Archive for July, 2008
Wednesday, July 23rd, 2008
With identity theft becoming the biggest crime ever, identity thieves have figured who that the young and elderly are easy targets. These two types are easy victims because they typically are not checking there credit and they are not buying anything credit. With this going on it only makes sense to check your child or elderly family members credit reports often.
You have to remember the identity thieves are getting smarter and smarter with whom to go after. After all this is their profession. Current statistics show that less than 33% of the US population checks their credit report, and when they do there may be some unexpected surprises.
With all the banks going out of business banking will never be the same. No one wants to repeat what is currently taking place. So with your credit worthiness being very important, the last thing you want is love one dealing with is bad credit because of identity theft. I would allocate at least 30.00 per quarter to check you child’s or parents credit reports. You can also check their credit report once a year at www.annualcreditreport.com, just be advised you don’t get your fico scores there. You will need to pay for them. So if you want to know there credit scores with each credit bureaus, you may consider a website that offers a 3-1 credit report with all 3 credit scores.
Having this piece of mind is really worth it. There are lots of skeptical people out there about his whole matter. They don’t do anything until it’s too late. If you are still not convinced check the FTC website. They discuss it everywhere since this problem is on epidemic proportions.
CreditScoreQuick.com
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Wednesday, July 23rd, 2008
Q:
Hello,
I have run into credit problems during the last 2 years. Once the economy in the real estate industry went bad, I had to let all my credit cards go. My credit report is ruined now along with my once good credit score. I have starting settling on all my credit cards which everyone has been eager to do. What I need to do now is re-establish my credit again since everything went to collection. What credit card do you recommend I apply for? Can I even get a credit card with my credit scores the way they are now?
Bob Lutz
A:
Hi Bob,
Sorry to hear about the real estate affecting your credit report. You are not the only one that has felt the affects of what has gone on in Real Estate. Since you are settling on your debt currently your credit score will eventually go up. Make sure that you get letters from these creditors stating that you have settled on all your debts. I just thought I would mention this. In order to get a credit card, you will more than likely need to apply for a secured credit card it does not sound like Credit Card Company will extend un-secured credit to you for while with all the recent credit card collections. Go here and select the Orchard Bank credit card. This is a low fee secured credit card. Also under the creditscorequick.com/reward_cards site there is a button for bad credit credit cards. You might also select one more within that link. You really need a couple new cards to get your credit in the right direction again.
CreditScoreQuick.com
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Tuesday, July 22nd, 2008
You know that the best plan is to protect your credit and keep your credit score high from the start of your financial life, but perhaps it’s too late for that. Perhaps your credit is already in sad shape, and you’re trying to come up with a good plan to repair it.
You can do it yourself, but you may be thinking that it will be faster and easier if you let an expert do it – an expert such as a Credit Repair Company. You may be right, simply because they know the process. But before you choose one, you should realize that not all such companies are honest. So talk to a few and ask questions before you choose.
The first red flag that should send you running the other direction is a promise to remove all negative information from your credit file. This cannot be done, and anyone who promises to do it is telling an outright lie.
What they, or you, actually can do is remove any inaccurate information found on your credit report. The first step, of course, is to get a copy of that credit report and read it thoroughly. Then each credit reporting company must be contacted with a formal request to re investigate and correct the mistakes.
Another red flag is a request for money up front. The Credit Repair Organizations Act says that Credit Repair Organizations are not allowed to ask you for any money until everything they promised has been done. In other words, they only get paid for results, not promises.
Some unethical Credit Repair Companies will actually advise you not to contact the reporting agencies themselves. This is a scare tactic designed to push you into using their service, and is completely unethical.
Before you begin interviewing Credit Repair Companies, familiarize yourself with the Credit Repair Organizations Act. Until you do, here’s a brief rundown on what those companies must do:
· Provide you with payment terms for their services
· Inform you of all fees and a final total amount due
· Give you a detailed description in writing of everything they plan to do
· Give you a timeline in which the process will be completed
· Provide all guarantees in writing
· Provide their company name and address in the Contract.
· Provide you with a copy of the Consumer Credit file Rights Under State and Federal Law
· Wait 3 days after you have signed a contract before working on your credit – during which time you may cancel the contract, owing nothing.
Before you sign that contract, read it thoroughly and make sure you understand and agree to each of its provisions. Only then should you take the next step.
CreditScoreQuick.com
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Tuesday, July 22nd, 2008
Your lender rattles off the term as if everyone knew exactly what FICO meant. But most of us don’t even know what the letters stand for.
The first part is simple: The Fair Isaac Corporation. Sounds mysterious, doesn’t it? What the heck is a Fair Isaac? Nothing. It just happens to be the names of the men who started the company.
In 1956, engineer Bill fair and Mathematician Earl Isaac joined forces to create what was originally a consulting and decision management service. Then in 1981 they devised a system for scoring the amount of risk associated with making certain loans and investments, and the FICO score was born.
The score is generated by statistically analyzing an individual’s credit history. Among other things, this scoring system takes into account:
· Bill paying history
· Debt to income ratio
· Debt to available credit ratio
· Length of time a person has had and used credit
· Existence of bank accounts
· Number of recent credit inquiries
Each factor in your financial makeup is given a “weight” toward your final score, which is a calculated risk factor, based on the past performance of others whose financial history is similar to yours. Through this score, lenders are shown the statistical likelihood that you will pay your debts. Then they determine under what conditions and at what rate of interest they will lend to you.
If your score is 720 or higher, you’ll have an easy time getting a loan. If your score is under 600, you’ll be considered a poor risk and if you can get a loan, it will be at a higher rate of interest.
FICO has become a giant in the American world of finance. In addition to providing credit scoring, FICO provides consulting and management services to over 200 international retailers, 99 of the top 100 U.S. banks, and over 100 international telecommunications companies.
Headquartered in Minneapolis, Minnesota, FICO has offices on 5 continents, employs over 3,500 people, and turns a revenue of over $800 Million every year. FICO is not associated with the government, but like Equifax, Experian, and TransUnion, is a publicly traded company.
You should always be aware of your credit score, so that you can make adjustments and take steps to keep it high. You can buy the report directly from FICO, or you can take advantage of a credit report offer from one of many online providers.
CreditScoreQuick.com
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Monday, July 21st, 2008
Credit scores are the talk of town now. Obviously the higher your credit score the better. As rule of thumb a credit score around 720 or above is considered excellent credit. Some lenders have there own internal credit score requirements for certain loan types. Some lenders have a minimum credit score requirement to even get approved.
In most cases a 720 middle credit score will get you just about any type of loan. This score will also get you the best rates and terms normally. Some banks might give a little better rate if you credit score is 740 and above. But if your have a 720 fico score I would not sweat it. That type of score is considered low risk to most creditors.
I hear people all the time thinking that if there credit score is in the 800’s they will get a better deal. This is simply not true. Typically if your credit score 720 and above regardless of your score you will get the same rate and terms as someone with a 720 credit score.
I am not saying that having a credit score above a 720 is a bad thing, but just don’t sweat it if your credit score around a 720 or so.
CreditScoreQuick.com
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Sunday, July 20th, 2008
 With all the drama in the lending industry, you can still get a mortgage with low credit scores. Yes, credit scores are a big determining factor in whether you will get approved for a mortgage, but your credit scores don’t have to be all that great. The mortgage loan I am talking about is a FHA loan. FHA loans are loans that are insured by the government. For years FHA did not have a credit score requirement, and until now they require a minimum of a 300 credit score. This may sound crazy but that is the lowest credit score they will finance with all the new mortgage insurance guidelines. Nether less, typically when you have credit scores that low you have too many recent issues to get a lender to approve you anyways.
There is a market on Wall Street called the secondary market which the buying of mortgage paper takes place. Typically this paper is sold in bulk called mortgage backed securities. The investors that buy this paper may have their own internal restrictions before buying loans. These restrictions might be far stricter than what FHA requires to insure a FHA mortgage loan.
Currently in today’s market there is a minimum credit score requirement of 580. There is also changes going on within banks where they are requiring a middle credit score of 620. The reason for this requirement is because people who have bought homes below that credit score threshold have a history of foreclosing on their homes. So the investors tighten up on what type of FHA mortgage paper they will buy.
Regardless of whether the credit score requirement is 580 or 620, those types of credit scores are still considered low and a high credit risk according the Fair Isaac’s scoring model. So yes you can still currently get a mortgage down to a middle credit score of 580. You will pay higher interest rates with that score, but you will get a 30 yr fixed mortgage.
CreditScoreQuick.com
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Sunday, July 20th, 2008
Surely our credit card companies have learned from extending credit to people in general. Extending credit to adults vs. extending credit to kids is there any difference? I would assume with the way credit reports look these days, there is not much difference. Adults are failing to pay back credit card debt just like our youngsters. Is it because of a lack of education, have we failed in this area? Once you get a credit card whether you are a young adult or older should you charge a vacation on it? Is it ok to buy a TV, stereo, and furniture if they are offering 12 months no payments and no interest on credit? These are some questions being asked everywhere. I think the banking industry missed something by offering got ahead and get now and pay later. If you are young and have not been taught about credit cards you can get in trouble with all these sales pitches real quick.
If you are on your way to college, and get offered student credit cards should you accept them? I personally believe that you need to start building your credit once you hit 17. That does not mean you get full access to your credit cards. Parents need to teach there kids about proper credit card management. If you go out and charge something on your credit cards you need to be prepared to pay it off that month, no exceptions. If you charge something on your credit cards and can’t pay it off that month you are living beyond your means.
With all the changes in how Fair Isaac calculates credit scores now, if you are young and just starting out there are two ways to establish credit.
· Secured Credit Cards
· Student Credit Cards
If you decide to go to college it will be pretty easy to get a student credit card. This is a great way to start the credit building process on your own. If you are not going to college, then secured credit cards is the other option. Secured Credit Cards do require a deposit from you, but it will get the credit building process going for you. Once you have a good 12 month payment history you will start getting all kinds of pre-approved credit card offers. Remember this and don’t forget, “Don’t charge more on your credit card than you can afford to pay off that same month.” If you spend carelessly on your credit cards you will find yourself in debt real quick and debt is like a dark cloud hanging over your head.
I personally believe there needs to be a credit education course in our schools now, to better educate everyone about the consequences of mismanagement of money. Id you don’t learn how to manage your money properly you will find your self either filing bankruptcy or debt consolidation at a early age. These types of situations will ruin your credit reports and credit scores.
Having credit is a fact of life and everyone needs to be aware of the affects of credit card debt.
CreditScoreQuick.com
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Sunday, July 20th, 2008
Perhaps. It depends upon your immediate plans. If you’re getting ready to buy a house or a car, or if you need another credit card, then no, you definitely should not. But if you have no impending need to apply for credit, and you worry about identity theft, then it could be a good plan for you.
Many older consumers are good candidates for this. They’re at an age where they aren’t likely to want a new house or a new car – at least not any time soon. Generally they have several credit cards, many that they aren’t using, which gives them excellent credit. And, sad as it is, elders are often the target for identity fraud.
But first, what does “freezing your credit report” mean? Simply stated, it means that no one, not even you, can access your credit report.
This move helps prevent identity theft because thieves trying to use your credit will run up against a brick wall. When a would-be creditor tries to run a check, they’ll be denied. And when a creditor can’t find out if you’re a smart money manager or not, they’ll deny the credit.
The down side is that you’ll have to pay $10 to each of the three credit reporting agencies: Equifax, Experian, and Trans Union. If you have a spouse, you’ll also have to pay $10 each for your spouse. You’ll also have to fill out paperwork.
However, you can get a “free freeze” if you’ve already become a victim of identity theft. You’ll have to send a copy of the police report in lieu of money.
Because the credit bureaus fought for 4 years to prevent Congress from passing a bill allowing individuals to freeze their reports, they aren’t making it easy for you. You’ll have to mail certified letters, present utility bills to prove you are who you are and you live where you live, and give other personal information.
Later, when you want to purchase a house or a car on credit, you’ll have to go through a reverse process to “thaw” your reports. You’ll pay the $10 per person per credit bureau over again. That’s the second “down side” to freezing your credit report.
Only you can decide if this is the right move for you. But anyone who has gone through the hassle of putting their lives back together after a brush with identity theft would probably tell you that paying those “freeze and thaw” fees is well worth it.
CreditScoreQuick.com
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Saturday, July 19th, 2008
 As new graduates embark into the world of independent living, most are ill prepared to deal with their own finances. It’s a shame that “Money Handling” isn’t a required course in all High Schools and Colleges, because starting off on the right foot can lead to a much more pleasant life than starting off wrong.
When you have a good credit score, lenders see you as a low-risk person. As a result, they’ll offer you lower interest rates, lower minimum payments, less paperwork, and more borrowing options. Poor scores have the opposite effect.
In fact, with a bad credit score you could be denied jobs, car loans, mortgage loans, insurance, or even rental housing. If you can get insurance, with a poor credit score you’re apt to pay rates that run more than twice as high as they would be if your score was good. And if you can get loans, you’ll pay 4 or 5 times as much interest as you would with a good score.
Creating a good financial reputation (credit score) isn’t difficult, but it does require a little discipline. And it does take time, so start early. The longer your record of responsible money management, the easier your life will be.
This means saying “no” to most of the credit card offers that come your way, and working hard never to use over 50% of the credit available to you. It also means paying each of those bills by the due date, and paying a bit more than the minimum payment. Strive to keep your non-mortgage debt down to 15% of your income, even when it means delaying the purchase of a new toy or a classy addition to your wardrobe.
One good way to make sure you pay your bills on time every time is to create a chart that shows each bill and the date it’s due. One caution: don’t assume that the due dates will be the same each month. Read each bill when it comes in and adjust the payment date accordingly.
Budget your payments and adjust your discretionary spending accordingly – so that you’re never in a position to make a late payment. Even if that means skipping Saturday night out.
Next, begin to build your net worth. Check in to automatic savings, deducted from your paycheck before you even see it. Small amounts add up, and they will raise your credit score. In fact, having both a checking and a savings account will earn you a score 4 times higher in that category than having a checking account alone.
If automatic savings aren’t available, discipline yourself to make that deposit from each and every check.
Lastly, be sure to check your credit score often – so if there’s a mistake you can get it corrected quickly!
Posted in credit cards, free credit score reports | 1 Comment »
Saturday, July 19th, 2008
Q:
Hi Mike,
I have some questions about leases with apartment complexes. My husband and I are in a lease currently that is up in 5 months. We just ran across an opportunity on a house that we cannot let go. The apartment complex will not let us out of our lease; they said we would have to pay almost $7,000 in fees to break the lease. We have excellent credit and fill like this is absurd. I told them they could easily rent it out again. My question is if I let the lease go and not pay the money will it go on our credit report. I don’t want anything to affect our good credit history. My husband and I have credit scores in the 700’s according the lender that has approved us. Any suggesting would be greatly appreciated.
Tanya Riddle
A:
Hi Tanya,
I personally think apartment complexes can be a thorn in your side. But on the flip side they need some kind of commitment from people as well. I do though completely understand your situation. If your break your lease, two things will happen. First the rest of the lease plus fees will be reported on your credit report. Also when you start the loan process the underwriter will need to verify good rental history, usually for 12 months. The apartment complex will state that you are breaking a lease. So my advice would be either pay it off, or finish out your lease. Also in the long run you will pay for it, and so will your good credit scores.
CreditScoreQuick.com
CreditScoreQuick.com
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Disclaimer: This information has been compiled and provided by CreditScoreQuick.com as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.
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