good credit score is earned by managing credit well. Until you do that, the credit bureaus don’t have any way to say what kind of credit risk you will be. It’s a lot like safe driving. Insurance companies often give discounts to drivers who haven’t had a ticket or accident in a couple of years. But when you first start driving, you can’t get that discount because there’s no data to indicate whether you’re a safe driver. So showing you can manage a few different credit accounts is a good thing.

The second reason this will help is for what’s called your debt utilization ratio. This is the percentage of the credit limits on all of your credit cards that you’ve currently borrowed against. For example, if you have two credit cards with $500 limits, you have a total credit limit of $1,000. If you have a $600 balance between the two cards, your utilization ratio is 60 percent—you’ve used 60 percent of your total credit limit.

With utilization ratios, lower is better, and a high ratio will decrease your credit score.

So there are a few ways to improve this number:

Only use a small percentage of your credit line.
Pay your card balances down before the closing of the statement cycle. (This will reduce the month-end balance that is used to calculate this number.)
Increase your available credit.

If suddenly you get a new credit card with a $1,000 limit, now your total available credit is $2,000 and your utilization ratio becomes 30 percent instead of 60, which is better for your credit score.

Do I have to go into debt to build credit?

No! And if you can help it, don’t go into debt just to build credit.

It’s a common myth that in order to build credit you need to carry a balance on a credit card. That’s not true. The credit bureaus reward you for using a credit card and paying it off—whether you pay it in full each month or not.

And borrowing too much—especially in the beginning—will likely hurt your credit score, not help it.

Unfortunately, there is some truth to the fact that credit bureaus reward consumers who have both credit card (revolving) accounts and loans with fixed monthly payments. But if you don’t need a loan, you don’t have to take one out and pay interest just to build credit.

Can I build credit by paying my rent on time?

In some cases, yes.

There are several companies— Rental Kharma , Rent Reporters , and RentTrack , for example—that will report your rent payments to one or more of the credit bureaus.

Unless your landlord or property manager already works with these companies, you’ll need to pay a monthly fee (Rental Kharma charges tenants $9.95 a month). Your landlord will also need to validate your rental payments for the system to work.

Also know that most utility bills do not count towards your credit , unless you fail to pay them.

What do I do once I get my first credit card?

So you’ve got a credit card—congrats! Now the only things you should do are: Use the card occasionally and pay the bill on time every month.

Ensuring consistent timely payments is the most important part of building credit. Missing your payment just once can set you back a year or two. But as long as you use the credit card some and make regular payments, you’ll start to build credit.

From a financial standpoint, only charge to the card small amounts that you can pay IN FULL at the end of every month. Treating your new credit line like “free money” and then only paying the minimum balance is asking for a big headache when you realize you owe hundreds or thousands at a high interest rate. I know because I made that mistake. Don’t do it! Here’s more on how to use a credit card responsibly .

Summary

It’s the catch-22 of personal finance: You’ve got to have good credit to get a credit card, but you can’t build credit unless you’ve got—oh right, a credit card. But there are ways for someone just starting out to build credit. Become an authorized user, apply for a starter credit card, or take out a credit-builder loan.

Regardless of the route you take to good credit, remember that the most important thing is making timely payments, whether on a secured card or a credit-builder loan.

Get Something Removed From Your Credit Report

Sat, 12 Sep 2020 18:06:46 GMT

Luckily, it is possible to remove something from your credit report before 7 years. In fact, it’s smart to remove negative items from your credit report if you’re trying to clean up your credit for a mortgage or car loan.

Or perhaps the negative entries are just bothering you!

Whether you’re dealing with late payments, collections, charge offs, or foreclosures, these effective techniques will clean up your credit report rather quickly.

How Can I Remove Negative Entries From My Credit Report?

Here are 4 effective ways to remove negative items from your credit report:

Check For Inaccuracies & Submit A Credit Dispute Letter

Before you try anything else, you should first make sure the negative entry on your credit report doesn’t have any inaccuracies. Studies have shown that most people’s credit reports contain errors.

The trick here is to look for any errors whatsoever on each negative entry. Just because the entry itself is accurate doesn’t mean the details about the entry on your credit report don’t contain errors.

In fact, you’ll find out that it most likely does.

The first step is to get a copy of your credit report and closely look over each entry and check each detail against your records.

You should check the following things:

Account number
Balance
Date opened
Account status (e.g., Closed)
Payment status (e.g., Collection)
High Balance
Credit Limit
Anything else that appears to be inaccurate

Every time you find an error, note what is inaccurate along with the accurate value. Then you can proceed with a credit dispute letter . You’ll want to write a detailed dispute letter that outlines everything you have found. You will send this letter to the credit agencies asking them to correct the inaccuracies or remove the entry.

The best part is that many times they can’t verify each detail about the entry, so it’s removed.

Write A Goodwill Letter Asking To Remove The Negative Entry

If disputing the negative entry doesn’t work (that is, either there weren’t any errors or the credit agencies verified them as accurate), your next step should be writing the creditor or collection agency asking them to remove the negative entry out of goodwill.

This is most effective when you’re trying to remove late payments, paid collections, or paid charge offs.

A goodwill letter is really easy to write and you can use my goodwill letter template as a starting point. You will basically explain your situation to the creditor or collection agency.

While this may seem like a long shot, you’d be surprised how often it works. This is especially true if you’re a current customer because they want to keep your business.

Negotiate “Pay For Delete”

If you have any unpaid collections or charge offs, the best way to get them removed is to negotiate with the creditor or collection agency and offer to pay the unpaid debt if they agree to delete the negative entry from your credit report.

This is very effective as long as you get everything in writing. Therefore, never do this over the phone.

Have a Credit Professional Remove the Negative Item

If you’re the type of person who would rather have a professional handle it and just be done dealing with it all on your own, I suggest you check out a company called Approved Credit Restoration Inc

Learn More at their website here: https://www.ApprovedCreditRestoration.com

How to Remove a Closed Account From Your Credit Report

Tue, 08 Sep 2020 05:14:59 GMT

Getting closed accounts removed from your credit report can impact your credit score.

YOU MIGHT THINK CLOSING a credit card or other account might remove it from your credit report automatically. But while closing an account prevents you from using it, that doesn't mean it disappears from your credit history.

Credit reports include information for both open and closed accounts. As long as they stay on your credit report, closed accounts can continue to impact your credit score.

If you'd like to remove a closed account from your credit report, you can contact the credit bureaus to remove inaccurate information, ask the creditor to remove it or just wait it out.

How Closed Accounts Affect Your Credit

Credit scores are based on several factors: your payment history, how much of your available credit you're using, the age of your credit accounts, the types of credit you're using and how often you apply for new credit. The impact that a closed account has on your credit depends largely on the type of account involved and whether you still owe a balance.

With a credit card, "closing an account causes you to lose the available balance on that card," says Rod Griffin, director of public education at Experian. "That results in an increase in your utilization rate, or balance-to-limit ratio."

That could hurt your credit score, as a higher rate of use in relation to your credit limit is a sign of risk, Griffin says.

Installment loans are a little different, since they aren't revolving accounts like credit cards and don't have an effect on your credit utilization ratio. Once a loan is paid in full and the account is closed, you lose the benefit of continuing to make regular on-time payments that have a positive impact on your credit score, but the payment history remains.

Regardless of whether it's a loan or credit card, a closed account can still affect your score.

According to Equifax, closed accounts with derogatory marks such as late or missed payments, collections and charge-offs will stay on your credit report for around seven years.

Closed accounts with a "paid as agreed" status, on the other hand, can stay on your credit report for up to 10 years from the date the lender reported it as closed.

When Should You Remove a Closed Account From Your Credit Report?

There are different situations when it makes sense to remove a closed account from your credit. What you must weigh in the balance are the potential credit score implications.

"If the account has negative or derogatory information, then the closed account is likely harmful to your credit, and removing it will probably increase your credit score," says David Chami, managing partner for the Price Law Group, a debt relief agency. "If the account is one with a positive history, removing it is probably not in your best interest."

Josh Rubin, owner and CEO of Sacramento, California-based marketing firm Post Modern Marketing, found out firsthand how removing closed accounts can impact credit. In August 2018, he paid off his remaining $15,000 in student loan debt in full. When he checked his credit in September, his score had dropped from the high-700 range to 640.

After he paid off the loan, his servicer not only closed his account, but also removed the entire payment history from his credit report. The servicer was within its rights, as creditors aren't required by law to report borrowers' account information to the credit bureaus. But it was Rubin who paid the price.

"I thought it wouldn't be bad since I'm in less debt now and should technically be less risky," he says. "Apparently, that's now how credit rating agencies see it; they see I've now got a shorter history and only a couple of lines of credit, so I'm more risky to them."

In Rubin's case, he didn't ask for the closed loan account to be removed from his credit, but his situation serves as an example of why removing accounts from your report is something to approach with caution. Losing the positive payment history associated with that account hurt his score in a big way. Rubin says he's now in the process of getting the servicer to restore his payment history in the hopes that his credit rating will recover.

If you have a closed account with a positive history, you may be better off leaving it alone than trying to get it removed. On the other hand, you may be hoping that removing a negative closed account from your report will boost your score. In that case, you need to know what your options are.

Removing a Closed Account from Your Credit Report

There are a few steps you can take to remove closed accounts from your credit report. If one doesn't work, move on to the next.

Dispute inaccuracies.

Write a goodwill letter.

Wait it out.

Step one: Dispute inaccuracies.

"The Fair Credit Reporting Act only requires credit reporting agencies to correct or delete inaccurate information," Chami says. And even then, it doesn't happen automatically. You must first successfully dispute the information in question to have it removed or updated.

All three credit bureaus – Equifax, Experian and TransUnion – allow consumers to initiate disputes online or by certified mail. When initiating a dispute, you'll need to provide certain information to the credit bureau, including:

Your name

Account number

Nature of the information you're disputing

Supporting documentation to show why the dispute is valid

From there, the credit bureau must investigate your claim with the creditor or lender in question, usually within 30 days, and notify you in writing of its findings. If the disputed information is inaccurate, by law it has to be removed or corrected. Once an error is removed from your credit report, the credit bureau can't add it back in unless the lender or creditor proves that it was accurate.

That process can take care of negative information related to errors, but it may not remove a closed account from your credit report entirely. And if you're seeking a removal based solely on negative activity, that's likely to be a dead end if the information is accurate. There are, however, some other paths you can pursue to get a closed account removed.

Step two: Write a goodwill letter.

A goodwill letter is essentially a polite way of asking a creditor or lender to remove a closed account's history from your credit report. It's not the same as a dispute, since presumably you're asking for the removal of negative information without contesting its accuracy. And the creditor has no legal obligation to remove accurate information.

Writing a goodwill letter may be more effective when there are extenuating circumstances – for example, if you defaulted on a credit card or loan because a serious illness or injury kept you out of work for an extended period. In addition to considering forces that were beyond your control, creditors may also weigh your previous payment history and whether you've made any good faith attempts to pay since you defaulted.

Some debt collectors will consider requests to pay for deletion of the collection account when consumers make a full payment or settle for less than the full amount. But pay-for-delete agreements are problematic because debt collectors aren't required to remove the account even if you pay them to do so, and even if the collection account is removed, the original account with a derogatory history will remain.

For example, if you stopped paying a credit card bill for a year and the issuer sent your account to a debt collector, you could pay the debt collector to remove the account. Even if it follows through with the agreement, only the debt collector's account would disappear. The original issuer account would still remain and continue to reflect your year of missed payments.

Step three: Wait it out.

If the negative information you want removed is accurate and the creditor isn't interested in removing it, you may be out of options. But closed accounts don't last forever.

Depending on how patient you can be, you could just wait for a closed account to fall off your credit report. In the case of negative account information, it's important to understand the timing.

"Any negative information in the payment history will be deleted seven years from the original delinquency date of the debt," Griffin says.

Essentially, the clock starts ticking on negative items when they're first reported on your credit, not when the account was closed. Depending on how old the account is, it may be close to being removed from your report anyway, in which case you could just bide your time. Reviewing your credit report can give you an idea of when closed accounts may be removed.

"We recommend consumers check their credit reports a few times per year to check for accuracy and potential identity theft and fraud," Griffin says.

You can get your report from each of the three credit bureaus for free once per year through AnnualCreditReport.com. Enrolling in free credit monitoring services can help you track credit accounts and your credit score from month to month.

Practice Good Credit Habits Going Forward

If you had a credit account closed because of late payments or default, getting it removed from your credit report is a step in the right direction. From there, you can focus on practicing credit habits that are designed to promote a positive score, including:

Paying bills on time each month

Keeping credit card and other revolving debt balances low

Paying off debt balances

Keeping unused credit accounts open

Limiting how often you apply for new lines of credit

One final tip: If you're struggling to keep up with credit card or loan payments, don't keep creditors in the dark. Reach out to them at the first sign of trouble to see if they offer hardship payment plans or deferments so you can avoid negative information on your credit report.

Your Go-To Guide to the Big 3 Credit Bureaus

Sun, 06 Sep 2020 22:07:59 GMT

What do the credit reporting agencies know about you?

WHAT ARE THE NATIONAL credit bureaus? The big three – Equifax, Experian and TransUnion – collect and maintain data about your financial life that is contained in your credit report. They use this data to assign you a credit score. Your credit score can affect everything from your odds of approval for credit cards to your interest rates for loans.

Equifax, Experian and TransUnion track many of your financial transactions, as well as your:

Credit card and loan balances

History of payments on credit cards and loans

Number and type of accounts

Bankruptcy filings

Each major credit bureau uses this information to determine your credit score.

By law, the bureaus – also known as credit reporting agencies – can provide information about you to many types of businesses, including:

Lenders

Employers

Volunteer groups

Government agencies

Landlords

Banks and credit unions

Payment processors

Retail stores

Debt buyers and collectors

Insurance companies

Telecommunications and utility providers

Gaming casinos that extend credit or take checks

The notion that multiple credit reporting agencies are keeping tabs on your spending might seem like an invasion of privacy – and maybe dangerous, especially after the massive Equifax data breach and a recent series of other highly publicized data breaches. But there is no practical way to avoid having your transactions documented, says John Ulzheimer, a credit expert who has worked at Equifax and FICO.

"Live with the fact that you're going to have a credit report," he says. "It's better to understand how they work than to sit there and complain about them."

How Many Credit Bureaus Are There, and What Do They Do?

The big three credit bureaus dominate, although many smaller credit reporting agencies track your financial behavior. The Consumer Financial Protection Bureau maintains a list of dozens of smaller agencies, plus the main ones.

The so-called "fourth bureaus" have popped up to serve niche markets, says Thomas Nitzsche, manager of media and brand at nonprofit credit counseling agency Money Management International. Some might track rental payments, while others track payments to payday lenders.

Equifax, Experian and TransUnion each keep a credit report on you.

But what do your reports contain? Your day-to-day financial activity makes up the bulk of your credit report. If you apply for a credit card, loan or line of credit, the lender likely will alert one or more of these agencies. That information then will appear in your report.

"There's no requirement to report to all three credit bureaus," Ulzheimer says. "As a lender, you can choose to report to one or two, or none, or all three."

Most big lenders report to all three credit bureaus, Ulzheimer says. But smaller lenders might alert just one of these agencies.

Two other types of information find their way into your credit file and can negatively affect your score.

First, debt collectors sometimes report information about you to the credit bureaus, such as your failure to pay bills. For this reason, you cannot assume that delinquent payments on utility or cable TV bills – or even an unpaid gym membership or magazine subscription – will not appear on your credit report, Nitzsche says.

"If you do fall behind on those, after a few months, they can go to a collection agency," he says. "At that point, the collection agency can report them."

Finally, credit reporting agencies may turn to public records, such as bankruptcy filings, to collect data.

In recent years, some items in your credit report that once greatly affected your score – medical debts, civil judgments, paid collection debts and tax liens – no longer carry as much weight with the bureaus, Nitzsche says.

"From a consumer standpoint, it's obviously a good thing," he says.

How Do the Credit Reporting Agencies Use Your Information?

As each credit bureau compiles your financial information, it goes into a credit report that serves as the basis of your credit score. To calculate a credit score, the agencies must "marry a credit report with a scoring model," Ulzheimer says.

The primary scoring models – FICO and VantageScore – are "the King Kong and King Kong Jr. of the scoring industry," he says.

FICO created and owns the oldest and most widely used scoring model. FICO allows the credit bureaus to use its algorithm to generate credit scores, says Ulzheimer, who has worked at FICO.

The company determines which factors – such as the amount of credit available to you and your payment history – weigh most heavily on your score.

"The bureaus don't have any influence over the weighing of information in your FICO score," Ulzheimer says. "FICO has control over that because they are the ones that built the model."

Because each agency feeds data from its own credit report to the FICO model, scores can vary from agency to agency. There may not be much difference if reporting is fairly consistent, but scores could be very different if there are, for example, collection accounts on one agency's report but not another. "Your credit score is likely to be different across the three because the data isn't going to be the same," Ulzheimer says.

Equifax, Experian and TransUnion joined forces to create their own credit scoring model, VantageScore, as an alternative to FICO.

How Can You Protect Your Credit?

Check your credit report at least yearly. Although "you don't have the right to not have a credit report," Ulzheimer says, you still can make sure the information in your report is accurate. "Consumers have the right to challenge things," he adds.

Federal law requires each of the major credit bureaus to provide you a free annual copy of your credit report. You can request this report at AnnualCreditReport.com, which is operated by the three bureaus.

In addition to these yearly reports, you can request a credit report when:

You have been denied credit, insurance or employment, or were the target of another adverse action, based on a credit report.

Your credit report appears to be inaccurate because of fraud.

You need access to a credit report to place an initial fraud alert.

You are unemployed and plan to look for a job within 60 days.

You receive welfare benefits.

Your state's laws grant you free access.

If you find an error on your report, alert the proper credit bureau, and request that the item be removed. Then, check your other credit reports to see if the error appears.

Each credit bureau may take up to 45 days to investigate and respond to your dispute.

"That consumer might be successful in getting something removed from one of their credit reports but not successful in getting it removed from the other two," Ulzheimer says.

Do You Need a Credit Freeze?

A credit freeze can provide an extra layer of protection for your report if you are worried about becoming a victim of identity theft. "Freezing your reports at the big three is really the step to take," Ulzheimer says.

Doing so prevents thieves from opening accounts in your name. But opening legitimate accounts while your credit is frozen is almost impossible. Thanks to a federal law passed in 2018, you can freeze and unfreeze your credit for free.

Parents can request a free freeze for their children under age 16. A guardian, conservator or someone with a valid power of attorney can get one for dependents as well.

You must contact each of the three major credit bureaus to freeze your credit. If you request the freeze online or by phone, the credit bureau must place it within one business day.

Once the credit freeze is in place, it will remain until you ask each bureau to lift it. If you want to lift a freeze and make your request online or by phone, the credit bureau must do so within one hour.

If you ask to add or lift a credit freeze by mail, the credit bureau must complete your request within three business days of receiving it.

What Is the Danger of Ignoring Your Credit Report?

When you're going to make a major purchase, such as a new car or home, do not wait until the last minute to check your credit report for errors, Nitzsche says.

"Sometimes it takes a matter of weeks or months to get things resolved," he says. "So you really don't want to wait until the heat of the moment."

Even checking your credit report once a year is not often enough, Ulzheimer adds.

"That's woefully inadequate," he says. "Once a year is terrible. I want to see what's on my credit report every month."

Sign up for a service that will let you access your credit report as often as you'd like. You may have a credit card with unlimited access to your report as a benefit. "So many companies are willing to give them to you for free," Ulzheimer says.

Finally, paying bills on time is paramount to keeping your credit score strong. Automate payments as often as possible so you don't forget to pay a bill, Nitzsche says.

"Don't rely on your memory to help you out," he says. "Those due dates creep up, and you might miss a reminder."

Why credit scores differ between credit-reporting agencies

Sun, 06 Sep 2020 21:50:46 GMT

FICO® credit scores are just the tip of the iceberg. Lenders also use dozens of other credit scoring models when you apply for a credit card, mortgage or auto loan.

There are few numbers in life that matter as much to your financial well-being as your credit scores.

Whether you’re applying for a credit card or buying a home, these three-digit numbers can go a long way in determining whether a lender will do business with you.

The problem is, there are so many credit scoring models out there. How can you keep track of them all?

And what should you do if your scores differ between credit-reporting agencies (also known as credit bureaus)?

First things first: It’s perfectly normal for scores to differ slightly between agencies. It’s up to lenders to decide which information they report to the major credit agencies — and which agencies they report to in the first place. Since your FICO Scores depend on the data listed on your credit reports, you might not see the exact same score from every credit-reporting agency. Of course, there may be other reasons for any discrepancies in your scores; more on that later.

The good news? Many agencies look at similar factors when calculating your credit scores. So long as you make payments on time, keep your credit card balances low and don’t go wild opening new credit card accounts when you don’t need them, you should be in good all-around shape.

So, listen up (and note that the following discussion only relates to credit in the U.S.).

Let’s start with your FICO credit scores.

In the old days, banks and other lenders developed their own “score cards” to assess the risk of lending to a particular person. But the scores could vary drastically from one lender to the next, based on an individual loan officer’s ability to judge risk.

To solve this issue, the Fair Isaac Corporation (formerly Fair, Issac, and Company) introduced the first general-purpose credit score in 1989. Known as the FICO Score, it filters through information in your credit reports to calculate your score.

Since then, the company has expanded to offer 28 unique scores that are optimized for various credit card, mortgage and auto lending decisions.

OK, but what about my other credit scores?

FICO Scores are just the tip of the iceberg. You may have dozens of other credit scores you’re not aware of.

The other main scoring model you’ll run into is the VantageScore. The three major credit-reporting agencies — Equifax®, Experian®, and TransUnion® — teamed up in 2006 to create the independently managed firm VantageScore Solutions, which just released the fourth and latest version of its credit scoring model, the VantageScore 4.0. (The previous version, VantageScore 3.0, is still widely used.)

Common Question

When will lenders start using VantageScore 4.0?

VantageScore 4.0 will be available to lenders this fall. However, it can take time and money to switch to a new model, and lenders may not immediately make the change. Some lenders also don’t use VantageScore credit scores. For example, Fannie Mae and Freddie Mac still require the use of FICO Scores (often older versions of FICO Scores) when underwriting mortgages.

We know this is a lot to take in, but don’t panic. While each of these credit-reporting agencies calculates your credit scores differently, they all focus on how responsible you are with the money you borrow.

Everything you need to know about the new VantageScore 4.0 credit scoring model

Why are my credit scores different?

There are a few reasons why you might get different credit scores from FICO and each of the three major credit-reporting agencies. Here are some of the most common situations:

Scores are from different dates. Since your scores might change at any time, it’s important to compare credit scores from the same date.

Scores are calculated using different scoring models. Keep in mind, there are dozens of credit scoring models out there that may calculate your score a little differently.

Scores are calculated using different credit reports. Some lenders report to all three major credit agencies, but others report to only one or two. This means a credit agency may be missing information that helps or hurts your score.

We recommend you periodically check your credit reports for errors, which could affect your scores. You can check your TransUnion® and Equifax® credit reports for free on Credit Karma, and your Experian® report on www.AnnualCreditReport.com.

Why do my FICO credit scores differ?

Credit scores are like thumbprints: No two scoring models are the same.

Like we mentioned before, FICO periodically updates its credit scoring models so there are multiple FICO Score versions. They feature unique formulas that cater to, say, credit card issuers, mortgage lenders or car salesmen, each placing importance on different factors.

If you’ve had a car repossessed or missed a payment on an auto loan, for example, your FICO Auto Score may put extra weight on those factors. Note that your base FICO Score will likely also account for a missed car payment, but it may be weighted differently.

Though your scores may vary, they’re all based on the information provided by the credit-reporting agencies. So, focusing on what’s in your credit reports could help you build your credit across the board.

Credit score ranges

Think of your credit scores as a report card that gauges your creditworthiness. The most common scores range from 300 points to 850 points. The higher your score, the better.

In the case of FICO Scores, if you consistently score above 800, it’s like getting straight A’s. The national average FICO credit score, a “C” if you will, is 695.

Your guide to credit score ranges

What’s the best credit score?

There’s really no such thing as a “best” or “worst” credit score — they’re just different, and different lenders may use different credit scores. With that said, FICO Scores are used in over 90 percent of U.S. lending decisions, so your FICO Scores may have more sway over your financial life.

On the other end of the spectrum, some credit scores are meant only for educational purposes and are rarely, if ever, used by lenders when making credit decisions.

Bottom line

It can be difficult to keep track of all your credit scores, because there are so many out there, and each score changes over time.

These complicated facets of credit scores are exactly why we developed Credit Karma. We hope to provide you with an easy-to-follow point of reference on your credit health.

Best of all, it’s always free to check your VantageScore 3.0 credit scores and credit reports from two major credit-reporting agencies with us. What’s more, checking your credit scores and reports on Credit Karma will never hurt them.

Credit Score vs. Credit Report: Which One Is Better?

Sun, 06 Sep 2020 21:41:40 GMT

Your credit score and credit report are pretty much the same thing, right? Far from it. Although a fair number of consumers conflate the two, each has different information that is used for different purposes.

The Credit Report

Actually, we should say “credit reports,” because there are three. The United States has a trio of national credit bureaus – Experian, TransUnion and Equifax – that compete to offer the most comprehensive information to their customers. Those customers could include mortgage lenders, car loan providers, insurers, collection agencies, landlords and potential and current employers. And you.

Unlike your credit score, your credit report provides detailed information on your financial history with loans, credit cards and charge cards. If you’re delinquent on any of your bills, your credit reports will likely show it. It also gives the reader information on the number of accounts you have open, their outstanding balances and a host of other details.

Each report may be slightly different. That’s why it’s important to look at all three when judging your credit health. Depending on the lender's methodology, your activity may or may not find its way to all of your reports. In other instances the information may be incorrect or missing altogether. A business doesn’t have to report to all of the bureaus – or to any of them, for that matter. And it’s not necessarily the bureau’s fault if the information is incorrect or missing. The lender may have erred in reporting or transmitting the data.

You’re entitled to a copy of your credit reports from all three bureaus once every 12 months. Even better, they’re free. The Big Three sponsor a site, AnnualCreditReport.com, that provides applications for getting your reports. Other websites may offer the reports to you as part of a promotion or as part of a paid membership. Some may try to trick you into thinking you’re on the official site. Don’t fall for it. Make sure the web address in your browser says “annualcreditreport.com” and don’t go to the site from another link. Type it directly into your browser to avoid fraud.

The Credit Score

Many lenders, especially credit card companies, don’t much care what is on your credit report. They’re not interested in digging through all the data and judging how much of a credit risk you represent. Instead, they pay somebody else to do it for them. Although there are other scoring companies, such as VantageScore, the Fair Isaac Corporation (FICO) so dominates the field that the terms “credit score” and “FICO score” are often used interchangeably.

Whichever company is calculating it, your credit score – in essence, a “snapshot of your credit report,” as Bethy Hardeman, senior manager for product marketing at Credit Karma, a credit advisory website, puts it – summarizes your creditworthiness (much as your grade summarizes your performance in a course). The higher your score, the less risk you represent. According to FICO, your payment history represents the biggest part of your score. The amount you owe is a close second, and the length of your credit history is a distant third. You can have a score as low as 300 and as high as 850. However, it’s nearly impossible to have a perfect score.

Remember those three credit bureau reports? FICO calculates a score based on each of them. Different lenders also use different scoring models – not necessarily just from FICO – so people generally have have multiple credit scores.

Unfortunately, you aren’t entitled to automatically receive your credit scores for free, the way you are with your credit reports. You might have to pay for them. The Dodd-Frank Act gives you the right to see your credit score from any creditor that used it to make a credit decision. Many credit card companies and other financial institutions now provide it free of charge, as do advisory services such as Credit Karma. Beware, though: Some websites and services may offer a “free” score, but it often comes with expensive membership fees or other conditions that you don’t want.

The Bottom Line

Without the credit report, there would be no credit score. Your credit score is important, but if you really want to dig into your credit and review your history, you need your credit reports. If you’re looking to raise your credit score, the first step is to clean up the reports: Correct any errors and pinpoint the weak spots (such as where your biggest outstanding balances are). Bear in mind, though, that any positive change to your credit score takes time, despite what those breathless mail and email notices offering to “raise your FICO score within weeks!” may claim.

8 Types of Companies That Check Your Credit Report

Digitalseoinc@gmail.com (Eric Brown) — Fri, 04 Sep 2020 17:01:44 GMT

8 Types of Companies That Check Your Credit Report

When you apply for a loan, you expect the lender to pull your credit report. After all, you’re borrowing money. It makes sense that your lender wants to see what kind of risk you present.

But what about other types of companies?

You might be surprised to discover that, even if you’re not borrowing money, certain companies may be looking at your credit report.

The following are examples of the types of companies that might be checking up on your credit.

1. Credit card companies

A credit card company can look at your credit report when you apply for a card. However, if you’re a customer, that company can look at your credit report anytime, according to the Consumer Financial Protection Bureau.

Additionally, prospective creditors can access certain information in your credit file to determine whether to make you what’s known as a “prescreened” offer for a new credit card.

Prescreening is allowed under the federal Fair Credit Reporting Act, but you can opt out of prescreening. We break down the process in “The Secret to Stopping Unwanted Credit Card Mail for Good.”

2. Insurance companies

The Fair Credit Reporting Act also allows credit reporting companies to release your credit report in association with “offering insurance coverage or setting insurance premium charges,” says the Consumer Financial Protection Bureau.

While federal law allows insurers to prescreen you for offers, it also gives you the ability to opt out of prescreening.

3. Employers

As part of a background check, employers can request a copy of your credit report. The Fair Credit Reporting Act allows credit reporting companies to release your report for employment purposes.

However, the employer must get your written permission to pull your credit report beforehand. You can refuse, but that could be grounds for the employer to reject your application, according to the Federal Trade Commission.

Related: 8 Common and Costly Homebuying Myths

4. Telecommunication companies

When you sign up for phone, TV or internet service, the service provider might check your credit.

It’s not exactly a loan, but some companies want to make sure you’re likely to pay your bill, says James Garvey, the CEO of credit-building site Self Lender.

“The telecom provider wants to check if the customer owes money to the provider itself or to another telecom provider,” Garvey tells Money Talks News.

5. Public utilities

Signing up for water, gas or electricity? You might need to submit to a credit check, says Logan Allec, a certified public accountant and the founder of financial education website Money Done Right.

“Utility bills are generally paid in arrears, meaning you’re billed for usage after the fact,” Allec tells Money Talks News. “In a sense, these companies are making you a short-term loan. They let you use $50 of water last month, and you have until a certain date to pay them for it.”

If you have a low credit score, Allec points out, the utility might not have confidence in your ability to pay bills on time and might charge you an upfront deposit.

6. Government agencies and courts

“You may think that the government should have no business requesting your credit,” says Allec, “but sometimes they actually have a good reason to.”

Allec points out that when you apply for government assistance, you might be subject to a credit check to see if you truly qualify.

Additionally, the Fair Credit Reporting Act permits credit reporting companies to release your credit report:

In response to court orders

In response to subpoenas

For certain child support awards and enforcement purposes

7. Landlords

Looking for new digs? Your landlord-to-be might want a peek at your credit report, says Leslie Tayne, a New York City-based lawyer specializing in consumer finance and debt.

She points out that renting an apartment is a long-term agreement, and many landlords want to be sure that you won’t cause trouble.

“While rent is not typically reported to the credit bureaus, your credit report can give an indication of your overall likelihood to pay bills on time and your financial responsibility,” Tayne tells Money Talks News.

In some cases, she says, if you have a poor score, you might have to provide a larger security deposit.

8. Assisted living facilities and nursing homes

Expect to be subject to a credit check when applying to live in an assisted living facility or nursing home.

“These facilities treat applications like applying for an apartment, especially since costs are typically high,” Tayne says. “Having good credit shows the facility that you’re responsible with your payments and that you’ll use whatever funds you have to pay for the stay.”

6 reasons why your credit scores are different and which one matters most

Mon, 24 Aug 2020 04:48:49 GMT

If you’ve ever checked your credit score on different websites, you may notice they vary. Here’s why credit scores differ and whether one matters more than others.

A credit score is a three-digit number that lenders use to determine whether you’ll get approved for financial products like credit cards and loans.

Credit scores typically range from 300 to 850, but there are dozens of versions — from base scores to industry-specific scores — that make it tricky to know which one you’re being evaluated on during the application process.

You may check your score with your credit card company or on a personal finance site only to find it differs on another, making it hard to know what credit score range you fall in and which products you have the best chance of qualifying for. And when a lender pulls your credit score, they may request it from a different credit bureau — Experian, Equifax or TransUnion — and/or request a specific version that varies from the one you checked.

Most credit scores weigh the same factors, such as payment history, utilization rate , length of credit history, number of new inquiries and variety of credit products. However, there may be score differences for a variety of reasons, which CNBC Select breaks down below.

6 reasons why your credit score differs

Credit scoring model used: There are several models out there for scoring your credit history. But typically, lenders use one of the two main credit scoring models — FICO or VantageScore. Both companies evaluate the same main factors of your credit history like payment history and utilization rate, but use their own formulas to weigh each factor.
Score version: There are dozens of credit score versions that are broken up into base scores and industry-specific scores. Base scores, such as FICO® Score 8 or VantageScore 3.0, show lenders the likelihood you’ll repay any credit obligation. Industry-specific scores represent the odds you’ll repay a specific loan, such as the FICO® Auto Score 9 used in auto loan decisions.
Credit bureau: Credit scores are calculated using data listed on your credit report, which comes from one of the three major credit bureaus — Experian, Equifax or TransUnion. Your score differs based on the information provided to each bureau, explained more next.
Information provided to the credit bureaus: The credit bureaus may not receive all of the same information about your credit accounts. Surprisingly, lenders aren’t required to report to all or any of the three bureaus. While most do, there’s no guarantee that the information will be the same across the board, creating potential differences in your scores.
Date scores are accessed: If you view your credit score at different times, there may be discrepancies since one score may be outdated.
Errors on your credit report: Your credit score can reflect any errors that appear on your credit report. If errors only appear on one bureau’s report, then your credit score from that report may differ from another that has no errors. You should dispute errors on your credit report right away to avoid harm to your credit score.

Which credit score matters the most?

While there’s no exact answer to which credit score matters most, lenders have a clear favorite: FICO® Scores are used in over 90% of lending decisions.

While that can help you narrow down which credit score to check, you’ll still have to consider the reason why you’re checking your credit score . If you’re accessing your credit score simply to track your finances, a widely-used base score like FICO® Score 8 works. This version is also helpful for gauging which credit cards you qualify for.

If you plan to make a specific purchase, you may want to review an industry-specific credit score. FICO lists the specific scores that are used for various financial products. FICO® Auto Scores are ideal if you want to finance a car with an auto loan, while it’s good to check FICO® Scores 2, 5 and 4 if you plan to buy a house .

Why Car Dealers Don’t Care About Your Online Credit Score

Mon, 10 Aug 2020 03:30:48 GMT

Have you ever applied for a car loan, either on your own and through a dealer, and your credit score came out different than what Credit Karma, or your credit card (Capital One, Chase, etc.), told you?

The truth is, the dealers don’t really care about the score that you can readily show them on your phone because it’s not the same thing as the score they will pull when they run your credit because they operate on different credit scoring models. Here is a closer explanation of what we mean.

Credit Karma operates using the VantageScore system

For those not in the know, your credit score is dependent on three different credit bureaus: TransUnion, Experian, and Equifax. And while it’s imperative to know your credit score from all three of them, sites like Credit Karma only show you scores from two of them, mainly TransUnion and Equifax.

Why? Because Experian wants you to pay to see your score from and it’s typically lower than the other two. If you just want to check your credit from time to time and get an idea of what it is, then checking Credit Karma is a good way to do it.

According to Investopedia, Credit Karma uses the VantageScore system because it’s accurate, however, it is very general. The Credit Karma website details what factors the VantageScore system accounts for when looking at your credit. These factors include:

Your payment history

The length of your credit history

What credit lines you have (credit cards, loans, mortgages, etc.)

Your credit limits

How much debt you have

How many hard inquires you have

These factors represent a general outlook of your current credit situation, but the model that the dealerships and bank lenders go by when you apply for an auto loan is a little different.

Auto lenders most commonly use the FICO Score 8 system

When you submit your credit information to a dealership or directly to a lender to apply for an auto loan, the information they pull from the credit bureaus is typically under the FICO Score 8 scoring model.

The FICO Score 8 model follows a lot of same credit-granting guideline as other models, like the VantageScore system, but it’s more “sensitive” to certain aspects of your credit such as:

High credit card usage: If you high balances on your credit cards

Isolated late payments: If you were at least 30 days late with any of your payments

Amounts owed on your credit lines

Payment history

Credit mix: The FICO Score also looks at your balance between credit cards, auto loans, mortgages, etc.

New credit inquiries: Although new credit inquiries don’t weigh heavily on your FICO score, they are taken into account.

While the differences between the FICO Score 8 and the other systems like the VantageScore might seem minimal, auto lenders have historically used the FICO Score model 8 for loan approvals, so that one would be better for you to keep in mind.

Why dealers don’t care about your online credit score

Ultimately, the next time you’re at a dealership and you happen to flash them your Credit Karma score after they pull your credit, don’t be surprised if they don’t bat an eye at it. The scoring models are different and the score that they pull is more in line with what the actual lenders are looking at in order to prove that you’re creditworthy enough to lend a large sum of money to.

How to Fix Your Credit — 17 Ways

Sun, 09 Aug 2020 15:44:42 GMT

Here are some tips on how to improve your credit score, both personal and business:

Do you know your personal credit score? What about your business credit score ? Many people don’t know either. What’s more, most people don’t check their credit score before applying for a credit card, business loan, or personal loan. Some are shocked later on to discover that errors hurt them — errors they may have been able to correct had they paid attention.

Repairing credit has many benefits, including getting more financing, with lower interest rates and favorable loan terms. When you repair credit, it also puts you in a better position to achieve your goals. Whether your goals are personal, such as buying a new home, or business, such as expanding your facility, better credit scores increase your options.

That’s why the time to fix bad credit is now before you need to borrow money or bid on a new project. These tips for how to fix your credit will enable you to make positive changes in a short amount of time.

1. Check Your Credit Reports

You must know your credit score to fix bad credit, and the best way is to check your credit reports using Experian, Equifax, or Transunion. You can get a free credit report for personal credit — many companies make that available — but business credit scores are another matter.

First, the three credit bureaus — Dun & Bradstreet (D&B), Experian, and Equifax — each have different scoring models and types of reports. Second, most are not free credit reports for a business. For instance, a single standard credit report from Experian costs $39.95, while Equifax prices start at $99.95.

2. Identify and Dispute Any Errors

Don’t just access these sources to review your credit score. Examine the factors credit agencies use to determine the rating and investigate those that affect your score specifically. Errors are common. In fact, 25% of these reports do contain serious errors. So check them carefully. Removing negative information is an essential part of your credit repair efforts.

Identify any apparent errors you find and dispute them with the bureaus and the creditor or information source. You can file disputes on each of the credit reporting agencies’ websites.

Personal information – problems with name, address, phone number,
Account problems – these could be accounts belonging to someone else, closed accounts showing as open, accounts set up as a result of identity theft, or accounts incorrectly reported as late or delinquent or showing incorrect balances,
Inaccurate information – including non-existent bankruptcies or foreclosures,
Data errors – problems with how your credit was handled either by the credit agencies or another party,
Incorrect inquiries – Checks on your credit that might negatively affect your credit rating

In the dispute, identify and clarify each mistake, gather your documents, explain your reasons for disputing the information, and ask that it be removed or corrected.

Tip: Collect documentation prior to contacting a credit bureau to challenge items on your credit report. Credit bureaus require you provide proof of any errors in order to remove them from your credit report. As a result, you must present credit card statements, court documents or whatever else necessary to verify a credit report is in error.

3. Monitor Your Credit Score Regularly

Monitor your personal credit score regularly to check for changes. Your goal should be to get your score to 633 or above. You may be amazed to see the difference even small steps toward improvement can make. The reporting agencies update scores routinely, so check at least once a month. Also, some credit reporting agencies will send email alerts any time your score changes. Sign up for those if available.

Personal credit monitoring services typically make suggestions for how to improve your credit score, and some even track spending. As with any other metric, establishing a baseline and then monitoring changes will put you on a path to credit repair improvement.

In addition to individual credit reports, business credit reporting agencies offer annual subscription plans, which allow you to check your credit history, credit report, and score for one price. Charges can run into the hundreds of dollars, but it’s a way to stay apprised of your score and evaluate your credit repair activities. That can come in handy when you need to finance commercial real estate, office equipment, or fulfill another business need.

Tip: Just like with your personal credit score, check your business credit reports for accuracy. You can also contact the business credit bureaus and add information to your business profile, so the bureau has a more complete history.

4. Make Payments on Time

Nothing affects a credit score more adversely than a history of late payments.

Payment history makes up 35% of your FICO Score, according to Experian, and FICO Scores are used in 90% of credit decisions. Late payments also stay on your credit report for up to seven years. Plus, their presence on a credit report, including the total number, how late they were, and how recently they occurred, are correlated with future credit risk. People without a late payment are much more likely to pay on time in the future.

Now your credit card or loan statement may say a payment is past due after 15 days. However, for credit reporting purposes, a payment isn’t considered past due until after 30 days. Once you pass that deadline, your creditors can choose to report you to the credit bureaus, impacting your creditworthiness.

Make it a priority to pay your creditors on time every month. Even if you made payments late in the past, you begin to build credibility that will result in higher credit scores in time.

Tip: Track your payments carefully paying those closest to passing the 30 day mark first. Setting reminders is an excellent way to ensure you never miss a payment. There are several ways to do this:

Calendars on your computer or mobile device,
Text or email reminders from your bank or credit card lender,
Automatic payments via your business bank account.

Regarding the last option, make sure you have sufficient funds to cover the draft. Overdraft fees will eat away at your balance and could hurt your credit score rather than help it. )

5. Don’t Have a Separate Business Entity? Establish One

Credit bureaus can’t track your payment history if they don’t know your company exists. That’s why its best to make your business a separate entity. You can do that in several ways:

Set up a corporation or LLC – These structures will help you minimize personal liability for the business.
Get an EIN (Employer Identification Number) – You get this from the IRS, and it’s required if you have employees or are an S corporation.
Get a D-U-N-S Number – A D-U-N-S Number is a unique identifier Dun & Bradstreet assigns to track financial transactions of businesses. It means D&B has validated your company, something lenders and vendors rely on when deciding whether to do business with you.
Get a business phone – Having a business phone number builds credibility. Plus, you’ll need it to register for a D-U-N-S Number.
Open a business checking account – Commingling business transactions with personal is a recipe for trouble, especially during tax time when you have to look for deductions. That’s why it’s imperative to maintain a strict separation between personal accounts and business accounts.

Tip: Deposit all business revenues into the business bank account and pay yourself a salary or transfer funds from the business account to your personal account — not the other way around,

6. Lower Your Credit Utilization Rates

Small business owners need to keep credit utilization rates on both personal and business credit cards low. Under 30% is recommended. That’s important because credit utilization is the second most important factor in credit scores, right after payment history. Your credit utilization rate is calculated by taking the total of all your credit card balances and dividing it by the sum of all your credit card limits.

It’s to your benefit to keep your credit utilization under 7%. That puts you in the“very good” credit score range of 740-799. Even better, holding it between 1 and 3% can give you an “exceptional credit” score of 800-850.

Do not have 0% credit utilization, however. You aren’t building credit if all your credit cards show no balance. In fact, your score could be lower. So use both your business and personal credit cards and lines regularly, but pay them down or off early every month.

7. Increase Your Credit Limit by Opening New Credit Cards

One way to lower your credit utilization rates is by applying for another card. This generates a hard inquiry, which lowers your credit score in the short-term, but the added credit amount will increase your score in the long-term.

This, in turn, helps your credit repair efforts and offset credit card amounts that exceed the 30% recommended limit by increasing your available credit limit.

A problem arises, however, if you run up the balance on the new card. Your credit utilization percentage goes back up as do your credit balances. But as long as you don’t increase your credit card balances, an upturn in your credit limit should reduce your utilization rate and improve your credit scores.

Tip: Beware! Don’t apply for several credit cards within a short period. Too many “hard” credit pulls will damage your personal credit.

8. Pay Down Business Debt

Another way to lower your credit utilization rates is to pay down as much business debt as possible. Consider this simple strategy for credit repair. Either pay down the account with the highest annual percentage rate or pay off the lowest balance.

Say you pay on two accounts. One charges an annual percentage rate of 20%. The other boasts a much lower annual percentage rate of 9%. Pay down the balance on the account with the higher percentage rate first. This decreases the overall interest owed and improves your credit history.

On the other hand, say you have new credit, Perhaps you just bought a new laptop for $500. Consider paying off this low balance first. You may need to make minimum payments on your other accounts. However, paying down this balance fast looks great on your credit report.

9. Open a Business Credit Card Account

A business credit card gives your company credibility and helps establish good business credit or improve business credit ratings. It’s also another way to separate business expenses from personal. Putting all your business transactions on a card intended for that purpose comes in handy during tax time, making figuring out deductions a much easier task.

Just as with a personal credit card, make small purchases with the new credit card and pay the account off in full each month. Do this for several months to establish a track record of timely payments on new credit. This process demonstrates creditworthiness when you need funding to grow your business. Just make sure the new credit card company is one that reports to a business credit bureau.

Here’s another reason to get a new credit card for your business. Even though your personal credit score will be affected short-term due to the hard inquiry, the business line of credit is separate from your personal credit. That means whatever happens with your business card should not affect your personal credit score.

10. Learn to Build Your Business Credit

Establishing a business credit history is a challenge for startups and smaller businesses. This is why setting your business up as a separate entity is so important. Fleshing out your business credit history is too.

Learning how to build business credit is vital to fixing a bad credit score, so start taking actionable steps to achieve that goal right away.

Tip: A useful first step is to purchase business credit reports, to see if and how your business appears on these. Also, create? ?a? ?profile? ?with? ?the? ?three business? ?credit? ?bureaus: Dun & Bradstreet, Experian, and Equifax.

11. Add Positive Trade References

Another credit repair strategy is to do business with “trades” that report to business credit agencies. Not all vendors and suppliers share payment data, but the bureaus can tell you which ones do.

To calculate its PAYDEX score, Dun & Bradstreet requires a minimum of three trade references which you can add. Having a low score can result in higher interest rates, smaller loan amounts, or the inability to raise capital. That’s why you want to add “positive” references, those that will help you build good credit.

12. Keep Older Credit Accounts Open

Pay off existing debts when you can, but don’t close the account. Your oldest accounts are valuable. The reason is that length of credit history is a major factor credit agencies use to determine your score. The older these accounts are, the better. That’s particularly true if you haven’t had any recent slip-ups such as late payments or delinquencies.

Another way old accounts help is by again reducing your overall credit utilization. You will have a lower credit utilization percentage if the account is open but has a zero balance.

Different credit bureaus weigh the importance of credit age differently. FICO factors it in at 15% of the total score, for example. Regardless, keeping those old accounts open will help boost your score.

13. Diversify Your Credit Mix

How much credit you have, the balances owed, payment history — all of that factors into your score. Your credit mix does too. It counts for as much as 10% of your overall rating.

What’s a credit mix? It’s the variety of credit you have in your profile.

Essentially, there are only two types of credit that apply: installment and revolving. Installment credit includes things like mortgages, car loans or term loans. They have a fixed end date with payments due every month. Revolving credit includes credit cards or lines of credit. These are accounts that have no fixed end date or set amount due each month.

Ideally, you want a mix of both. It demonstrates that you can manage multiple types of accounts. Having only one or the other will make it harder to increase your score.

14. Get Authorized to Use Someone Else’s Account

Becoming an authorized user on another person’s credit card account can give your score an immediate boost. Just be sure it’s with a person who has a better credit score than you!

There is a risk for the person authorizing your use. According to the law, authorized users are not the persons responsible for repaying the debt. That burden falls to the primary user. Also, this form of “piggybacking” credit doesn’t necessarily help the authorizer build his or her credit so much as it does the person with a low score.

15. Apply for a Secured Bank Loan

If you are unable to get a loan based on your creditworthiness, apply for a secured bank loan. A secured loan is based on collateral, such as a car, CD, savings account, or equipment. If you are unable to make payments, the lender can seize your asset, which means you take on additional risk. But, timely payments over a long period can benefit you with a higher credit score.

16. Negotiate to Remove Delinquencies

One way to remove a negative mark on your credit such as a delinquency is to contact the creditor to try and negotiate a partial payment. In turn, the creditor agrees to reclassify the debt as “paid.” Assuming you strike a deal, get the agreement in writing and pay only once it’s in hand.

17. Get an Immediate Credit Boost

Experian offers a way to improve your FICO Score “instantly,” according to the website. It’s through a program called Boost , a free opt-in service that allows users to add cell phone and utility bill data to their credit history. It works by connecting the bank account they use to pay those bills to Experian. Assuming payments are made on time, users should see an immediate score increase.

Credit Repair Pays Off

It will take time and focused effort, but you can repair your credit and improve your credit scores. However, you must make it a priority to repair your credit stick with it. Follow the steps outlined above, and you will see. The benefits will pay off in the form of the capital you need for business growth. In the meantime, if you need options while your credit scores are low, contact Approved Credit Restoration at 602-456-0427 or https://www.ApprovedCreditRestoration.com

Bad Credit? Here Are Some Easy Steps to Boost Your Score

Sun, 09 Aug 2020 15:12:20 GMT

Bad Credit? Here Are Some Easy Steps to Boost Your Score

Approved Credit Restoration presents practical answers to some of the most commonly asked questions around finance, employment and preparing for the future — even when that future can seem very uncertain.

Having good credit can open up an array of financial options, from securing a mortgage and other types of loans and credit cards to obtaining lower interest rates that translate into thousands of dollars in savings. It can even help renters qualify for an apartment lease.

"It's important to have good credit scores because they play such an important role in all of the financial aspects of our lives," says Rod Griffin, director of public education at Experian, a major credit-reporting firm.

If your credit isn't stellar at the moment — a score below 670 is defined by Experian as fair, and anything beneath 580 is very poor — here are some important steps to take to boost your score.

1. Pay bills on time and in full, and keep the amount of credit you are using as compared to the credit available to you — called credit card utilization — below 30 percent.

"That's a maximum," says Griffin. "The lower your balances are as compared to the limits the better."

Paying down your credit card balances can result in an almost immediate improvement in scores, he says, adding: "Your balances on your credit cards as compared to the credit limit is critical."

Payment history and your credit utilization rate account for about 65 percent of your score, according to FICO , a data analytics company focused on credit scoring services. To get a quick check on your credit utilization rate, try going to CreditKarma.com or NerdWallet .

2. Make multiple payments throughout the month.

Make payments on a debt not only on a credit card's due date. Add an extra payment or two through the month before the statement comes out to keep balances low.

"If you make a lot of charges throughout the month, even if you pay them off in full, it may still look like a high utilization to the credit bureaus," says Ted Rossman, an industry analyst at CreditCards.com . "This is really one of the best things you can do quickly."

3. Try new credit-boosting tools.

Now you can potentially increase your score by reporting paid-on-time cell phone and utility bills that don't normally go towards your credit score through Experian Boost .

"The average person who does that gets an increase of about 13 points," Rossman says. "That's something that's going to give you bonus points basically for behaviors that haven't traditionally counted towards your credit score."

Additionally, rent payments can now be used to boost credit, through companies such as RentTrack , Rock the Score , or Rental Kharma or RentReporters , Rossman says.

Fees to report your rent can range from $6.95 to $9.95 a month, and "may be worth it," says Rossman. "I'm not really a big fan of paying to build credit, but in some circumstances that might make sense. Especially for young adults. A lot of people are having trouble getting their foot in the door so they need to be creative."

Griffin, of Experian, has seen that when consumers sign up for one of these services, "almost one hundred percent of the time their scores will improve or they'll become scorable if they weren't before."

4. Check your credit report.

"It sounds basic, but a lot of people don't do this to make sure everything's accurate," says Rossman. You can go to annualcreditreport.com to find — for free on a weekly basis until April 2021 — information on your credit report with the three credit bureaus (Experian, Equifax and TransUnion).

About 20 percent of credit reports have errors on them, says Rossman, "and some can be quite serious." Any mistakes should be corrected with the credit bureau through filing disputes.

5. Obtain a secured credit card.

This kind of card requires you to put down a deposit that serves as a line of credit.

"This is a starter credit card that I think is becoming increasingly popular because it's harder to get the so-called traditional or unsecured credit cards," says Rossman. "Typically, if you use it responsibly for six to 12 months, that's going to help your score. And you could probably upgrade."

6. Check out non-traditional cards.

Petal and TomoCredit both offer credit cards to people who have no credit score or little to no credit history and can't get a traditional card, but who may actually be good borrowers — such as young professionals or recent immigrants, Rossman points out.

"These companies are going to look at more than just the score," says Rossman. "When they think about approving or denying you, they're going to actually take a detailed look at your income, your expenses, your money habits. They really do cater to people who may not have a credit score at all, or may not have a good credit score."

7. Get a credit building loan.

Even if you have bad or no credit, you can usually qualify for a credit builder loan , created to help users build a good credit history.

How it works: A lender agrees to loan you a certain amount of money, but puts the money in an account. You make regular payments to the account, which are reported to the three credit bureaus, and once you pay off the amount, you have access to the money.

" Self.inc is a leading player in this space, and several credit unions offer credit builder loans," says Rossman.

Shop around for the best interest rates and associated costs before making a final decision.

Plus: "Make sure the monthly payments (really more like savings deposits to yourself) are reported to the credit bureaus," Rossman adds. "This is another way to help your score."

8. Become an authorized user on another card from a trusted user.

Another way to build your credit score and profile is to become an authorized user on another person's credit card account. You could get a card or you could go without one, and you are not responsible for payment.

When you become an authorized user, not only will you have a new account appear on your credit report, but the primary card holder's account will impact your credit scores. So make sure to become an authorized user only on an account with good or excellent history from someone you trust.

If you have deep subprime credit, you’re considered a risky borrower—here’s what you need to know

Sun, 09 Aug 2020 14:49:04 GMT

What it means to have deep subprime credit, the credit scores that make up this type of borrower and how to improve your situation.

Your borrower risk profile can fall into one of the five following categories: super-prime, prime, near-prime, subprime and deep subprime.

Consumers who classify as deep subprime fall into the bottom tier of credit scores, which range from 300 to 850, and are considered the most risky to lenders.

The credit score of a deep subprime borrower

Deep subprime borrowers have credit scores that fall below 580, as defined by the Consumer Financial Protection Bureau (CFPB) Consumer Credit Panel.

While credit score categories can vary between financial institutions, anyone classified as deep subprime has a very low credit score.

Banks and lenders consider consumers who fall into the deep subprime category to be high risk, with a greater likelihood of defaulting on their payments. For this reason, deep subprime consumers have a hard time getting credit and, if they do, it comes at a high cost.

What it means to have deep subprime credit

Deep subprime borrowers looking to take out a subprime loan or credit card should pay close attention to the terms and conditions, as these financial products typically come with sky high interest rates and fees.

CNBC Select found that deep subprime borrowers with credit cards can incur interest charges that are more than double what top-tiered super-prime borrowers pay.

In January, Fortune reported that many of the more than 7 million Americans who are more than three months behind on their loan payments are subprime borrowers with poor credit, and they owe more than their car is worth.

An Experian analysis of auto loans in the first quarter of 2020 shows just how much more subprime and deep subprime borrowers are charged in interest on a new car loan than those in the higher credit score categories.

Here are the average interest rates for each category of borrower, according to Experian’s first quarter data:

Super-prime (781-850 as defined by Experian): 3.65%

Prime (661-780): 4.68%

Nonprime (601-660): 7.65%

Subprime (501-600): 11.92%

Deep subprime (501-600): 14.39%

The interest rate is almost double between nonprime and subprime auto loans. And for those with deep subprime credit scores, they’re charged an interest rate more than 3X that charged to prime borrowers.

How to improve your situation

If you have deep subprime credit, don’t despair. There are steps you can take to repair your credit, albeit it’s not an overnight fix.

Knowing your credit score is arguably the first step to improving it. Financial education, including understanding how your credit score is calculated and how interest rates can vary, can help you protect yourself from subprime loans and their steep costs. Really take a look at the interest rates being offered before you apply for new credit and understand any associated fees.

With deep subprime credit your approval odds aren’t great, but there are credit cards that exist specifically for those with bad credit or no credit history at all — and they can help you build your credit back up. Just be sure to review the terms and conditions carefully as some subprime cards can charge high fees alongside high interest rates.

One of the best options is a secured credit card. These cards are for beginners and don’t require a high credit score to qualify, but you will need to pay a deposit upfront (usually $200) that acts as your credit limit. Once you use this card for a while, you can be upgraded to an unsecured card and get your deposit back.

Consider the Capital One® Secured for a low deposit, the DCU Visa® Platinum Secured Credit Card for a low variable APR and the OpenSky® Secured Visa® Credit Card for no credit check when you apply.

Another option to build your credit is to use Experian Boost. This free service helps people improve their credit scores by giving them credit for paying their monthly bills on time. Users can add their utility and phone bills, including internet, cable, gas, electric and water bills. And, just recently, Experian announced that consumers can now link their Netflix on-time payment history to their Experian Boost accounts.

Bottom line

While a deep subprime credit score can make it difficult for you to qualify for credit cards and personal loans, there are steps you can take to improve your credit. Consider signing up for a free credit monitoring service, such as CreditWise® from Capital One and Experian free credit monitoring, to get help keeping track of your credit as you work to improve it.

Secrets to Credit Score Success

Thu, 27 Jun 2019 16:42:45 GMT

How to keep track of your score, get it as high as possible—and keep it that way

If you think your credit history determines only the interest rate you get on home mortgages, car loans, and credit cards, you’d be wrong, but you certainly wouldn’t be alone.

In a recent U.S. News & World Report survey, less than half of the 1,497 respondents knew that in many states poor credit could lead to higher home and auto insurance rates or being denied an apartment (CR opposes the use of credit reports for these purposes).

The consequences go even further: Employers in many areas can use credit reports to vet job candidates, and having a low credit score could mean paying $4,000 more for a typical car loan or $200,000 more for credit over the course of a lifetime than someone with a high credit score.

There are several types of credit scores, but the FICO score is one of the most widely used by lenders, which makes it a good barometer of your overall creditworthiness.

According to the Fair Isaac Corporation, which creates more than a dozen versions of the score for various types of lenders, all of them are based on assorted forms of credit data (such as payment history and amounts owed) provided by the three major credit bureaus—Experian, TransUnion, and Equifax. Each form of credit data is given a different weight (see “The 5 Keys to Your Credit Score,” below).

Finding your credit score can be a frustrating process if you don’t know where to look. The Fair Isaac Corporation and credit reporting agencies will provide your FICO score for a fee, but there are several ways to find it at no charge. For instance, if your bank, credit card issuer, or lender participates in FICO Score Open Access, you may be able to get it free just by logging in to your account.

Discover, which is among the cards that provide FICO scores to its cardholders, will also provide the scores at no cost to non-customers who share information (including their Social Security number), which the company says it will protect from misuse.

Though it does not provide the actual score, FICO’s free Credit Scores Estimator provides a range within which a consumer’s score is likely to fall based on answers to 10 questions.

Making Sense of Your Score

FICO scores typically range from a low of 300 to a high of 850. (The national average FICO score is 704.) In general, a score above 800 will qualify you for the lowest interest rates, though even a score in the high 600s should qualify you for a favorable rate.

Experian, one of three major credit bureaus, defines the boundaries this way:

800-plus: Exceptional. Less than 1 percent of borrowers in this range are likely to become seriously delinquent. They’ll easily be approved for the lowest rates.

740-799: Very good. One percent of borrowers in this category are likely to become seriously delinquent. They could be offered the lowest rates from lenders, but it’s not a given.

670-739: Good. Eight percent could become seriously delinquent. This stratum includes the average U.S. credit score. People in this range are considered an “acceptable” lending risk.

580-669: Fair. An estimated 27 percent of the people in this group could become seriously delinquent, making them likely candidates for subprime loans at higher rates.

579 and below: Poor. This group is considered a poor lending risk: Roughly 62 percent could become seriously delinquent. They will be eligible only for the highest interest rates, if they can get credit at all.

Though missing just one payment can ding your score, even a major downturn in your luck or behavior is unlikely to drop it into the very lowest range.

Bruce W. McClary, vice president of communications at the National Foundation for Credit Counseling, a group that represents nonprofit credit counseling agencies, says the lowest score he’s ever seen was 425, for a consumer who had already been in bankruptcy and was delinquent with several creditors.

“Obsessing over perfecting your score might be a waste of time,” says Katie Ross, education and development manager for American Consumer Credit Counseling, a nonprofit that offers guidance to consumers. Instead, “focus your efforts on keeping it within a healthy range,” she says.

10 Ways to Raise Your Credit Score

Taking these actions can help to raise a sagging score. Just don’t expect it to happen overnight: Depending on the reasons for a poor score, it could take from 12 to 24 months to see a difference.

1. Regularly monitor your credit reports. Mistakes on your credit reports can be costly—and common. A study by the Federal Trade Commission found that 1 in 5 consumers had an error on his or her credit report that was corrected after it was disputed. Consumers are entitled to receive three free credit reports each year—one from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. A smart way to monitor your credit is to go to annualcreditreport.com and request a free report from a different agency every four months. Common errors to look for include: credit accounts that aren’t reflected, duplicate credit accounts, debts incurred by a former spouse, and bad debts older than seven years. You can initiate a dispute online at each of the three major credit reporting agencies.

2. Pay your bills on time. Approximately 35 percent of the FICO score is determined by your payment history, and 96 percent of those with the highest FICO scores have no missed payments. It’s better to pay the minimum on credit cards each month than to fall behind.

3. Don’t apply for several credit cards at once. This generates numerous inquiries into your credit history, which may lower your score. Another reason: Opening several new credit accounts at the same time reduces the average “age” of your accounts, which can also lower your credit score. However, multiple requests within a 45-day period for a single type of credit (mortgage, auto loan, or student loan, for instance) are counted as a single inquiry to allow consumers to shop around for the best rate. These are less likely to lower your score.

4. Don’t cancel unused cards (unless they carry an annual fee). Roughly a third of your score is based on the ratio of credit used to total available credit. Eliminating a card will lower your available credit and can work against you.

5. Keep credit balances low. Because a high credit ratio can negatively affect your score, maintaining a low revolving credit balance is wise. (Most people with the highest FICO scores owe less than $3,000 on revolving accounts.)

6. If you charge everything on a rewards card for the points, switch to cash or a debit card for a couple of months before applying for new credit. Even if you pay your balances in full every month, a lot of debt relative to your credit limit can still be viewed negatively.

7. Maintain a variety of credit types. Successfully paying, say, an auto loan, a student loan, and credit card bills over the same period shows that you’re able to juggle different types of credit. That diversification accounts for 10 percent of your score.

8. Pay off debt in collection. With the most current version of the FICO score, debt that was referred to a collection agency but has been paid off will no longer count against you. (Always dispute any debt that has been wrongly assigned to you.)

9. Get a secured credit card after bankruptcy. If you’ve been through bankruptcy, using a secured credit card backed by a refundable deposit may be an effective way to start rebuilding your credit. A bankruptcy will have less impact on your score over time if you don’t default on new loans. It may be a while before you can access credit inexpensively again: Chapter 7 and Chapter 13 bankruptcies stay on your credit report for up to 10 years.

10. Consider new tools that can boost your credit score. Consumers with little credit history or less-than-stellar scores may now use two new tools that could boost creditworthiness by taking into account additional information, such as utility or mortgage payments and bank balances. Click here for the pros and cons of these.

Editor's Note: This article also appeared in the August 2019 issue of Consumer Reports magazine.

12 Ways to Fix Your Credit Score

Wed, 01 May 2019 16:47:17 GMT

You can boost yours, but it could take some time

Don't let things happen to you...Make them happen for you

Your credit score can have a major impact on your finances. Having a low score could mean that you end up paying as much as $5,000 more for a car loan than you would if you had a high one. Even worse, a low score could make it harder for you to get a loan at all.

But according to a recent survey of approximately 1,500 consumers by U.S. News & World Report, many Americans are under informed about their credit scores—and especially about how to improve them.

Less than half the survey respondents knew, for example, that consistently making payments on time has a major positive impact on your score. A full 49 percent weren’t sure whether you need to carry a credit card balance to boost your score (you do not).

And close to a quarter of the people surveyed believed that people with higher incomes automatically score higher than those who didn’t make as much money. In actuality, income isn’t considered in determining credit scores. It’s all about how you manage the money you do have.

The brand of credit score used in more than 90 percent of consumer-credit decisions, the FICO score, typically ranges from a low of 350 to a high of 850; good scores begin in the mid-to-high 600s.

If your score is lower than you’d like, it’s worthwhile to learn how to improve it. Just bear in mind that, depending on the reason for the poor score, it could take from 12 to 24 months to improve, says Bruce W. McClary, vice president of communications at the National Foundation for Credit Counseling, a group that represents nonprofit credit counseling agencies.

You can speed up the process by enrolling in a debt-management program and consistently maintaining on-time payments, “but there’s no instant fix,” he says.

Steps to Improve Your Credit Score

Pay your credit card and other bills on time. Thirty-five percent of the FICO score is determined by your payment history—that is, how often you pay on time. It’s better to pay the minimum each month than fall behind.
Check your credit reports. Request one free credit report from a different reporting agency every four months through AnnualCreditReport.com. “Hard pull” credit inquiries—from a potential lender and others with permission from you—can lower your scores slightly, but there’s no penalty for checking yourself.
Don’t apply for multiple credit cards at once. Unlike applying for a mortgage, an auto loan, or a student loan, applying for several credit cards generates multiple hard pulls about your credit history and can hurt your score.
Don’t open too many new credit accounts at once. By doing so, you reduce the average “age” of your accounts, which can lower your credit score.
Don’t cancel unused cards (unless they carry an annual fee). Part of your score depends on the ratio of credit used to total available credit. Eliminating a card reduces your credit line and can raise the ratio, which works against you.
Keep credit balances low. Maintaining a revolving credit balance under 10 percent of your total available credit is wise. A higher ratio indicates an elevated credit risk. “If you use your entire limit or close to it, your ratio will reflect negatively, which in turn will negatively affect your credit score,” says Katie Ross, education and development manager for American Consumer Credit Counseling, a nonprofit that offers guidance to consumers and is based in Boston.
Maintain a variety of credit types. Successfully paying, say, an auto loan, a student loan, and credit card bills over the same period shows that you’re able to juggle different types of credit. That accounts for 10 percent of your score.
Pay off debt in collection. Most current versions of the FICO score ignore collections with a zero balance.
Beware of keeping high balances. If you charge everything on your rewards card for the points, for instance, switch to cash or a debit card for a couple of months before applying for new credit. Lenders can’t tell from your score whether you pay your balances in full every month. But they’ll see from your credit score, a snapshot in time, that you’re charging a lot relative to your credit limit. That can be viewed negatively.
Get a personal loan to pay off credit card debt. You can improve your credit score by paying off your credit card debt by taking out a personal loan. The interest rate on the loan is also likely to be lower than credit card interest rates.
Get a secured credit card after bankruptcy. If you’ve been through bankruptcy, start populating your credit report with good credit. Using a secured credit card (that’s linked to a bank savings account) may be an effective way to rebuild your credit. A bankruptcy will have less impact on your score over time as long as you aren’t defaulting on new loans. Keep in mind, though, that Chapter 7 and 13 bankruptcies stay on your credit report for up to 10 years.
Consider getting a little help from alternative data. Consumers with less than stellar scores may now be able to get lenders to take into account other indicators of fiscal responsibility, like regular utility or mortgage payments. Experian Boost allows consumers to give read-only access of their bank account data to Experian to show their payment histories. The service takes into account only positive information and can be turned off at the consumer’s discretion. (A similar new service, UltraFICO, focuses on how well the consumer manages money, looking at things like keeping a balance in savings and avoiding bounced checks.) The leg up is not likely to be large, but it can potentially help many consumers’ credit scores.

Credit Score Myths: What Really Hurts You and What Doesn't

Sun, 31 Mar 2019 16:48:38 GMT

Don't get sidetracked by misinformation

Most Americans apparently believe that unpaid traffic tickets can affect their credit score, according to a recent survey conducted by DriversEd.com, a service that provides online defensive driver education.

There's just one problem: It's not true, according to credit experts.

Similarly, a report on Credit.com tells library scofflaws they could have a stain on their credit history if they don't pay their overdue book fines. Also not true.

Your credit history is key to so many aspects of your financial life, from getting a good interest rate on a car loan or mortgage to passing muster with an employer or landlord.

It’s a shock, then, to discover that there's a lot of misinformation about what actually affects your credit report, which determines the three-digit score that sums up your creditworthiness.

Here is a guide to what's true—and what's not—about what goes into your credit report, according to experts at the credit reporting agencies that put the reports together.

Lingering Library Fines

Myth

The three major U.S. credit reporting agencies—Equifax, Experian, and TransUnion—periodically udpate the sources and methods of consumers' personal information to create their credit reports.

But library fines aren’t among the types of debt that wind up on your credit report, says Rod Griffin, director of consumer education and awareness at Experian.

“Library fines were reported through municipalities and municipal court records,” Griffin says. “We no longer collect that information.”

The Credit.com article suggests it's possible that a fine could go to collections, and that the collections information could end up on your credit report. Griffin refutes that.

"A library may work with a collection agency, but municipalities have relationships with collection agencies that prohibit them by contract from reporting," he says. "To my knowledge there are no exceptions. We’ve removed all of that information."

Unpaid Bills, Late Payments

True

Other unpaid bills—even the ones that don't go to collections—can affect your credit.

“Just one late payment can hurt your score and will remain seven years from the date of the missed payment,” Griffin says.

The solution: Follow up on old accounts to make sure they're really closed—and don't end up in collections because of a small amount of debt left on them. And pay all your bills on time.

With a revolving credit account like a credit card or home-equity line of credit, at least pay the minimum required by the end of the bill's grace period. Timeliness of payments counts for 35 percent of your credit score, says FICO, the company that generates credit scores used for a majority of consumer credit decisions.

Unpaid Parking or Traffic Tickets

Myth

Eric Ellman, senior vice president for public policy and legal affairs at the Consumer Data Industry Association, which represents credit reporting agencies, says he was once interviewed by a television reporter who’d received a speeding ticket with a warning that drivers who didn’t pay would be reported to a credit reporting agency.

Turns out that threat was an empty one. “It’s not true,” Ellman says. “Those don’t show up on a credit report.”

Griffin explains that tickets, like library fines, come from municipal records. They’re no longer collected by any of the credit reporting agencies.

A Soon-to-Be Ex's Credit Card Debt

True

You may think you’re off the hook if the judge presiding over your divorce says your soon-to-be-ex spouse must pay all the debt on your joint credit card. The card company sees it differently.

While you are still husband and wife "you are both jointly and severally liable for 100 percent of the card debt,” Ellman says. Even if one spouse is responsible for paying back the debt, the other spouse could start receiving collections calls and letters if the debt isn’t paid, he adds.

Ellman says those going through divorce should to work with lenders. “If, for example, the husband is responsible for the debt, the couple will need to work with the lender to take the wife’s name off of the card," he says.

Liens or Judgments Against You

Mostly Myth

These infractions rarely make it onto credit reports, Ellman says.

“Liens and other judgments don’t show up on credit reports very often,” he says. In part that's because in order for those public records to appear on your credit report, certain personal information from those sources must match what the credit reporting agency has on file about you.

“We’ve found that public records will almost never have both a Social Security number and date of birth,” Ellman says. “So as a general rule, most liens or judgments are not showing up on credit reports.”

As for unpaid and paid tax liens, those no longer appear on credit reports.

“Neither paid tax liens nor unpaid tax liens are part of a credit report any longer,” Griffin says. “They were removed from all credit reports almost a year ago.”

Griffin confirms, though, that negative information in general stays on your credit reports for seven years from the time of the first delinquency.

“If you fall behind on an account and never again become current, the consecutive late payments will be deleted seven years from the date of the first missed payment,” he says. “That date is called the original delinquency date.”

Checking Your Credit Report Frequently

Myth

Ellman says a common misconception is that each time consumers check their credit reports, their credit scores go lower.

“If I had a nickel for how many times I heard that, I could retire today,” he says. “It’s an urban legend.”

You’re entitled to look at your credit reports as often as you like. Consumer Reports maintains that you should do it several times a year, if only to ensure that the information is accurate.

And you don’t have to pay a credit-monitoring service to do that for you. Instead, because you are entitled to three free inquiries a year—one from each of the credit reporting agencies—go to annualcreditreport.com and stagger your inquiries. Every four months, ask for one of the reports—say, Equifax in April, Experian in August, and TransUnion in December.

It’s also a good idea to check all three of your credit reports simultaneously before shopping for a major loan like a mortgage. Do it even if you've used up your free reports and have to pay a bit to get new ones.

That way, you can correct errors before applying for the loan. A 2013 report by the Federal Trade Commission found that about 5 percent of credit reports had errors that could result in less favorable loan terms.

If you find mistakes on any of the reports, you’ll need to ask for corrections from each of the credit-reporting agencies showing the error.

Inquiries from Potential Employers or Insurers

Myth

Increasingly, consumers’ credit reports are being accessed by entities with no plans to lend you money. Employers, insurers, and landlords can check on your credit, but these inquiries have little or no impact on your credit report.

“If your prospective employer wants to look at your credit report, you have to sign a consent,” Ellman says. “The law also requires that the inquiry show up on your credit report. Similarly, if an insurer is looking at your credit report as part of the application process, you are almost always going to have to consent to letting the company pull your credit history.

“But inquiries from an employer or an insurer won’t have an impact on your credit score,” he says.

Applying for a Lot of Credit Cards

True

Opening up a lot of credit cards in a short period of time can have a negative impact. “That could have a downward effect on your score because it suggests you’re in credit trouble,” Ellman says.

Freezing your credit reports is a way to curb the urge to take on more debt—and, after a data breach, to foil scammers from opening credit lines with your stolen personal information. It’s free to freeze your credit report.

Go to each of the three credit-reporting agencies and click the link mentioning a credit or security freeze. Consumer Reports recommends doing such a freeze rather than a credit lock. That’s because a freeze’s promise to guard your credit accounts is guaranteed by law, notes Christina Tetreault, a staff attorney on the financial services team at Consumer Reports. A credit lock is simply an agreement between you and the credit reporting agency.

“Having a contractual agreement is not as strong as having protections under law,” Tetreault says.