Monday, March 11, 2013

As Reported by CNN Money New credit score could help millions


A new credit scoring model will potentially boost scores for many credit applicants and help establish credit for millions of people who previously had little or no credit history.   

read the full story on CNN's

Thursday, February 14, 2013

Credit report mistakes: How to protect your score

(CBS News) A new government study reveals up to 40 million Americans have mistakes on their credit reports. Ohio Attorney General Mike Dewine has opened an investigation into the credit reporting industry and insists that while the agencies have for years pinned mistakes on banks and merchants that provide them with bad information, the fault lies with the industry for what he calls clear violations of the 2003 Fair Credit Reporting Act.
Moreover, according to a recent "60 Minutes" report, when you report a mistake on your credit score, resolving that dispute is a particularly opaque process and as Steve Kroft reported, "it's extremely unlikely that anyone with the authority to resolve your dispute will ever actually see it.

Read the full story here

Wednesday, December 26, 2012

NY Times Article

Perfect 10? Never Mind That. Ask Her for Her Credit Score.
The credit score, once a little-known metric, has become a factor in dating decisions, eclipsing traditional priorities like a good job or shared interests.

Friday, December 14, 2012

How to Retain Your Credit Score When Moving

How to Retain Your Credit Score When Moving
how to retain your credit score when moving
Moving from one home to another requires a lot of planning, expenditures and time. And in a time like that it is likely that you will forget about checking your credit score. However, if left ignored, moving houses can have a bad impact on your credit score, without you even knowing it. Following are some ways how you can make sure that your credit score remains unscathed when moving houses.

1. Paying Off Bills

35% of your credit score depends on timely payments so it is imperative that due dates are met. Hence, it is important that you pay off all your bills before you move. It may seem quite obvious to you, but many people to pay off their housing association, cable or recreational bills when moving to a new place. So in case you are moving to a new neighborhood or city make sure that all your dues have been cleared so that you aren’t reminded about them through a bad credit score.

2. Do Not Cancel Accounts

So you plan on making a new beginning? A fresh start? You may be tempted to close down your previous accounts start afresh, however it can affect your credit scoring negatively. And considering 15% of your credit scored is determined by the longevity of your accounts, it is a better idea to hold on to the accounts that you already have.

3. Inquiries

10% of your credit score depends on the number of inquiries that are made about your credit score by lenders, and too many of them can drop your score up to 10 points. And it is inevitable that inquiries will be made when purchasing or renting a new home as homeowners make credit check for renters, but what you can do is try to make all those inquiries within a given time period. If all the inquiries are made say within two weeks, they will be counted as one. Also you can lessen the number of inquiries by refraining from making too many other major purchases like new furniture or car or anything that might lead to an inquiry, in the same time period.

4. Address Change

It is important that you inform the post office and your creditors about the change of address to make sure that all your bills and letters get to you in time. A good idea is to change the address even before you start moving so that you are immediately well adjusted and can pay your bills on time. Also it will protect you against having your credit information from being misused by the new tenants of your old home.

5. Minding the Credit Card Limits

You may be swayed into renovating the living room or upgrading the garden the moment you move, and including those to the expenses thou you would have incurred while moving may be a bad idea. It is important that you don’t max out your credit card limits as they can reduce your credit score. It is advisable that you use multiple credit cards than exhausting one out. Rule of thumb is to keep it under 35% of the credit limit.
Moving can be a fun experience, by checking your credit score and making efforts to retain it, it can also be a convenient and hassle-free.
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Friday, November 30, 2012

Credit Score for Students

Credit Score for Students
credit score for students
  You might be thinking of waiting until after graduation to start worrying about your finances or your life plans, however if you have a credit card or a student loan, it is about time to start worrying about maintaining a good credit score. Because the credit bureaus have started calculating your credit score, and considering most companies check credit scores prior to employment, your future depends on a good one. Hence, it is important that you understand how credit scores work and keep checking it from time to time.
Following are some factors that all college students and fresh graduates should keep in mind regarding their finances:

1. Understanding the Importance of Credit Scores

You must have heard that a stitch in time can save you a lot of time and labor, well that’s what a good credit score will do for you, just like your personal and career goals, you should make a plan to keep a good credit score too. It will not only help you get a job but will also determine whether you will be able to get a loan on your first house or a new car and the interest rate that you’d have to pay for it.
When in college you have the advantage to start with a clean slate and thus you are in a position to control what your credit score will be like once you start earning money.

2. What You Can Do

Good news is that your phone bills or retail card bills will not show on your credit score, unless you stop paying them. Even when in college make sure that you pay all your bills on time and try not to delay making those payments.  This will not only make sure that you build a good credit score, but will also help in developing the habit of making payments on time once you have to start paying the “real” bills. Procrastination of even a couple of days can end up on your credit report for years to come. Keep a reminder in your mobile phone or your planner to make sure that you don’t miss any deadlines. Also try not to exhaust your credit cards completely, even if it means one less pair of snickers this summer.

3. Keeping a Check on Credit Scores

It is important that you check your credit score from time. The 3 bureaus enable you to check your credit score once a year. Even if you feel that you haven’t done anything that might end up on your credit report, there is no harm in going through it anyway. It may well be a small mistake or an error might show up that you weren’t even aware of. So it is better that you take care of it yourself rather than being informed about it by a prospective employer.

4. After Graduation

If you are moving after graduation, make sure that you update your post office and your creditors about your new address, so that you are updated about your student loans and debts. Inform your employers about any bad debts or negative markings on your credit score, it is very likely that they have already checked, however hearing it from you will build the trust most employers are looking for. Keeping a good credit score is not a matter of choice, but an adjustment to make sure that all prospects of a better living are available to you.

Monday, November 19, 2012

Solutions to Rebuilding Your Credit

Solutions to Rebuilding Your Credit

Rebuilding your credit score can be a long process which will require timely payments and patience, a lot of patience. And regardless of many companies might tell you, they can’t improve your credit score. There is no way that they can erase your bad debts or delayed payments from your credit history. Before looking for ways to fix bad credit store,  you need to first understand how your credit score looks right now and how long it will take before it is “forgotten” by the credit bureaus.

How Credit Scores Work

Your credit score is calculated based on your payment history and your credit usage, and it will remain a factor in determining your credit score for a long time. Following chart shows how long it takes for a certain piece of credit information to be removed from the database.
Score Variables
Time on Report
Late payments on accounts that are open
5 Years
Late payments on accounts that are closed
7 years and 180 days
2 years
Chapter 7 Bankruptcy (when no debts are repaid)
10 years 
Chapter 13 Bankruptcy (when some portion of the debt is repaid)
7 years
Civil Judgments
7 years and 180 days
Paid Tax Lien
7 years
Unpaid Tax Lien
10 years

*     This table only provides an approximate duration and the time may vary in some cases and is subject to change.

How to Fix Your Credit Score

As you would have gathered, it will take a long time before a bad debt or delayed payments will be removed from your credit records. However, that does not mean that it is a lost cause. You can still fix your credit score by maintaining a good credit record and keeping a check on your payments. Following are some ways which will be helpful in getting you those much needed points quickly:

1. Review

The first thing you should do is check your credit score and review reports from all the 3 bureaus very closely. It may well be that there may be payments or errors that aren’t your doing.

2. Good Will Adjustments

The first thing you should do is make requests for adjustments to your payments history. If you are an old customer or have a good relation with your lenders then they might consider removing a late payment from your credit history. This is in no way a long term solution and the lenders might refuse if you’ve made frequent late payments.

3. Pay Credit Card Debts

So there’s no easy (read free) way to improve your credit score, you will eventually need to start paying up your debts. It is about time that you took out your credit cards and paid for that weekend in Hawaii. Note: Closing down your credit card account is not a solution, if anything it will negatively affect your current credit score.
These are three simple ways to rebuild your credit score in the short run, however you will have to maintain a “healthy” credit in order to get and retain a good credit score, and remember there are no short cuts to long term happiness and peace of mind.
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Credit Score Calculations

Credit Score Calculations
Remember Leonardo Di Caprio portraying Frank Abignale in Catch Me if you Can? Do you recall how he enters a bank and tries to charm the cashier to get a check cashed? Well those were the good days for some, all you had to do was wear a pair of spectacles, carry a briefcase and flash an innocent charming smile to assure the banker that you were the “good guy”.
However things have changed in recent years, now your credit history and past records determine whether you’d receive financing for a new car and at what interest rate you’d be getting it at.

How Credit Scores Work

Credit reports contain the history of all your financial obligations, which include your accounts, installment loans and credit card limits among other things. Credit score variables are different for all companies, however all of them have many common factors that determine how credit worthy you are.
Credit scores are measured between a score of 300 to 850, as determined by FICO. The higher your score, the lower your interest rate will be. The interest rate between a credit score of 520 and 720 can differ by around 4.36%, which can make a major difference when loaning large sums of money on long terms. 

How Credit Score is Calculated

Although FICO has not revealed the formula used for determining credit score, there are some score variables that play a major role. Primarily, score variables depend on your credit usage and payment history, but the following factors also play an important part in determining your credit score:
ü      Your average credit card limit
ü      Average age of your accounts
ü      The number of inquiries that are made about your credit score
ü      Your payment routine, i.e. the number of late payments
When broken down into percentages, the most important factor is your payment history (31%) followed by pending debts (30%), length of credit history (16%), account types (13%), and inquiries (10%).

What does Not Determine Your Credit Score

There are a number of misconceptions about credit scores and factors that determine it. Following details are not put into consideration when calculating your credit score:
o   Gender
o   Education
o   Child support, or other family obligations
o   Banking accounts
o   Race/ethnicity
o   Location
o   Salary/monthly income
o   Interest rates
Another misconception among people is that credit score starts at the highest or the lowest number, however generally credit score starts somewhere in between.

Credit Bureaus

Credit Bureaus are the ones that collect all the information from various sources in order to calculate your credit score. The 3 major bureaus that calculate your credit score are Equifax, Experian, and TransUnion. You can check your credit score once a year through these bureaus or through other third party service providers. There are also a number of websites that enable you to check your credit score for free.
Credit scores are based on mathematical calculations and not on personal preferences or judgments, hence the only way to maintain a good credit score is by assuring the lenders that you are credit worthy. And the only way you can do that is by paying all your bills and debts on time.

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