How much money should you save in case of an emergency?

Your Credit Minute Show Notes:

 

  • 00:00                                   All right guys. Credit question of the day. And we’ll actually make this a finance question of the day, is coming from [Sherry Lynn White 00:00:06]. Sherry Lynn thank you so much for posting your question on our Facebook page and the question is: How much money should you save in case of an emergency? Well, let’s think about this. In 2008, I would have said a year’s worth. Why? Because when people lost jobs in 2008, it took a lot longer to get a job. Now, the economy is a little stronger, if you’re going to apply for another job, it might be a shorter time frame. So, I would say the minimum should be six months. Okay. You want to look at all of your monthly expenses, you should be able to jot this down on a small piece of paper, even a napkin. Jot down those expenses, times six, that’s what you want to have in the bank. Now, if you’re getting out of debt, I would suggest actually putting that to the side. Okay. The debt’s probably costing you 20 plus percent, get a $1,000 in the bank, just in case of an emergency, something breaks down, you got a car issue, you need to rent a car, something happens. Okay. And attack the debt, don’t worry about your reserve.
  • 01:03                                   SO the order is, put a thousand bucks in the bank, pay off the debt, and then move to get six months reserves. And once you’re done with the six months reserves, then you want to start investing in putting money into retirement. Thanks, guys. Have a great day.
How much money should you save in case of an emergency?
How much money should you save in case of an emergency?

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What is rapid re-score and how does it work?

Your Credit Minute Show Notes:

  • 00:00                                   What’s up, YouTubers? Today we are going to talk about rapid rescores, the fastest, fastest way to increase your credit score. And we get a million questions a minute about this. Rapid rescores. “Hey, can you do a rapid rescore for me, Nik?” “I need a rapid rescore.” “Just rapid rescore that thing.”
  • 00:18                                   What’s a rapid rescore? Does anyone even know really what this means? Well, we’re going to talk about it today here at Your Credit Minute. Let’s talk about rapid rescores, how this can help you close on your mortgage much quicker with a lower rate, how much it costs, how long does it take, let’s detail everything.
  • 00:34                                   So, guys, rapid rescore is typical a product that’s only provided by your mortgage company. Okay? You go in for a mortgage and they pull up your credit report and your score is 680, and they’re not giving you the best rate possible. And you’re wondering why. You’ve looked at your credit, you’ve never had a late, you don’t have any derogatory information, but your credit score is still no more than average, and you’re wondering, “What can I do?” Well, the first thing you’re going to do is you’re going to call me, right? And I’m going to tell you, “Guys, you don’t need credit repair.” Okay? But you’re still wondering, “What do I do? How do I get my credit score up?” And typically, what I’m going to tell you is you got to pay down your credit card balances, right? We’ve talked about this in all of our previous videos where your credit card utilization rate is about 30% of what makes up your credit score. So, here are your credit limits, here are your credit balances. A little too close. The ratio or that credit card utilization rate is far higher than it needs to be.
  • 01:28                                   So, what will Nik tell you? Pay down those credit cards, right? Bring down that utilization rate. Bring down that ratio, uh, as low as you can, okay? Really, what you want to do is you want to have your credit card balances or any sort of lines of credit below the 10% credit limit mark before you apply for any sort of a mortgage, or a card lending product, anything that’s major where you’re going to get a longer term interest rate and you’re going to end up overpaying for many, many years if your credit score isn’t exactly where it needs to be.
  • 01:58                                   Now, here’s the problem, okay? You’ve paid down your credit card, um, it’s down to zero, you did it the day I asked you to do it. You go back to your lender and you say, “Hey, Mr. Banker Guy, time to close on my mortgage. I- I- I paid off all my credit cards. That 680 should be a 780 now. It should be a- a- a- a million eighty. Um, you know, let’s- let’s do a rerun my credit.” Your loan officer reruns the credit. Lo and behold, your credit score is exactly the same. Why?
  • 02:29                                   Because typically the items … the activities that’s happening on your credit report today, it’s really not going to show up for at least, at least another 30, 60, sometimes 90 days. It really depends on when that creditor, that credit card company’s taking all that data and batching it out to the credit agencies. And we don’t know when that’s going to happen. That’s really up to them, okay?
  • 02:52                                   So, what do we do? We found the house of our dreams, but we can’t buy it ’cause we’re going to get stuck with this lousy interest rate, okay, um, because of a credit score that really isn’t reflecting where my current position is with my credit cards, okay?
  • 03:05                                   Um, and this is where rapid rescore comes in, okay? Also, some lenders are going to call it a CBU, okay? And that’s going to stand for Credit bureau update. It’s really all the same. And this is just some fancy marketing.
  • 03:21                                   So, what you’re going to do is you’re going to take copies, okay, of your statements online, you’re going to print everything out, showing that you paid off that debt, that it’s now a zero balance, okay? And you’re going to submit it to your loan officer. As long as your loan officer offers that product, okay, some loan officers don’t, some banks don’t, um, your loan officer is going to go back to his credit vendor, which could be like a LandSafe, it could be a Birchwood, these are the companies that actually pull the credit report for, uh, the purpose of lending for them, okay?
  • 03:50                                   Now, that company then is typically going to have a team on staff that will call your banker lender, okay, will call your credit card company, and will verify over the phone that that balance is, in fact, now a zero balance, okay? And they have been given the right by Experian, Equifax, and TransUnion, the three major credit bureaus, to go in and actually update that balance right then and there to reflect a zero. And they’ll tell the lender, “Hey, re-pull a credit report. Balance is now showing zero.” Lender re-pulls the credit report and, voila, you have your rapid rescore. That score has shot up to, you know, from that 680 to that 780 or 750 or whatever that number is going to be ’cause you’ve paid off all your credit card balances, okay?
  • 04:34                                   This process typically takes three to five days to accomplish versus the 30 to 60 days of just waiting around after you’ve paid off your credit card balances. The cost to you, the consumer, is usually zero, okay? I know the lenders right now are paying somewhere in the vicinity of 30 to $50 per update, per credit bureau, which is fairly expensive on their end, so they’re going to make sure they, you know, they have a solid application before they do all this work for you, um, ’cause it’s- it’s coming out of their pocket first. And I- I believe in certain cases they even bill you at the end of your loan, okay? But it is a great product. It’s something that’s available. You do have to be in process with a mortgage company. It’s not something that’s offered out online. It’s not something even a credit repair company can do for you.
  • 05:20                                   Now, keep in mind, this process is not credit repair. A mortgage lender does not do credit repair. They’re simply updating things that have been paid off, okay? So, if you just paid off a bunch of things, your credit’s not where it needs to be, but you found the home of your dreams, it’d probably be worth having a conversation with a local lender that you trust, that you found through, you know, whatever source it’s going to be, your realtor, the local Better B- … Better Business Bureau and discussing the rapid rescore or CBU product.
  • 05:50                                   Uh, guys, this is Nik Tsoukales with Key Credit Repair. Thanks for checking us out every single day here on YouTube and Facebook. Um, please click the subscribe button below and check us out on a daily basis. And if you have any credit questions, um, beyond what you’ve seen in some of these videos or even your consultation, if you’ve spoken to us already, shoot me an instant message, shoot me an email, at NTsoukales@KeyCreditRepair.com and I’ll make sure I answer it right away. Thanks, guys. Have a great day.

 

How Your Credit Report Can Impact your Health

Improve Your Credit Score

How are health and bad credit score connected?

Restless nights. Unhappiness. Poor heart health. Anxiety.

The four aforementioned symptoms have all been linked to poor credit scores and credit card debt, according to consumer studies. In other words, bad credit can be bad for your health – and there’s some significant research to back this claim up.

Take a study recently published in the Proceedings of the National Academy of Sciences, for example. The study analyzed over 1,000 health records from birth to mid-life and found an alarming correlation between bad credit scores and heart health. Conversely, people with good credit scores were found to have had good heart health.

A separate study from Nerd Wallet discovered that more than 85 percent of surveyed Americans who have previously had or currently have credit card debt regret it. In citing reasons for regretting accumulating credit card debt, some of the answers weren’t surprising. Respondents stated reasons such as “it took too long to pay off” and “high interest rates cost me more money long term.” But there were a few other interesting reasons. For instance, stress and anxiety made the list.

Needless to say, but accumulating credit card debt can put you on the path to a poor credit score, which can thereby greatly impact your financial future. We don’t want to speak for all consumers, but that would certainly stress us out should we find ourselves unable to receive a reasonable auto loan or home mortgage.

The good news is that by enacting some credit repair strategies, you can boost your score rather significantly in a relatively short period of time. In the process, you can relieve some of that excess stress you’ve been carrying with you and possibly even improve your heart health. Here’s a closer look at some tips on how to do it:

How to Improve Your Credit Score

  •  If you can’t pay off your credit card balance in full each month, you should at least be making the minimum payments. Ideally, however, you should be trying to keep your credit utilization ratio at or under 30 percent. The credit utilization ratio is essentially the amount of credit card debt you owe versus your total allotment. Your credit score should increase if it’s at or less than 30 percent.
  • Improve your consumer habits. If you’re in debt and can’t seem to get out of it, it’s likely time to take a closer look at your lifestyle. What things can you live without? Even the little things can add up long term and go a long way toward any debt management plan.
  • Don’t miss payments. We can’t stress this one enough, as it’s the single largest individual category that goes into calculating the FICO score. Miss a payment, and it could really cost you when it comes to your credit score.

So if you won’t take it from a financial expert to improve your credit score, perhaps you’ll take it from a doctor. After all, studies say it’s bad for your health. Doctor’s orders!

For Free Credit Repair Consultation call us: 877-842-5215

Five Practical Methods To Build Credit

It can be really difficult to build credit. Whether you are just starting out or had some bad experiences with credit cards that left you with less than stellar credit, you are probably running into the same issue – to be able to get credit you have to have good credit. This can leave you feeling frustrated, as it can even limit your ability to rent an apartment. Don’t get too worried, however. There are a few tried and true ways that you can establish credit quickly and be able to qualify for great terms and rates on loans. If you’re in this situation, read on and pick one of these methods to try so that you can soon have great credit.

1. Sign-up for a credit builder loan –

These are not very common, but due to how many people have problems with their credit, more and more people are hearing about them as an option to help build credit. It’s a loan from a bank or other lender, but the money that is loaned to you will be held in a special account that you won’t be able to access until after you have paid the whole loan back. It’s almost like a forced savings account, but your payments will be reported and will go on your credit history. Small, local banks are the most likely to offer this sort of program, although you may be able to find a few options online.

2. Signup for a secured credit card –

Most likely the best option for anyone who doesn’t have a credit score at all, secured credit cards offer no risk to the bank or lender who decides to work with you. You have to put down a cash deposit in the amount of the credit limit on the card that you signup for. You can use this card the same way that you would any regular card. Buying things, making payments, and paying interest if you leave a balance on your card all work the same as a regular credit card. The difference is the cash deposit that you made to open it. You’ll get this money back when you close the account, but if you ever default then the lender has that money to protect themselves. These types of cards aren’t meant to be used for your whole life – they’re simply a great way to build credit from scratch. After you have done that, close the card and apply for one with a better rate. Always make sure that the secured credit card you sign up for will report to all three major credit reporting agencies.

3. Pay rent and get credit –

There are certain rent-reporting services that will add your rental bill to your credit report, meaning that all of your payments will show up on your report. While not all credit scores will include these payment histories, sometimes they are enough to make a big difference in getting your next loan.

4. Ask a co-signer for help –

This is often what teenagers will do to begin building their credit. Signing up for a car loan or a credit card with a parent is a great way to get experience, build a credit score, and not experience a whole lot of risk. It’s also possible to get a co-signer as an adult, too, but the co-signer always needs to be aware of the danger of having to repay the loan themselves. Remember that anything you sign you will be responsible for, even if you are just helping out a friend or a family member.

5. Signup as an authorized user on a credit card –

If a family member is willing to let you become an authorized user on their credit card, you can build your credit history this way. However, you won’t be obligated to pay for any purchases, but just having your name on the card can help you. Make sure that all three credit reporting agencies will receive information about you as the signer, or there is really no reason to even do this. Make sure you are willing to pay what you own on the card before becoming an authorized signer on a family member or friend’s card, even though you are technically not required to do so.

Building a great credit score takes time, a lot of patience, and the responsibility of paying your bill on time each month. Be prepared to take a minimum of six months for this process to work, no matter which method you choose. Always pay your whole payment on time, especially with utility bills and your rent. Any bills that aren’t paid in full will work against you. Don’t use all of your available credit on a credit card, and limit how many new accounts you open. By following these tips you’re on your way to a great credit score.

About the author:

Steven is a professional personal finance writer. He is a contributor for several professional finance sites. His work has been mentioned in and linked to from, USA Today, The Huffington Post, Benzinga, Investopedia and many other publications. He also has his own personal finance blog, Credit Zeal, where you can follow him.
https://www.creditzeal.com/

How to Freeze Your Credit After the Equifax Breach

About half of all Americans are at risk for long-term identity theft in the aftermath of the recent Equifax data breach. In fact, the company has said that 143 million consumers are potentially at risk, as hackers swiped the likes of social security numbers, birth dates, addresses and more.

So what can you do? If you’re really worried about someone trying to steal your identity or open up a line of credit under your name, the best thing you can do right now is take the steps to freeze your credit. A credit freeze essentially acts to prevent any creditor from accessing your credit report. In fact, per the FTC, nobody can open a line of credit or apply for a loan without your approval first. The nice thing about conducting a credit freeze is that you’ll still be able to see your credit score, as will any of your current creditors. Additionally, a freeze won’t impact your credit score in any way.

How to Freeze Your Credit

1. Contact the credit reporting firms: A freeze is fairly easy to do. Just call the credit reporting firms — namely the “big three” of Equifax, Experian and TransUnion — and tell them you want to freeze your credit. You should also call a smaller, yet increasingly important credit reporting bureau, Innovis. Note: While you can freeze your credit online, it’s always better to conduct this task over the phone.

2. Give them your information: In order to proceed with a credit freeze, you’ll be asked for your name, address, birth date and social security number.

3. Freeze it, don’t lock it: You may be asked if you’d rather lock your credit rather than freeze it. Stick to freezing it.

4. Lift it: Say you want to apply for a mortgage loan, open a new credit card or you’re looking to lease a new apartment where a creditor will need to see your credit report. When your credit is frozen, no potential new creditor will be able to access this information unless you lift the freeze. To lift the freeze, you’ll need to once again contact the credit bureaus and inform them of your decision. Lifts may take anywhere from 15 minutes to three days to activate. After you’ve taken care of any business, you can then choose to freeze your credit again by following the steps detailed here.

Is a Credit Freeze for You?

Though freezing — and lifting your credit freeze when need be — can be a bit of a hassle, it’s a good way to preventatively guard against identity theft. Note that it does cost money, with fees ranging from $5 to $10 depending on the state you reside in, but credit freezing can give consumers peace of mind, especially in times of uncertainty in the wake of the recent Equifax hack.

Credit Repair

The Ultimate Guide to Credit Score and Repair Services

Introduction

Numerous questions come to your mind when you think of credit score. A cleanup credit report is all you need, but the lack of knowledge about the same is one of the hindrances that can lead you to poor credit score.

Here are some of the information about credit score and repair services that shall guide you to boost it.

Components of Credit:

Before you understand credit repair, you need to understand the elements of the credit score. The FICO model of credit score is vastly used by the majority of the banks and credit providers. As per FICO model, the credit score is made up of 5 components which are as below.

1. Payment History

Your payment history has the highest impact on your credit report as 35 % of your score is made up of history. You should make sure to pay your bills timely to maintain a favorable history.

2. Debt Burden

Another essential component is debt burden that possesses 30 % of your credit score. The debt burden in simple terms can be referred as the credit utilization, that is the percentage of available credit that has been borrowed.

3. Length of Credit History

The length of credit history is made up of two factors, one the time each account had been opened and the length of time since the account’s most recent action. It has the stake of 15 % on your credit score.

4. Types of Credit

Your credit mix forms 10 % of your credit score. Opening too many credit lines at the same time may seem that you are in need of credit that can affect your credit mix unfavorably.

5. New Credit

Your inquiry for credit, the application for new credit or the new accounts make up the last component that has 10 % stake on your credit score.

What Is Credit Repair?

As you have understood the components of the credit score very well; to understand the credit repair shall become easier for you. In simple terms, credit repair is an improvement of your credit report by fixing the bad credit and resorting to such techniques that enhance the credit score.

How Does The Credit Repair Work?

The credit repair companies analyze client’s report and with the help of techniques and other resorts improves the same. For instance, if you have a collection account at different debt collectors, your credit report shall mention multiple times.

The same even being accurate information as well impairs your credit score. The credit repair companies make sure that your report is correct, entirely fair and thoroughly substantial.

In particular cases, the credit repair companies communicate with the creditors to resolve the disputes and remove the same from the report.

Concluding Remarks

Herewith you know the components of credit score, how the credit repair works and whether you should consult the credit repair agency or not. To boost your credit score, make sure to maintain a good history and ask the professionals who can take care of your accounts very well.

IRS Private Debt Collectors Accused Of Pressuring Taxpayers, Breaking The Law

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_text admin_label=”Fact: There’s a new law in effect where the Internal Revenue Service now can pass along unpaid tax bills to private debt collectors. If you know anything about debt collection at all, you can get a sense for just how problematic this new law may be. In fact, according to Forbes, many U.S. senators have already come on record regarding the way that these debt collectors are handling certain taxpayer accounts. Specifically, Pioneer Credit Recovery has been among those that have been targeted by the concerned senators. ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Fact: There’s a new law in effect where the Internal Revenue Service now can pass along unpaid tax bills to private debt collectors.

If you know anything about debt collection at all, you can get a sense for just how problematic this new law may be. In fact, according to Forbes, many U.S. senators have already come on record regarding the way that these debt collectors are handling certain taxpayer accounts. Specifically, Pioneer Credit Recovery has been among those that have been targeted by the concerned senators.

Issues with IRS Private Debt Collectors

So just what are some of the major issues when it comes to IRS private debt collectors? Forbes states that in their letter regarding Pioneer Credit Recovery, Sens. Sherrod Brown (D-OH), Benjamin Cardin (D-MD), Jeff Merkley (D-OR) and Elizabeth Warren (D-MA) have found the issues to be four-fold:

  • Concerns about properly protecting U.S. taxpayers from criminal debt collectors posing as IRS agents.
  • Pressuring taxpayers into illegal, illogical or complicated payment plans or transactions.
  • Violation of the Fair Debt Collection Practices Act.
  • Violation of IRS protocol and guidelines.

While all of the aforementioned issues are of grave concern, the one that the senators have found to be most alarming thus far is the potential violation of the Fair Debt Collection Practices Act. This is largely because of Pioneer’s short lapse in collection attempts regarding letters sent to verify debt and confirm debt collector legitimacy. Pioneer’s short five-day window has the potential to allow scammers to swoop in and capitalize.

[/et_pb_text][et_pb_text admin_label=”Additionally, Forbes reports that there are also major concerns about how much taxpayers are being pressured into settling debts or moving around assets to compensate for their unpaid debts, notably among low-income taxpayers. Under the Federal Trade Commission’s Fair Debt Collection Practices Act, it’s illegal for a debt collector to use any sort of threat, abusive language or unfair or deceptive practices when it comes to collecting debt. However, after looking into the call scripts of Pioneer, the senators have found concerns regarding the collector’s ability to stay within these set confines. ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Additionally, Forbes reports that there are also major concerns about how much taxpayers are being pressured into settling debts or moving around assets to compensate for their unpaid debts, notably among low-income taxpayers. Under the Federal Trade Commission’s Fair Debt Collection Practices Act, it’s illegal for a debt collector to use any sort of threat, abusive language or unfair or deceptive practices when it comes to collecting debt. However, after looking into the call scripts of Pioneer, the senators have found concerns regarding the collector’s ability to stay within these set confines.

[/et_pb_text][et_pb_text admin_label=”It’s worth noting that in response to the senators’ letter and concerns about possible illegal collection practices, Pioneer has responded defending its integrity and claiming that all of its collections practices fall within legal lines. Forbes states that Pioneer is just one of four agencies that the IRS authorizes to collect debt on its behalf. The other three are CBE, ConServe and Performant.” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

It’s worth noting that in response to the senators’ letter and concerns about possible illegal collection practices, Pioneer has responded defending its integrity and claiming that all of its collections practices fall within legal lines. Forbes states that Pioneer is just one of four agencies that the IRS authorizes to collect debt on its behalf. The other three are CBE, ConServe and Performant.

[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Separating Scam from Legit: What You Need to Know” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Separating Scam from Legit: What You Need to Know

[/et_pb_text][et_pb_text admin_label=”You’ll get an IRS letter if your tax account has been passed to a debt collector. Private debt collection agencies still must abide by the Fair Debt Collection Practices Act. All payments must go to the IRS – not to any debt collection agency (or those posing to be a debt collection agency). Debt agencies are unable to place tax liens or issue any sort of a levy against taxpayers. ” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

  • You’ll get an IRS letter if your tax account has been passed to a debt collector.
  • Private debt collection agencies still must abide by the Fair Debt Collection Practices Act.
  • All payments must go to the IRS – not to any debt collection agency (or those posing to be a debt collection agency).
  • Debt agencies are unable to place tax liens or issue any sort of a levy against taxpayers.

Average Credit Score for Home Buyer Mortgage Loans: 2017 Update

According to Ellie Mae’s %22Origination Insight Report,%22 that was the average credit score among home buyers that went the mortgage loan route in April of 2017. Any credit score of 700 or above is typically considered a %22very good%22 score, characteristic of someone deemed to be a good consumer. When it comes to credit scores, higher is always better, and higher scores typically qualify consumers for lower home loan interest rates. This can represent a significant long-term savings on either a 15- or 30-year mortgage.

According to Ellie Mae’s “Origination Insight Report,” that was the average credit score among home buyers that went the mortgage loan route in April of 2017. Any credit score of 700 or above is typically considered a “very good” score, characteristic of someone deemed to be a good consumer. When it comes to credit scores, higher is always better, and higher scores typically qualify consumers for lower home loan interest rates. This can represent a significant long-term savings on either a 15- or 30-year mortgage.

Average Credit Score for Home Buyer Mortgage Loans” src=”http://keycreditrepair.com/wp-content/uploads/2017/07/trident-mortgage-group-mortgage-loan-approval-with-keys-960×350.jpg” alt=”Average Credit Score for Home Buyer Mortgage Loans”

Home Buyer Credit Scores Explained

While the 722 credit score is the average of all home buyers that sought a mortgage loan in the month of April 2017, the Ellie Mae report’s data analysis extends beyond just this. For instance, it includes credit score data based on the types of mortgages that were sought in the particular month. The average score for those who bought with a conventional mortgage was 753, for those who bought with an FHA loan, 684, and for those that purchased with a VA loan, 708.

While the 722 credit score is the average of all home buyers that sought a mortgage loan in the month of April 2017, the Ellie Mae report’s data analysis extends beyond just this. For instance, it includes credit score data based on the types of mortgages that were sought in the particular month. The average score for those who bought with a conventional mortgage was 753, for those who bought with an FHA loan, 684, and for those that purchased with a VA loan, 708.

Buying a Home with Good or Poor Credit

While the 722 number was the average credit score for purchasing a home in April 2017, that’s not to say that those with lower credit scores that fall into the %22good,%22 %22fair%22 or %22poor%22 range would be unable to qualify for such a loan. However, if they are approved, their credit score will likely reflect the interest rate that would accompany their home loan. Generally speaking, the higher the credit score, the lower the interest rate. Over time, the savings can add up. In fact, consumers with good credit and low interest rates may save tens of thousands of dollars over the course of a home loan tenure compared to consumers with fair credit and high interest rates.

While the 722 number was the average credit score for purchasing a home in April 2017, that’s not to say that those with lower credit scores that fall into the “good,” “fair” or “poor” range would be unable to qualify for such a loan. However, if they are approved, their credit score will likely reflect the interest rate that would accompany their home loan. Generally speaking, the higher the credit score, the lower the interest rate. Over time, the savings can add up. In fact, consumers with good credit and low interest rates may save tens of thousands of dollars over the course of a home loan tenure compared to consumers with fair credit and high interest rates.

So if you’re among the consumer base with a credit score that may be on the bubble of getting approved for a home loan or just want to boost your score to earn a better interest rate on a home loan, you might be wondering what you can do. Here’s a look at some credit repair tactics to think about:

So if you’re among the consumer base with a credit score that may be on the bubble of getting approved for a home loan or just want to boost your score to earn a better interest rate on a home loan, you might be wondering what you can do. Here’s a look at some credit repair tactics to think about:

Pay all bills on time. Late payments can cause your credit score to take a hit, especially if you’re regularly doing it. Set reminders and alerts, or arrange for auto bill pay if you can. Pay down debts: Try to always keep your debt-to-credit ratio, or credit utilization, at about 30 percent for a better score. For instance, if you have a credit card limit of $10,000, try to carry a balance of no more than $3,000 at once. Reduce your debt by paying off high-interest loans and credit cards first. Check your credit report for errors.

  • Pay all bills on time. Late payments can cause your credit score to take a hit, especially if you’re regularly doing it. Set reminders and alerts, or arrange for auto bill pay if you can.
  • Pay down debts: Try to always keep your debt-to-credit ratio, or credit utilization, at about 30 percent for a better score. For instance, if you have a credit card limit of $10,000, try to carry a balance of no more than $3,000 at once.
  • Reduce your debt by paying off high-interest loans and credit cards first.
  • Check your credit report for errors.

New Credit Scoring Models Won’t Work if Lenders Ignore Them

Chances are you’ve already heard some of the rumblings regarding the way new credit scoring models work. To recap, some of the newer models exclude any medical debt that consumers owe as well as the likes of settled delinquencies and collections. Under new scoring models, tax liens and civil judgments have also changed in the ways they are reported – all for the betterment of consumers. In a perfect world, this is great news for the consumer, as individuals are likely to see a boost in their credit scores and qualify for lower interest rates on long-term financed purchases like auto and mortgage loans. As a result of these changes, credit score boosts may be enough to qualify consumers that otherwise wouldn’t have even qualified for a loan. But there’s one problem – lenders aren’t embracing them to the same degree that consumers are. In fact, some are using old formulas to determine consumer risk that don’t exclude everything that we listed above.

Chances are you’ve already heard some of the rumblings regarding the way new credit scoring models work. To recap, some of the newer models exclude any medical debt that consumers owe as well as the likes of settled delinquencies and collections. Under new scoring models, tax liens and civil judgments have also changed in the ways they are reported – all for the betterment of consumers. In a perfect world, this is great news for the consumer, as individuals are likely to see a boost in their credit scores and qualify for lower interest rates on long-term financed purchases like auto and mortgage loans.

New Credit Scoring Models Won’t Work if Lenders Ignore Them. New Credit Scoring Models Won’t Work if Lenders Ignore Them”

As a result of these changes, credit score boosts may be enough to qualify consumers that otherwise wouldn’t have even qualified for a loan.

But there’s one problem – lenders aren’t embracing them to the same degree that consumers are. In fact, some are using old formulas to determine consumer risk that don’t exclude everything that we listed above.

Why Aren’t Lenders Using New Scoring Models?

So just why aren’t the majority of lenders using the new scoring models and instead relying on old FICO scoring formulas? That’s a good question, and it’s one where the answer varies based on the lender. For instance, some lenders have stated that they’re too small and the older formulas are a better indication of potential consumer risk. Other lenders, conversely, say that they’re too big to institute changes in how they determine consumer risk and that any change this significant could be disruptive to the way that they do business. Then there are the lenders who are just simply putting off integrating such formulas.

Whatever the reason, the true loser is the consumer in all of this. In a way, lender refusal to use new credit scoring formulas discourages responsible credit behavior. Think about it: Why should a consumer be motivated to pay off a collection if a settled collection is still going to be counted against them on their credit report and credit score? The refusal of lenders to adapt to the current times and the newer scoring models could actually prevent consumers from enacting credit repair strategies.

Taking things a step further, the lender would also benefit by adopting these new scoring formulas. That’s because weighing consumers under the new scoring formulas would likely earn them new customers that may not have qualified for a loan before. New customers and more customers equal more revenue for a firm. Isn’t growing to become more profitable the goal of any business, big or small? Credit scoring is changing to become more consumer-friendly. Lenders need to be changing too. It should be a win-win for both parties involved.