Credit Scores and Car Insurance – Credit News

While credit scores and credit reports are most commonly associated with loan approvals, there’s more than just getting approved for a credit card, auto loan or mortgage that the little three-digit FICO score is used to calculate.

For instance, credit scores are also factored into things like auto insurance premiums. Yes, credit scores count for insurance too, which makes credit repair all the more important and quite the lesser known credit tip.

So just how is a credit score factored into an insurance premium? An insurance provider will typically base premium rates on an insurance score. And this insurance score takes into account your credit history in order to predict your likelihood of being involved in an accident or filing an insurance claim. Studies detail how credit history can be linked to risk and accident potential.

Here’s a closer look at a credit-based insurance score and why it’s important that you repair credit for more than just good interest rates on loans:

The higher your credit score – and thereby your credit-based insurance score – the greater the likelihood that you’ll qualify for low auto insurance premiums. Keep in mind that this premium also takes into consideration driving history and the amount of claims on your record.
If you have a low credit score, you’re more likely to pay more for your auto insurance premium, as you’ll likely have a lower overall credit-based insurance score.

If you have less than stellar credit, what can you do to improve it for auto insurance purposes? The same thing you would do to improve it for any other purpose:

Make sure payments are on time.
Open new credit lines in good standing.
Have a favorable credit history (i.e., no collections, missed payments, etc.)
Good debt management – try not to accrue more than 30 percent of your total credit line at once.

Yes, good credit is about more than just low interest rates on loans – it can also net you lower auto insurance premiums. So if your credit is lacking, take measures to get your finances in order today.

For more information on how to repair your credit, please Sign Up for $0 Today.

Credit After Divorce – Managing Things After This Hard Time

When you get divorced, the person you thought was “the one” might not be the only thing you lose – your credit score could also suffer! Yes, financial problems have the potential to crop up during a divorce, especially if you’ve co-signed loans with your soon-to-be ex. Divorces can be messy enough, but yes, they can take a toll on your credit too!

With that being said, here’s a look at some ways to manage your FICO score through divorce, so you’re not stuck in a lengthy credit repair plan later:

Close or refinance all shared accounts: During a split, courts will divide shared debt through what’s called a divorce decree. But what the courts and lawyers won’t tell you is that these decrees don’t eliminate shared responsibility. For instance, if your ex is tasked with paying the auto loan and misses a payment – the late payment will show up late on your credit report too, hurting your score and staying with you for years! So along the lines of a credit tip, don’t take any chances and refinance any loans that were previously shared if you’re able to.
Cooperate with your ex: While you’re divorcing for one reason, it’s important to work with your ex on your finances for the sake of not having to repair credit down the line. Hence, along the lines of our first bullet point – not every loan can be refinanced quickly. So for loans that can’t, be sure that you strike a truce with your ex to ensure that payments are made. If they’re not they hurt both of your credit scores. Online accounts and automatic payments are ways to make this easier.
Credit monitoring: Divorces can get messy, and there’s no telling what your ex might do to your credit score as a means of revenge if they know of your social security number and financial details. That’s why signing on to a credit monitoring service is a good idea – it’ll immediately make you aware of any changes to your credit data, potentially permitting you to avoid implementing a big debt management plan later for the damages incurred.

For more information on how to repair your credit, please Sign Up for $0 Today.

Why a Collection Agency Won't Remove a Record After It Has Been Paid

Paid Collections – Why Are They Still on My Report?

Are you one of many Americans who have collection accounts on your credit report? If so, you unquestionably want it to just go away. This is a pivotal part of credit repair but raising your credit score back up to a favorable status is much easier said than done. That’s because according to U.S. law, collection accounts can be reported in your credit history for seven-and-a-half years from the original date you fall behind on payments.

Yikes!

Seven-and-a-half years. That’s a long time a bad record can weigh down your FICO score. Even worse, it’s possible that you can settle your debt with a collection agency and the record will still weigh down your credit score. Why? Because collection agencies are required to report information that is both accurate and complete and that includes this negative aspect of your credit history.

So now that you know why collection agencies won’t wipe a record clean, even after you’ve settled your debt, you might be wondering if there’s anything you can do? I mean, 7.5 years is a long time to wait out a bad record.

The good news is that there are some things you can do to wipe bad records from your report early, thereby allowing you to advance and repair credit. The bad news is these things are not sure-fire. Here’s a look at a few credit tips for working with collection agencies on this matter:

First, pull your credit history so you know what’s being reported. There’s a chance you might find an inaccuracy within the report, which can lead to a favorable outcome, as collection agencies aren’t legally allowed to report inaccurate or incomplete information.
Negotiate a “pay for removal” debt management deal: If you haven’t settled any debt yet, contact the collection agency and see if they will remove your record should you settle the debt. Many will likely respond and say that they’re unable to remove the record, as credit reporting agencies frown upon this policy. But it’s worth a shot.
Build new, positive credit: Part of your credit score is based on any new credit you’re building. So if you’re striking out with getting records removed from your credit report, it may just be best to cut your losses and focus on building new credit. As time goes on, these negative records will have less of an impact on your overall score, as long as your finances and credit history are headed in the right direction.

For more information on how to repair your credit after a collection you can Sign Up for $0 Today.

maximize your fico with different tradelines

Different Types of Credit – How to Maximize Your Score?

There are five main factors that make up a FICO credit score – payment history, amounts owed, credit history length, new credit and types of credit used.

While the “types of credit” category only factors for about 10 percent of your overall FICO score, it can mean the difference between a good score and a great score, so it’s a category not to overlook if you’re on a mission of credit repair.

First, it’s important to note that there are two main types of finance loans: revolving and installment. Installment loans consist of things like auto loans and student loans — money that is loaned with the expectation that it will be paid back in a relatively short period of time. Revolving loans, which are things like credit cards and bank cards, involve debt that is accrued and, ideally, paid off on a monthly basis (i.e. debt management).

For the best possible credit score, it’s recommended that consumers try to establish a good balance between installment and revolving loans. But here’s a credit tip — there’s one other type of loan that can greatly aid your credit score for the better in the long-term: a mortgage.

When you’re first approved for your mortgage, it’s likely that your credit will take a hit in the near-term. But a mortgage is good for your credit score in the long run for two big reasons. One, it qualifies as a type of credit used. And two, if you make on-time mortgage payments, it will reflect well in the payment history portion of your credit score, which makes up 35 percent of your FICO score.

With all this being said, it’s also worth mentioning that just because you have a variety of installment, revolving and real estate loans to your name doesn’t mean you’ll have a pristine credit score. Like we mentioned above, on-time payments are key. And it’s also key that you don’t have any unpaid loans that are taken on by collection agencies, as it’s hard to repair credit when you have something that could stay on your record — and influence it in a negative way — for up to 7.5 years.

So while diversifying your credit is important, it’s important not to overlook other factors that go into the makeup of your overall score as well.

Different Types of Credit Scores – Credit Tips

When it comes to your credit score, you’re likely already familiar with your FICO score. It is, after all, the most common type of score that creditors check before approving you for a home loan, car loan, etc. But there’s more than just the FICO score that creditors may check when it comes to looking up your finance history. Vantage and PLUS scores are two in particular that come to mind.

So what are the key differentiators between FICO, Vantage, and PLUS? Here’s a closer look at the different types of credit scores:

FICO

The FICO credit score, which ranges from 300 to 850, is made up of five main categories:

Payment history, 35 percent
Amounts owed, 30 percent
Length of credit history, 15 percent
New credit, 10 percent
Types of credit, 10 percent

As you can see from the FICO score makeup, the single most important thing is credit history – so here’s a credit tip – pay your bills on time. It’s why making on-time payments is such a crucial piece of credit repair. Debt and debt management is the next most important thing and the score is, rounded out by how diverse your credit is, new lines of credit you’ve opened, and how long your credit history is.

Vantage

Unlike the FICO score, the Vantage score essentially judges you on your last 2 years of credit and delivers your score in a range from 501 to 990. Unlike the FICO score, which takes into account 5 components of your credit history, Vantage measures you on 6 categories. Here’s a look at what they are and how significantly they weigh into your overall score:

Payment history, 32 percent
Utilization, 23 percent
Balances, 15 percent
Depth of credit, 13 percent
Recent credit, 10 percent
Available credit, 7 percent

Many of the categories of the different types of credit scores are similar to FICO, and there’s the “payment history” category, which takes tops in importance on its own. But the Vantage score includes a separate “Utilization” category, which measures debt-to-credit ratio, and “Balances.” In FICO, those two categories are somewhat grouped together. So while on-time payments are also important to repair credit with the Vantage score, there’s almost a greater emphasis on debt-to-credit ratio and debt.

PLUS Score

The score is measured between 330 and 830. It’s considered more of an “educational” score rather than one that’s used by lenders, but it’s nevertheless still a score. It’s a scoring system developed by Experian. Here’s a look at the breakdown:

Payment history, 31 percent
Credit usage, 30 percent
Age of accounts, 15 percent
Account types, 14 percent
Inquiries, 10 percent

Cash or Credit – Key Credit Repair Tips and Advice

In order to avoid debt and overspending, many Americans have moved away from credit cards and loans and instead save up cash for purchases. The thinking behind this practice is that they’ll never have to embark on any credit repair or debt management mission, as paying with cash only ensures that they’re never spending beyond their means.

Paying only with cash also ensures that consumers are paying the lowest possible price for items, as they can avoid interest rates that can make large purchases even larger in the long run.

But is paying cash for everything all the time really the right way to go about your finances? While it certainly carries some benefits, one area where this practice can hurt you is how it pertains to your credit score.

Yes, your FICO score, that three digit number that’s essential for getting approved for loans and credit cards and also for cell phone plans, employment opportunities and more. Building credit is important for a variety of reasons, and while many people may be scared off by falling into debt and having to repair credit, a favorable credit score can help you with more than just home and auto loans and credit cards.

Here’s a look at some other reasons why paying cash for everything may not be the best financial strategy:

Your FICO score is composed of five factors: payment history, amounts owed, length of credit history, new credit and types of credit used. If you pay cash for everything, you won’t have a credit report. And while many people are OK with this, there’s the chance of being denied for a credit line in the event of an emergency or being turned away for a job or cell phone plan. Like we mentioned earlier, your credit score is important these days for more than just loan approval and favorable interest rates.
You can have a credit card and be responsible. One argument for paying cash over credit is that you’ll never have to worry about spending getting out of control. But there’s another way to use a credit card and keep spending within means — by being responsible. Here’s a great credit tip to build your score and keep debt down: Make payments on time. Not only does this save on interest, but it’s also the most heavily weighed aspect of your credit score.

So while many are spurning credit cards altogether and opting for a cash-only approach, it’s possible to have the best of both worlds, so your credit score as well as your finances don’t suffer.

Credit Mistakes to Avoid at Any Cost – Credit Tips

Credit Mistakes to Avoid- If you’re in need of credit repair, it’s something that you have to devote time and energy toward working on. Repairing credit takes commitment and a proper understanding of how credit is configured. And while improving your credit score isn’t something that’s easy or fast to do, harming it is something that is.
With that being said, here’s a look at the five most common blunders people make that harm their credit score. Knowing these could be the credit tips you need to keep your score favorable and not poor:

Not paying bills on time: Payment history accounts for 35 percent of your FICO score, specifically if you’ve made on-time payments. A late payment won’t just incur late fees and possibly higher interest rates, but it can immediately dock your credit score of anywhere from 80 to 110 points.
High debt-to-credit ratio: Ideally, it’s recommended that you keep debt-to-credit ratios at about 30 percent for the best possible score. So if you have one credit card and a credit limit of $10,000, keeping it no higher than $3,000 is ideal. Anything more will drop your credit score, so take debt management seriously.
Bad debt: Simply put, don’t let any bills go to collections. Not only will they stay on your credit report for up to 7.5 years, they’re not good for your overall finance picture.
Hard credit pulls: Hard credit pulls are done any time someone is officially approving you for some sort of credit line. They also impact your score by about 5-10 points for every pull and stay on your report for up to two years. Simply put, know the difference between a hard pull, which docks your score, and a soft one, which doesn’t. Many consumers don’t and are surprised to see their score so low.
Check your credit report: You should regularly check your credit report – ideally, once a month. Why? Because it’s estimated that up to 40 million Americans have some sort of mistake on their report. By staying on top of your report, you can monitor and dispute incorrect information, which could be bringing down your credit score.

Closing Out a Credit Card – Does it Damage Your Credit?

So your credit score in unfavorable and you want to get your finances in order. However, credit repair is a big part of getting your FICO score back in favorable order. So what’s there to do?

To put it simply, there is not one tried and true “fix” to turn your credit score from poor to stellar over night. No, instead you need to take a look at the areas where your credit score is lacking luster and then make appropriate changes, whether in regards to debt management, making on-time payments, etc.
But one way people think they can magically improve their credit score quickly is by closing out credit card accounts. This is what we like to call a “repair credit no-no” when it comes to upping your FICO score. Here’s why:

Your FICO score takes into consideration what’s called a “credit utilization ratio.” Simply put, this takes into account your total credit amount versus the amount of credit that is currently being used. Generally speaking, you want to keep this credit utilization ration around 30 percent, meaning that you’re only carrying a balance at or below 30 percent of what your total limit is, for the best possible score.
- If you close out a credit card, you’re also eliminating parts of your total credit amount. Say, for example, you have two credit cards. Between the two of them, you’re at a 30 percent credit utilization ratio. You close one of them, thinking it will help, except now your credit utilization amount will rise about 30 percent, hurting your FICO score.

So if someone offers “closing out a credit card” as one of their credit tips, don’t be fooled. The best way to repair credit is to simply make on-time payments, enact debt management strategies to pay down loans and credit card debt and be mindful of the types of accounts you open.

Payment History – Why It’s So Important?

Of the five categories that make up a FICO score, “payment history” is the one that carries the most weight. Specifically, payment history accounts for 35 percent of your total credit score, while amounts owed (30 percent), length of credit history (15 percent), new credit (10 percent) and types of credit used (10 percent) round out the rest of what goes into your score.

But just why is payment history so important? Here’s a look:

The whole point of a credit score is to inform a lender of whether you’re a reliable borrower. And a big part of being a reliable borrower is making on-time payments. That’s the biggest thing that the “payment history” category tells a lender — whether or not on-time payments have been consistently made on things like credit cards, retail accounts and loans.
A common query many consumers have is whether a late payment here or there will harm their credit score. And the answer, in most cases, is no if your score is otherwise favorable. However, if you have regular late payments, credit repair is necessary. Luckily, in this case, it’s simple to repair credit — just make on-time payments.
What’s in the score? Specifically, when it comes to late payments, a FICO score considers not just how many late payments there are, but how late they were, how much was owed and how recently each one occurred.

Like we already noted, the good news regarding the payment history portion of the credit score is that it’s easy to correct. There’s no debt management involved, just the matter of making on-time payments. So take these credit tips from us as it pertains to your finances. Make sure your credit history is in check. It’s the biggest piece of the FICO pie.

FICO Factors: What’s in Your Credit Score?

Whether it’s getting approved for a home loan, car loan or car insurance, your credit score plays a big role. And the score that creditors check most frequently is the FICO score. Needless to say, credit is confusing to a lot of people – and if you don’t know what goes into the makeup of a credit score,
just how do you know whether you have good credit or are in need of credit repair?

With that in mind, here’s a look at the five factors that are used to determine one’s FICO score. We call it “the FICO 5”:

Payment History: Payment history accounts for 35 percent of your FICO score – the single largest category. Simply put, have you paid all your past credit accounts on time? If you have, then you’re good in this area. If you haven’t, then you’ll likely take a hit in this category and have to work to repair credit.
Amounts Owed: This factor accounts for 30 percent of your FICO score. When you borrow money, you’re given a credit limit. This factor takes a look at how close you are to using all your available credit. The closer you are, the more your score will suffer.
Credit History Length: This represents 15 percent of your FICO score. The longer your credit has been established, the better it is for you and your score.
New Credit: Ten percent of your total score, this reflects any new sources of credit you’ve opened recently, as several recently opened accounts pose a greater risk to lenders.
Types of Credit: The final 10 percent of your FICO score, this category factors in your credit cards, retail accounts, loans and every other source of credit.

As you can see, there’s a lot that goes into your FICO score, which is why it’s important to be on top of all the various categories and to practice good debt management strategies, as your credit score could determine what you can and cannot finance.