How to Fix Your Credit – Credit Repair 101

650.

That’s your credit score. It’s not horrible, especially considering that the FICO score ranges from 300 to 850. But since it falls into the general “fair” category, it certainly isn’t prestigious as a score of 750, which is considered “excellent.” With this score, it wouldn’t be unusual to have to pay a higher interest rate than you would with a better score. Naturally, you want to repair credit, but how?

Here’s a look at some pointers on how to improve a poor credit score:

On-time payment: Pay your bills on time! Even bills that are a day or two late can have a big impact on your credit score. If you need to, set up reminders or automatic payments.
Check your report: Be sure to keep an eye on your credit report. Look out for errors – you’d be surprised at how often they occur. In fact, it’s estimated that up to 80 percent of all credit reports contain some type of error. If you find any errors, dispute them to help improve your score.
Reduce debts: Come up with a payment plan to pay down the debt on major accounts. Focus on paying off the high-interest accounts first. With credit cards, try to keep the balance within 30 percent of your overall credit limit. This is key to credit repair.
Credit cards: Don’t close unused cards and don’t open any new cards as a means of increasing your score or raising your credit limit, respectively.
Do not apply for too many credit loans: When you apply for credit loans or get a new credit card, it automatically generates a hard inquiry on the credit report. Typically, these hard inquiries show up on your credit report for 2 years and can create a negative impact, pulling down your credit score. This is because too many hard inquiries can give creditors an impression that you are a risky borrower.
Questions may arise over your creditworthiness – Why do you need a new credit? Does that a sign of your financial instability? These are some red flags zones for lenders, which you should keep in mind when considering how to fix your credit score.
Dispute Inaccuracies on Your Credit Report: Inaccurate information, errors and negative items on your credit report can significantly pull down your credit score. When you worry about “how can I fix my credit score,” it is important to check credit reports from all three major bureaus – TransUnion, Experian and Equifax – and verify that all information listed on your reports is accurate and correct. For any error or discrepancy, dispute the same and get it removed to fix your credit score.

And most importantly of all, use common sense. Don’t move debt around – pay it off. Manage credit cards responsibly and know the basics about your credit score and what can make it go down and up. If you feel like you’re really in over your head, consider consulting with a credit counselor who can help address your challenges for how to fix your credit score.

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FICO vs “Other” Credit Score

When you first start learning about your credit ratings, the terminology can be confusing. What is a FICO score? Is it the same as a credit score? Read on to learn a bit more about credit scores and how they’re derived:

Your FICO Score

Your FICO score is a three digit number between 300 and 850. A higher score is better. It started selling its scoring system to businesses in the late 1950s. It is based on reports from Experian, Equifax and Transunion, the three major credit reporting bureaus. These bureaus keep track of credit lines, debts and your payment history.

This score is used by 90% of financial institutions when determining your credit-worthiness when you are seeking a car loan, mortgage, credit card or other credit.

Other Types of Credit Scores

FICO, however, is not the only credit score out there. Each of the three major credit bureaus have their own scoring systems. Equifax offers ScorePower, a branded version of the a credit score, as well as their own Equifax Credit Score. Experian offers a score they call the PLUSScore. The three credit bureaus also collectively offer the VantageScore, which is intended to be a competitor to FICO. While FICO is the most commonly used score, banks and other institutions will also often consult one of the above, as well, when making credit decisions.

There are also a number of credit scores offered now that do not use credit reporting data. Scorelogix offers the JSS Credit Score, which assesses credit risk based on job history, income and the impact of the economy. L2C uses a potential borrower’s history of utility payments to determine credit risk. Because the FICO score only shows how well someone has done in the past, many banks are complementing these scores with alternative credit scores to predict whether a borrower will be able to continue to make on-time payments.

Things That Affect Your Score

All of the credit scoring companies take into account the same factors when determining your score. These include:

the length of your credit history
current debt
your payment history
the types of credit you use
how recently you looked for new credit

Each of the credit scoring companies weight these items differently by a few percentage points. Because of this, your credit score will vary by institution.

How to Get Your Credit Scores

All consumers in the US are entitled to free credit reports from all three bureaus once a year. However, you are not guaranteed free access to your FICO and other credit scores. The company has partnered with credit card companies to offer free monthly FICO scores on credit card statements. You can also get your VantageScore free from CreditKarma. By using these tools, you can make better decisions about what sorts of credit you qualify for and pick the best instruments for you.

FICO & Vantage Scores – Different Systems

Different Systems, Different Scores

Those three little digits that control so many of your financial opportunities. Your credit score can be pulled when you apply for a job, shop for insurance, during the home purchase process and in many other circumstances. But, it might surprise you to learn that there are actually a number of different agencies that create credit scores, and your scores will vary depending on which one is used. Some financial institutions even have their own internal credit scores that they use in place of independent ones.

Some of the most common credit scores used to determine your credit worthiness:

FICO

The FICO score is the one that people are most familiar with. It uses information from the three major credit bureaus to assign a three digit score that estimates credit risk. The score uses a number of weighted factors that include payment history, age of the accounts, ratio of available credit to debt, types of credit used and how recently you’ve searched for new credit. Your FICO score might vary depending on which credit bureau’s records are pulled to estimate your score.

Vantage Score

This credit score was created through a joint effort between Experian, Equifax and TransUnion. The advantage of the VantageScore is that your score is the the same no matter which credit bureau’s information is pulled to calculate it. The score can range from 501 to 990 and also comes with a letter grade. It has not been adopted by many creditors and is currently only used for about 6% of credit score pulls.

PLUS Score

This score was created by Experian to give consumers an easy to understand their credit health. It is not used by lenders; instead, it is intended as a consumer tool. The scoring range goes between 330 and 830, with a higher score indicating lower credit risk. Since this is not the score that creditors use when considering credit-worthiness, do not be surprised if your PLUS Score is different from the score that your bank says that you have.

TransUnion New Account Credit Score

This credit score is available for free from financial monitoring site Credit Karma. (As an aside: Credit Karma is a great resource for those undergoing credit repair. They allow you to check your credit score in real time and also to test what affect different actions will have using their credit score simulator.) The TransUnion New Account score is used by many lenders to decide how risky it is to extend credit to you. This score ranges from 300 to 850. It is based on information from TransUnion. It is made up of a number of factors that include the age of your accounts, our payment history and other factors.

Auto and Home Insurance Scores

These scores are used by the insurance industry to determine risk of a claim if you are insured by them. The results can affect the rates that you are extended when you shop for a policy. The scores range from 150 to 950. While the use credit scores for insurance is controversial, industry members defend the policy because of a correlation between credit scores and insurance risk.

Why Your Credit Score Matters – Tips

Prior credit mishaps make many people gun shy; it’s understandable to want to live plastic-free if you have had trouble managing credit in the past. There are those who espouse the merits of a cash-only existence, and they have a lot of arguments that are sound. But, there are also many things that they miss. You may be surprised to learn that, even though you may never need or want a credit card, your credit score still has a huge impact on your life. A few ways a bad credit score can hurt you:

Why Your Credit Score Matters

While you definitely can get insurance with bad credit, it will cost you more. According to Insure.com, bad credit can cost you up to 10% extra in car insurance premiums. Over a period of years, this can add up to thousands of dollars. When you raise your credit score, this frees up cash every month while providing you with the same level of coverage you had before.

Higher Deposits

Having bad or no credit means having a lot more of your cash tied up in deposits for services. Without good credit and a history of paying utility bills on time, getting electricity or water turned on at your place can cost you the equivalent of two months worth of bills. When you rent a car with a debit card instead of a credit card, you could be required to tie up hundreds of dollars of your own money during your trip. You may even be required to put down a deposit for a cell phone with some providers.

Losing Out on Job Opportunities

In these unstable financial times, more and more employers are checking applicants credit scores when making hiring decisions. Many believe that a good credit score is a sign of a more stable and conscientious worker. Whether that holds true or not, the belief itself can keep you from getting the job you want.

Escaping from Renting

A home purchase is generally seen as one of the best ways to build stability. When you rent, your cash disappears down a hole every month; when you own your own home, part of what you spend each month goes back in your own pocket in the form of home equity. And, owning a home can make retirement much easier since you’ll either have a paid-off place or saved up cash to build your lifestyle.

But, buying a home is almost impossible without a good credit score. Those with poor credit usually have to come up with much larger down payments if they are approved for a loan at all. And, the interest rates that are available to someone with less than sterling credit are higher, meaning tens of thousands of dollars down the drain over the years.

Having a good credit score is about much more than access to credit cards. It can affect your opportunities and your quality of life in dozens of different ways. If your score has taken a hit because of mistakes in the past, credit repair can help you fix it and improve your chances in life.

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Who We Are – Welcome to Key Credit Repair

Who We Are: Bad credit is not a permanent situation. With the help of our certified consultants we will show you the proper steps needed to improve your scores, remove in-accuracies and reduce your debt load.

At Key Credit, we offer professional services custom tailored to your specific situation. Call our credit consultants today for your free, no-obligation consultation. The consultation is completely FREE of charge. If you don’t have a credit report we can order one for you.

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Fico vs. Fako – Credit Tips

“What is my real credit score? Really!”

10.24.2014 Key Credit Repair

This is a very common subject we cover and one of the most confusing thing in the credit industry. What are my real scores? How are they really calculated? Well, let me tell you. It’s more complicated then you might think. With the introduction of the Vantage score by transunion and the credit plus score by experian it just become a little bit more complicated.

Client: “I pulled my credit report online and the score my loan officer pulled up was completely different?”

Yes, there are multiple credit scoring formulas. The industry standard remains FICO but consumers are no longer given access to all 3 FICO scores (experian, equifax & transunion).

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Remember, if you are in the market for a mortgage or any other loan product you can always review the details of your report by going to www.annualcreditreport.com but remember, only your lender can access all 3 fico scores. Start the process early so if you find that your FICO scores are too low you can quickly work on getting things up to par. It is truly never too early. The process of purchasing a home could take months and in some cases years. It is much better to be prepared early then trying to scramble to fix your credit after you’ve found a home.

Understanding FICO Scores For a Mortgage

Obtain a mortgage loan and you’ll soon come to be familiar with FICO scores. Below you will find a guide on the infamous FICO racking up procedure. This is the primary scoring formula used by fannie and freddie mac, the goverment agencies that insure and underwrite 80% of the mortgages in the United States.

FICO ratings are simply an algebraic portrayal of your credit document. Credit rating documents are just a recording of your possessions and financial obligations. Credit card equilibriums, for example, are a financial obligation that shows up on your credit history record, as do late repayments, bounced checks and more. Credit, obviously, is a substantial consideration in the mortgage loan process.

A “credit score” is a figure that stands for an overall evaluation of exactly how you handle credit rating and also the danger degree associated with offering you a lot more credit rating, to wit, a home loan. The funding underwriter will evaluate your credit rating guide for products such as settlement record on financial obligations, financial obligation balances and also sorts of credit rating you currently have. A summary of this information is stood for by an amount called you “FICO score.”.

FICO.

You may be shocked to discover that “FICO” does not mean any credit-related terms. Rather, it represents Exhibition, Isaac and Company. This company produced the algebraic formula that creates the much loved or disliked FICO credit scores. The FICO rating assigned to you determines whether you love or hate the formula.

FICO credit scores been available in a variety of three figure numbers. The most affordable FICO credit score you can get is 350. The highest FICO score is 850, a score for which lenders will bow at your feet. The higher your score, the much better your credit situation and the most likely a banking is to supply you with a mortgage loan.

Lots of people do not have excellent credit. To this end, we discover lots of people have FICO scores varying from the low 600s to the high 700s. Mortgage applications typically are not turned down due to a couple of late repayments.

You should always attempt to pre-qualify for a mortgage financing if you’re considering purchasing a residence. Getting a reading of your FICO credit score should be among the initial steps.

FICO credit scores are merely an algebraic portrayal of your credit rating record. The FICO score designated to you establishes whether you despise the formula or enjoy.

The greatest FICO credit score is 850, a score for which bankers will bow at your feet. To this end, we find many individuals have FICO scores ranging from the low 600s to the high 700s.

For more information and a breakdown of how FICO scores work and how they can affect your mortgage approval you can contact our office or fill out the form below to Sign Up for $0 at a later time.

Nikitas Tsoukalis, President

Key Credit Repair

info@keycreditrepair.com

Credit Repair Company

Tag: FICO Score