Online Credit Disputes – Stay Away

Having good credit is an important part of life. Without good credit, it can be difficult to do a number of things that many take for granted, such as get a job, buy a car or house, and even sign a cellphone contract. Unfortunately, even if you pay bills on time and do everything you think is necessary to maintain a good credit score, mistakes can be made (through no fault of your own) that cause your credit score to go down. Before trying to repair credit by disputing mistakes on the part financial institutions and credit agencies, make sure to follow one of the most important credit tips in the industry: never dispute a mistake on your credit score online.

What makes online credit disputes so difficult

According to numerous experts, disputing your credit score online can lead to a myriad of problems that are easily avoided by simply mailing a dispute via Certified Mail. The most significant issue that arises from disputing credit issues online is the fact that the online dispute system, known as E-OSCAR, provides little to no actual proof that a dispute has been filed, which can substantially increase the amount of time you have to spend going back and forth with a credit agency.

The other major problem that arises from the use on E-OSCAR is the fact that credit agencies are not required to inform you if they choose to reopen a case. Normally, when credit disputes are filed using Certified Mail, credit bureaus are required to inform you that they are reopening a case, which in turn allows you to file a Method of Verification (MOV). A MOV ensures that a disputed record that is deleted, is deleted permanently.

Without a MOV, a credit agency can use what is known as a “soft delete”. A soft delete removes a record for 30 days while it is “under review”. After that time, it can be placed back on your account without any notification to you. By filing through traditional Certified Mail, you can avoid this altogether by verifying at the time of the initial dispute that the deletion is permanent.

Consumer Complaints from soft deletes

There are many cases of consumer complaints due to soft deletes. Unfortunately, soft deletes are completely legal under the current regulatory system. While you cannot prevent credit agencies from using a soft delete, you can make sure you know whether they are using a hard or soft delete during your dispute review. If they are in fact using a soft delete to further review your case, you know to follow up 30 days later to ensure that the incorrect record is removed permanently. The easiest way to avoid these problems is to simply file all disputes through Certified Mail.

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Foreclosure Vs. Short Sale – News

If you’ve fallen behind on your mortgage, if your home is currently underwater or if you don’t foresee being able to continue making payments on your home, then two options you may consider are foreclosure or a short sale. While both of these can have a negative effect on your credit score, they both act differently. Here’s a closer look at both options. Foreclosure vs. Short sale is a difficult decision.

Foreclosure

Foreclosure occurs when you’ve defaulted on your mortgage loan and the bank reclaims possession of your home.

The good: Foreclosure allows you to walk away from your home, which is valuable if your current mortgage is higher than the home’s value.
The bad: Foreclosure takes a heavy toll on your credit score and will stay on a credit report for up to 7 years. It’s estimated that a score can be docked from 100 to 150 points after a foreclosure – but that’s not the worst part about it. The worst part is that you may not be eligible to purchase another home or qualify for a loan for at least 2 to 5 years, depending on your state laws.

Short sale

A short sale is an agreement with the bank that you’ll sell your home for less than what you owe on it in the event that you can no longer make payments as-is:

The good: You – and not the bank – control the sale. It’s also a more responsible way of walking away from your home and being able to qualify to buy another home immediately, in some circumstances. However, if you’ve fallen behind on payments, it may be at least 3 years before you can qualify for an FHA loan.
The bad: Your credit score will still take a hit – from 50 up to 130 points in some cases. And although credit bureaus don’t show “short sale” on a report, it may still identify that you either settled for less or paid in full for less on a report, which can jeopardize future loan opportunities.

If we were to give you a credit tip, it would be to not bite off more than you can chew when it comes to buying a home in the first place, as this reduces the chance of foreclosure and short sale. And unlike other credit repair situations where debt management or financial responsibility can go a long way toward upping your score, foreclosure and short sales can be that warning sign on your credit report for several years, making it very difficult – if not impossible – to get approved for a loan, let alone good interest rates.

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What’s Hurting My Credit Score? – Advice

The credit score of the average American is 661, which is considered “fair.” To have good credit, the score must clock in between 700 and 749 and an excellent credit score is considered anything about 750. Needless to say, the majority of Americans don’t have a great FICO score, which means that most are trying to enact debt management or credit repair strategies to boost their scores and thereby make them a more attractive consumer.

So since many Americans have unfavorable credit scores, just where are people going wrong? Here’s a look at some of the most common negatives that impact credit scores:

Late payments: Payment history accounts for 35 percent of an overall credit score. It’s the largest thing that plays into a score and it allows the lender to see whether or not you’ve paid past accounts on time. Make one late payment and it could stay on your credit report for up to 7 years and dock your score by up to 120 points. That’s a big price to pay for not getting your payment in by the due date. Here’s a credit tip – don’t be late with your payments!
- Similarly, a delinquent account is one that you haven’t paid on within 30 days from the previous due date.
Collections: When a debt goes to collections, it means that you haven’t been paying on it and it has been sold to a third-party collector. And being that one measly late payment can severely impact your credit score, just imagine how much damage a debt in collections can do. Generally speaking, the higher your score, the greater damage a debt in collections can do to your score. And it can remain on your score for 7 years since you defaulted on the payment.
High balances: Your utilization rate makes up 30% of your FICO score. The amount of your outstanding balances on your credit cards divided by the sum of your credit cards’ limit, is your utilization rate, expressed as a percentage. Your balances should never exceed 30% of your credit card limits.
Bankruptcy: Bankruptcy is often a last-ditch resort for people who have severely mismanaged their finances. Filing for either Chapter 7 or Chapter 13 can shave up to 220 points from your score. What’s more is that a Chapter 7 bankruptcy stays on your credit report for 10 years and a Chapter 13 bankruptcy for 7 years. That’s a long time to have to work – and wait – to effectively repair credit.
Foreclosure: Foreclosure is essentially when a person can no longer afford to make payments on their home any longer and it becomes the property of the bank. It can dock a good credit score up to 160 points and dock a fair credit score up to 105 points. What’s more is that this will stay on your credit report for up to 7 years, making it difficult for you to get another mortgage or qualify for any other type of loan.

As we mentioned in the open, most Americans have poor to fair credit scores. So make sure you understand what is and isn’t good behavior as it pertains to your finances so that you can work your way into the minority and qualify for the best interest rates on loans.

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Reasons for Credit Repair – Blog

If personal finance issues make you want to pull the covers over your head, it can be hard for you to know whether you’re coasting along okay or whether you need help with your credit score.

The top signs that you need credit repair:

1. You’ve been turned down for a job.

Many companies will only hire people who have good credit. They believe that good debt management skills points to a higher level of responsibility.

2. You pay more for car insurance.

Insurance companies take your credit score into account when determining your rates.

3. You were denied a car loan.

It is generally easier to get approved for an auto loan than other types of credit. Car loans are good to have, since keeping up with an installment loan over time significantly improves your credit score.

4. You lost a promotion.

Does your company do work with the federal government? These companies often require that employees over a certain level be able to qualify for security clearances. And, you can be denied clearance if you have excessive debt or a low credit score.

5. Debt collectors are calling and harassing you.

When you fail to make payments to your creditors, they end up selling your debt to a collection agency, which then can call you and request payments. The account will be reported by the three credit bureaus as a collection and will affect your ability to get any loans or open a new credit card, as well as damage your credit score.

6. You were turned down for a mortgage.

This is the big one. Homeownership is linked to greater financial stability, a feeling of psychological stability and even tax advantages. Having a good credit record is necessary to achieve this common goal.

7. You’ve been denied for a credit card.

Opening a new revolving account is not as easy as it used to be. If your credit card application was denied, you may need credit “clean-up”. The credit card company is required to let you know the reasons why your application was denied, so you can take the necessary actions to fix your credit.

8. You need to save more than most for a vacation.

No credit card means that you are at the mercy of airlines and may miss airfare sales. Rental cars and hotels hold hundreds of dollars of your money for deposits. Limited or complete lack of access to credit can make every aspect of a vacation more of a hassle.

9. Your application for an apartment was turned down.

Not only can bad credit keep you from buying a house; it can prevent you from finding a place to rent.

10. You feel trapped by a lack of access to credit.

Many everyday financial interactions are made more difficult by a lack of access to credit. But, you can learn how to repair your credit and enjoy more and better opportunities. Visit Key Credit Repair to educate yourself about credit and find helpful credit tips.

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Credit Around the World

You’re likely already familiar with how your credit score is factored and what debt management tactics you can deploy to repair credit here in the United States. But it’s worth examining credit elsewhere around the world, including how credit scores are calculated, what countries have advanced credit reporting systems as well as some of the consequences one might face abroad when a bill goes to collections.

FICO (or Something Like it)

The FICO concept isn’t just exclusive to the United States. In fact, it’s estimated that up to 20 countries use either the FICO score, or some variation of the FICO score as we know it, to judge whether or not a customer would make a worthy borrower. Using the FICO method is one of the most reliable ways to judge a good borrower, and formulas similar are used in countries such as the U.K., Thailand and Germany (where the credit reporting agency is known as SCHUFA).

Accentuating the Negative

Abroad, credit scores are calculated based on both the good and the bad when it comes to lending history. But if you live in Australia, Hong Kong or Sweden, only your negative credit history is included in your report. However, this is a bit of an unreliable credit system, because a lender is unable to accurately judge whether or not someone would make a good borrower based on the fact that they are unable to see any positive history. Questionable credit reporting methods are particularly highlighted by Sweden, which has no three digit score, just either “good” or “bad” as values.

Consumer Friendly Scoring

In the U.S. it’s usually a good idea to check your credit score and pull your credit history from time to time. After all, it’s truly the only way to institute any credit repair strategies over bad debts or poor past finance habits. But elsewhere in the world, credit reporting is made quite consumer friendly. Take Austria, for instance, where residents must opt-in before any of their personal info can be used for any purpose. In Canada, as long as it’s in writing, you can get as many free credit reports as you desire. And in Norway, every time your credit is checked, you’ll receive an e-mail that details who it was requested by and why.

Discrimination Scoring

If you really want to get an example of a poor – and racist – credit scoring system, look no further than the system that South Africa used in the 90s. It actually considered things like race – and gave black consumers a lower score than other races. That consideration has since stopped, however.

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Fix your credit – Get approved for a loan!

In today’s world, credit scores are more important than ever. Without a good credit score, it’s virtually impossible to attain a house, car or anything that requires long-term repayment. The good news is, while a good credit score is crucial, a bad score can get fixed more quickly than you might think. Here are some good credit tips for shaping up your credit score as you prepare to purchase a house.

The Big Picture

Before you can repair credit, you have to understand exactly what you’re repairing. For most people, this means fixing a spotty payment history and a high debt-to-credit-limit ratio. These two factors comprise 65 percent of your FICO score, with payment history being a slightly more important factor.

Credit Report Review

Your first step in the credit repair process is pulling your credit report and looking for errors. An estimated 80 percent of credit reports have errors, and a quarter of these errors can impact your ability to get a loan. It’s important to take note of any inaccurate information, particularly late payments that weren’t truly late. Disputing these errors and getting them removed will improve your credit score significantly.

Reducing Debt

When applying for a mortgage, the bank wants to assess your debt management skills. Carrying large credit card balances isn’t the way to show that you’re a responsible money manager. Get your balances as low as possible before beginning the mortgage application process. You’ll want to have card balances no higher than 30 percent of your credit limits.

Managing Inquiries

Every time you apply for credit, an inquiry is noted on your credit report. This normally isn’t a big deal, and counts for just 10 percent of your FICO score. That said, too many inquiries in a short period of time makes you look like you’re desperate for cash, and it might turn a bank off from lending to you. Make sure you have as few inquiries as possible as you prepare to buy a home.

Why Credit Scores Matter

You might be able to get a mortgage with a credit score of 660, but you won’t get as good a rate as someone with a score of 740. That difference could add up to thousands of dollars in finance charges over the life of the mortgage. It’s in your best interest to get your credit score in the best shape possible before you apply for a mortgage. The higher the score, the less you’ll end up paying for the house of your dreams. For additional information on how to repair your credit, please Sign Up for $0 Today.

Authorized User Accounts – How they work?

Authorized users on credit card accounts are commonly used in a variety of situations. Parents can use them for children, employers for particular employees, and couples will often set up each other as users on their credit cards. Understanding what an authorized user account means can help people determine if this option is right for them.

Setting up an Authorized User Accounts

An authorized user account means that the person can use the credit card for their own expenses. Often, the primary account holder will be able to set credit limits for a particular authorized user if they choose, but it is not required. Although the process of adding a spouse to a credit card might not differ much from adding an employee, the potential risks and benefits may differ.

What are the benefits of having an Authorized User Accounts?

Those who have become authorized users on credit cards find that the opportunity can help them boost their own credit and potentially repair credit scores. Although just being an authorized user is not enough to earn a good credit score by itself, the credit line is noted on the person’s own credit history the same way it is noted from the primary card holder. This can help establish an financial track record and give the user a leg up when it comes time to build their own credit or if they need help with credit repair.

Many users also appreciate the ability to gain experience using a credit card and having experience using plastic. In certain situations, such as an employer making employees authorized users, it can also make keeping track of the company finance easier and more straightforward. Couples can use joint cards to build their team credit scores as well.

What are the drawbacks that users should be aware of?

It is critical to ensure that any user added to the card is trustworthy and ready for the responsibility. A user who spends too much, misses payments, or otherwise mismanages the money can hurt the credit score of the primary user as well. Understanding of proper debt management is crucial. Financial difficulties are also well known for their potential to hurt relationships, so any credit card relationship should be carefully considered.

Authorized users on credit card accounts can be very convenient for a number of situations and even help people build credit scores. Like any financial decision, however, it needs to be thought through very carefully to avoid potentially damaging liability. Review the above information and speak with a professional about credit tips to determine whether or not adding or becoming an authorized user is the best decision for a particular situation.

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Bad Credit Aftermath – How Much it Can Cost You?

How Much Does A Bad Score Really Cost You?

Common sense will tell you that having a good credit score is much better than having a poor credit score, as far as loan approval and interest rates go. But do you really know how much a bad score can really cost you? You might be surprised.

Take a 30-year mortgage for example. Now take a good credit score (680-699), an excellent credit score (740+) and a poor credit score (620-639). Here’s a look at the breakdown of possible costs over the course of a hypothetical $200,000 home loan:

Excellent credit (4.025 percent): A likely monthly payment of $958, which equates to an $11,493 annual cost and a $344,798 lifetime cost.
Good credit (4.974 percent): A monthly cost of $1,070, annual cost of $12,846 and lifetime cost of $385,368.
Poor credit (5.418 percent): A monthly cost of $1,133, annual cost of $13,598 and lifetime cost of $407,950.

As you can see, having an excellent credit score can save you up to $113 per month and $40,591 over just having a “good” credit score over the course of a 30-year mortgage. And an excellent score can save you $175 per month and $63,173 over a “poor” credit score. Hence, taking measures to repair credit before financing such a significant purchase is crucial to your short- and long-term finances.

So just what are some credit tips to repair a poor score?

On-time payments
Keeping debt within 30 percent of your total credit allotment
Having a diversity of different credit
Having a lengthy credit history

As if having a favorable credit score wasn’t important enough, the above examples certainly place even more significance on the importance of credit repair and debt management if you’re in a financial bind. As the above examples show, a good credit score could mean the difference of tens of thousands of dollars over the course of a long-term loan. That’s a lot of money that you surely could put toward other purchases and a big incentive to take measures to improve your credit score today.

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Medical Collections – The Credit Score Killer

Making on-time payments, enacting a debt management strategy so that you don’t owe more than 30 percent of your total credit limit, and having a variety of different types of credit are all things that you can do to ensure a good, healthy credit score. But one common credit score killer is medical bills – and many times, your score could suffer due to a misunderstanding with your insurance or your doctor, potentially docking you big points for something that isn’t necessarily your fault. Other times, your score could suffer because you simply just can’t afford the cost.

In fact, medical bills that go to collections are treated the same way as any other type of bill that goes to collections in the FICO score formula. Analysts say that just one medical bill that has gone to collections could drop your credit score by 100 points, thereby forcing you to enact a lengthy credit repair strategy to bring the score back up over time.

So what can you do to ensure that a bill doesn’t go to collections? Here’s a look at some credit tips:

Understand your insurance: Many medical bills go to collections because people can’t afford to pay them. One way to better plan and prepare for potential medical costs is to know and understand your insurance plan. For instance, does it cover wellness visits? What’s the deductible? Will you have to pay money out-of-pocket after you meet the deductible? Knowing all these things can better help you prepare in the event of a surgical procedure or emergency rather than take a “wait and see” approach for when the bill arrives.
Go on a payment plan: Surgeries, procedures and hospital stays can all add up. And many people can’t afford to pay the total bill in full right away. Check with the hospital to see if you can go on a payment plan to make regular installments toward the bill. Many hospitals won’t charge any interest as long as the balance is paid within a year or two. Others may allow you to finance bills.
Keep records: Be sure to retain all your medical bills and check your credit report regularly to watch for inaccuracies. It’s estimated that four out of every five credit reports have errors in them, so if your report doesn’t line up with your personal records, take action to have any discrepancies removed from your report. Otherwise, you could have to repair credit for nothing.

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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.

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