fixdaback asked:


Is investing the money for credit repair wothwhile? Are the results satisfactory from an accredited repair service company? I am looking for first hand experience and reference from someone who has used an online credit repair service.

Gregg Pennington asked:


When you apply for credit, whether for a mortgage, an auto loan, or a credit card, your credit score will determine whether or not you can secure financing, and what type of interest rate you can get. While you probably have at least some idea of how good or bad your credit is, it is important to understand your credit score and how it is calculated.

A credit score is a three digit number that ranges from 300 to 850. Each of the three major credit bureaus use this rating system that was devised by the Fair Isaac corporation - commonly called a FICO score. Your FICO score is calculated by measuring three distinct aspects of your credit.

1.A third of the score is based on your payment history. If you have defaulted on one or more loans, or been more than thirty days late making payments on your credit accounts, your credit score will be adversely affected.

2.The next portion of your credit score is determined by your credit to debt ratio. If you have a number of credit accounts close to being maxed out, or if your total debt is too great, this part of your score will suffer. Conversely, if you keep your credit balances reasonably low, your score will be higher.

3.The final part of your credit score takes three separate factors into account: the length of your credit history, the amount of credit for which you have recently applied , and the type of debt you have. Of the three, the length of your credit history holds the most weight. If you have established a long history of repaying your debts on time, you will be looked upon as less of a credit risk. Another aspect of your credit score is the number of recent applications you have. The greater the number, the lower the score. Finally, the types of credit you carry will affect your credit score. A credit card from a bank would have a more positive effect on your score than would a store credit card. Applying for credit with a finance company could label you a higher credit risk, and may be seen as a last resort for someone who could not get a bank card.

Once your score has been determined and made available to prospective lenders, it is often the only factor considered in determining your eligibility for credit and the interest rate you will receive. A higher FICO score will translate into savings when you apply for credit. A lower score may increase your interest rate which may cause you to have to borrow more money than you would have otherwise.

Also, information provided by credit reporting companies is not always accurate. You should acquire a copy of your credit report for inconsistencies and inaccurate items. If you find any questionable items on your credit report, you have the right to dispute them and possibly have them removed.

Once you understand the effect that debt and use of credit has on your credit score, you can devise a plan to make any necessary repairs to your credit. As your credit score improves, you will pay less when you borrow money, and you will find more and more lenders eager to do business with you.

Claudia D asked:


I’d like to know of anyone who has actually used Lexington Law credit repair and of their experience. I’ve gotten mixed reviews on the company, so I’d like to hear from some actual users. Was it successful? How long did it take? Any problems? How was their communication/customer service? Do you get to talk to a real lawyer ever?

Jim Kemish asked:


When did credit scoring begin?

All of your credit repair efforts are designed to improve your credit scores. There may be no more important number in your life. But where did credit scoring start? The FICO credit scoring model was created in the 1950s by two Stanford University researchers, Bill Fair and Earl Isaac. Automated FICO scores were first made available in 1989 and initially utilized by credit card issuers. But credit scores really became part of all of our lives in 1995 when Fannie Mae and Freddie Mac, the mortgage giants, asked lenders to incorporate the use of FICO credit scores in their approval decisions. The rest is history. Fair Isaac Corp. trades on the New York Stock Exchange under the Symbol FIC, and reported revenues of over 800 million dollars in 2007.

Why are lenders scores different from the ones I bought online?

Lenders purchase FICO scores from the three credit bureaus. But with the exception of Equifax, the credit bureaus do not sell FICO scores to consumers. The scores sold by TransUnion and Experian are their own proprietary scores. These scores may vary significantly from your FICO scores. This can be very confusing for anyone in a credit repair program who wishes to monitor their credit scores. If you are working on credit repair and want relevant lender FICO scores you can purchase them at myfico.com.

Why do I have three credit scores?

The three major credit bureaus compile data on consumers, and sell credit reports and a wide variety of marketing information based on this data. The three credit bureaus compete with each other, but because lenders have adopted the practice of minimizing risk by reviewing all three bureaus, the three bureaus are perceived as being equally important. Each bureau licenses the use of the FICO scoring software from Fair Isaac and Company and applies it to their database to produce a FICO score. All three credit bureaus must be addressed in your credit repair effort.

Why are my three credit scores different?

There are three reasons for the differences in your scores. First, creditors do not necessarily report to all three bureaus – if you examine your reports you will probably notice many differences in the content. Second, the timing of the reporting of information by each bureau is different – if you used a credit card recently your new balance is likely to be reported by each bureau at different times. And third, Fair Isaac modifies the software from time to time, and the bureaus do not all implement the new version concurrently. It is pertinent to your credit repair effort to know that when correcting reporting errors the information on each bureau may be unique.

I’ve heard that there are two types of inquiries, what are they?

There are two types of inquiries. Hard inquiries will affect your credit scores, and occur when you apply for new credit. Soft inquiries will not affect your credit score, and are triggered most often by three different events; first, when you request your own credit report; second, when prospective lenders review your credit before offering you pre-approved credit; and lastly, when a current creditor conducts a periodic review of an existing account. Because inquiries have such a small impact on your scores, they are often addressed last in any credit repair effort.

How much will inquiries hurt my credit scores?

Soft inquiries, as mentioned, have no impact on your credit score. Hard inquiries are likely to lower your scores between 1 point and 5 points. Credit repair efforts revolve around your credit scores, and it is useful to know that the FICO scoring model considers everything on your report all together. The affect of an inquiry, like other information on your report, will vary depending on everything else in your file. The more credit you have, and the more established it is, the less of an impact a single inquiry will have.

How can I increase my scores?

The categories of data that will impact your scores are your payment history, your account balances, the length of your credit history, the balance of credit types, and the amount of new credit you have. Try to not make any late payments from this point forward. You should also attempt to pay your revolving balances down. And if you don’t have any open accounts, start the rebuilding process right away by opening two secured credit cards; your credit repair effort cannot succeed without open accounts, so take action today.

How much do my credit scores really matter?

Your credit repair effort should focus on improving your credit scores. Every loan you apply for will be underwritten based on your credit scores. Insurance companies are not allowed to consider your credit scores when pricing life and health insurance, but property insurers will consider your credit scores and may even deny you coverage if they don’t like what they see. In addition, prospective employers and landlords are likely to check your credit. Make sure your scores are where they should be when you need them. If you have credit issues, begin your credit repair effort immediately.

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

dr asked:


I would like to learn how to do credit repair. Are there any certification programs? Any suggestions would be highly appreciated. Thank you.

Cornie Herring asked:


Have you check your credit score? Do you know how high your credit score is? Many people only pay attention to their credit score when they need it for any credit application. If you just realize you have low credit score at the time you need it for a loan or credit application, it might not help in getting the best rate because the best interest rate of any loan or credit always offer to the person with high credit score and time is needed to rebuild your low credit score. Hence, it’s better to pay attention to your credit score now and put your efforts to improve it if you found it low.

The three major credit bureaus: Equifax, Experian and TransUnion collect data from your lenders about your history of borrowing and paying back credit. The information is then being compiled into your credit reports. The company like FICO will then takes the information from your credits and applied a trade-secret formula to produce one score ranging from 300 to 850 based on your credit history. The more excellent of your credit history, the higher credit score you will get.

Top tier scores are range from 760 to 850. People who fall into the top tier scores are expected to get the lower interest rates as they are categorized as the lowest risk group by the lenders and this group has more choices to select their favorite loan package with more attractive offers. In general, a score about 500 to520 is the lowest acceptance level for many lenders to approve any loan or mortgage application. If your credit score is fall in this low acceptance range, you can be expected to be quoted significantly higher interest rates and may be offered with fewer varieties of loan offers. Any score below 500 has very low chances to be approved for any credit unless you go for secured loan.

Example below will give you a better picture on how the credit score will affect the interest rates of credit:

760 to 850 tier: Interest rate = 5.78%

700 to 759 tier: Interest rate = 6.00%

660 to 699 tier: Interest rate = 6.30%

620 to 659 tier: Interest rate = 7.10%

580 to 619 tier: Interest rate = 8.58%

500 to 579 tier: Interest rate = 9.50%

Let assume if you credit score is top tier (760 to 850) and you care being approved for $100,000 mortgage with 30 years term; the total interest for this $100,000 mortgage over 30 years is $110,772. Whereas, if your credit score is at bottom tier (500 to 579), the same $100,000 mortgage, the total interest over 30 years will be $202,709. You are paying about $92,000 extra interest just because your credit score is at bottom tier as compare to if you credit score is at top tier. That’s why you need to get the highest possible credit score so that you can save more money in term of interest for any credit you apply for.

Even your credit score is not as bad as fall into the bottom tier, as long as your credit score is not in the top tier, it worth for you to work it out to improve your credit score so that your credit score is fall into the 760 to 850 range so that you have more options to get the best offers whenever you need to apply for a credit.

Summary

Lenders measure your credit history based on credit score, the higher credit score the lower risk as seen by the lenders and you are at a better position to get better credit offers. Hence, it worth for you to improve your credit score if you r score is not fall into the top tier range.

Floyd Dorrance asked:


When you think about “credit score”, what do you think of first? Which aspects of “credit score” are important, which are essential, and which ones can you take or leave? You be the judge.

How do credit bureaus compute one’s credit scores?

A lot of credit reporting bureaus or agencies gathers information on the subject of the debtor’s credit history or files from reliable private and public sources. They also collect data from the creditors who extended the loan to the debtor.

Accordingly, the information is clustered into five sets or categories with the corresponding percentages which reflect the importance of each category in the final computation of scores, namely: (1) Owed Amount – 30%, (2) History of Payments – 30%, (3) Duration of Credit Record – 15%, (4) Nature or Kinds of Credit Currently in Use – 10%, and lastly (5) Latest Credit Inquiries – 10%.

Generally, these credit bureaus calculate the debtor’s credit score using a three figure number which range from 300 up to 850. The higher the credit score, the better chance of acquiring low interest rates for the loan being applied for and a better opening for wealth accumulation.

The industry of credit-scoring has been generating different opinions and wide-spread reactions to the public. The consumers fear that credit-based rating or scoring will pose a negative impact or unjust rating to them and will affect their economic standing and other financial transactions.

Some credit bureaus justify their purpose of gathering information and making credit rating or scoring. For them, their work is to help lending businesses formulate efficient economic decisions.

The information about “credit score” presented here will do one of two things: either it will reinforce what you know about “credit score” or it will teach you something new. Both are good outcomes.

Others create a distinction between the credit-based scores of insurance companies which predicts the loss of propensity and the credit scores which is simply to predict the worthiness of a certain person to pay.

A distinctive company should develop its own credit-base rating or scoring algorithm to serve better the consumers. Here are some of the strategies adopted in credit scoring:

1. Forming a Credit Assistance Group/Team – they are the quick response group that will assist consumers calling through toll-free numbers. The public would certainly like to know the effect of credit records to their application of loans, mortgage, employment and/or insurance transactions.

Also included to the team’s responsibility is the making of reports on the personal credit insurance of the consumers. This report will show the consumer’s variable score and the comparison with the aggregate scores

In addition, the team will consider previous credit records and the possible effect of extraordinary events which resulted to low scoring.

They will help the consumers by directing or referring them to the right people who will be of much help to them in taking good care of their credit problems. They will also help in correcting errors in the credit records of the concerned consumer.

2. Revising a New Method in Credit Scoring- this simplified method uses nine variables instead of the usual sixteen. Their algorithm will compute the credit scores by designating or assigning 100 as a foundation score. From these base score, they either add or minus making the range of score from 50 up to 250. The lower the score, the more desirable it is as credit scores.

3. For those consumers with no credit records or whose credit histories are lacking, they will create a program which will specifically cater to these groups of creditors to somehow uplift their credit ratings.

With the continued research and study on the needs of the consumers, these credit scoring bureaus will truly make a difference to the lending and/or insurance world.

Now you can understand why there’s a growing interest in “credit score”. When people start looking for more information about “credit score”, you’ll be in a position to meet their needs.

RateSupermarket.ca asked:


 

Ask any Canadian who has gone through the home buying process what score is more important – last night’s NHL results or their Beacon Score – and they’ll most likely respond, “the Beacon Score of course!”. The reason being that a Beacon Score is one of the credit scores that lender’s use to measure a borrowers’ risk based on a valuation of their financial history including details on credit cards, charge cards, loans, mortgages and overall payment history.

 

 

 

In Canada, 3 private company’s generate almost all the credit scores – Equifax, Trans Union and Experian. Though all 3 bureaus offer FICO (Fair Isaac Credit Organization) scores using the formula developed by Fair and Isaac, each has its own brand name - Equifax calls it the Beacon Credit Score, Trans Union has the FICO score and Experian uses the Fair, Isaac Risk Model.

 

 

 

A high credit score is an important factor in applying and securing the mortgage and mortgage rate of your choice. It also makes it easier for an individual to get credit cards and loans on favorable terms, sometimes even with instant approvals. The higher your score, the lower the interest rate! The difference between a good and bad score can increase the cost of a loan by 3% or more.

 

 

 

Equifax is the most popular credit score used by lenders and results range from 300 to 900. The break-up is as follows:

 

 

 

35% of the total score is based on payment history

 

 

30% is the amount owed and the available credit

 

 

15% is for length of credit history

 

 

10% is for types of credit used

 

 

10% is for search and acquisition of new credit and inquiries

 

 

 

A common misperception is that all inquiries will negatively impact your score instantly. The reality is that this may happen but its not a given and depends on your overall credit profile. The first inquiry can result in a drop of 5 to 20 points on the first mortgage inquiry, and will usually have a larger impact on the score for consumers with limited credit history and on consumers with previous late payments, but it’s different in every case.

 

 

 

Factors that affect your credit score

 

1. You have a short credit history

 

 

Age of your credit on revolving or non-revolving accounts also affects your credit score. Revolving accounts are credit cards such as Visa, MasterCard, or retail store card that allow you to make a minimum monthly payment and “revolve” the remainder of their balance over to the next month.

Non-revolving accounts include cards such as American Express and Diners Club and must be paid off in full each month.

 

 

 

Research shows that consumers with longer credit histories have better repayment risk than those with shorter credit histories. Also, consumers who frequently open new accounts have greater repayment risk than those who do not.

 

 

 

If you can maintain low balances and make sure your payments are on time, your score should improve as your revolving credit history ages.

 

 

2. You’ve been looking for credit in the past year

 

 

If you’ve been recently been seeking credit, this is evident on your credit file based on the number of inquiries in the past 12 months. Research shows that consumers who are seeking new credit accounts are riskier than consumers who are not seeking credit.

 

 

 

There are both credit and non-credit inquiries on the report and the score only considers those related to credit applications. Inquiries such as your bank reviewing your account or you requesting a copy of your own report are not considered.

 

 

 

The scores can identify “rate shopping” so that one credit search leading to multiple inquiries being reported is usually only counted as a single inquiry. For most consumers, a few inquiries on your credit file has a limited impact on FICO scores and the best advice is to only apply for credit when you need it.

 

 

3. Not paying off your loans

 

If you have installment loans and owe money on them, this does not mean you are a high-risk borrower. Paying down these installment loans is very positive as it shows that you are willing and able to manage and repay debt, and a successful repayment history is good for your credit rating.

 

 

 

One measurement is to compare outstanding loan balances against the original loan amounts. If you took out a $1,000 line of credit 1 year ago and still owe $925, this shows that you may be having trouble paying off the debt. Generally, the closer the loans are to being fully paid off, the better the score. This metric has limited influence on the FICO score.

 

 

 

Paying off loans on a timely basis reflects well on your credit score, but if you really want to improve it, try to pay the loans, (especially non-mortgage debt) as quickly possible.

 

 

4. Non-mortgage debt is too high

 

Consumers with larger credit amounts have a greater future repayment risk than those who owe less, resulting in the score measuring how much non-mortgage related debt you have.

 

 

 

The total outstanding balance on your last credit card statement is generally the amount that will show in your credit bureau report. Even if you pay these off in full each month, your credit bureau report may show the last billing statement balance.

 

 

 

Paying off your debts and maintaining low balances will help to improve your credit score. Consolidating or moving your debt into one account will usually not, however, raise your score, since the same amount is still owed.

 

 

 

Bankruptcy on the credit report is a borrower’s worst nightmare, as it stays on record for almost 10 years and reduces your score by 200 points or more.

 

 

Top tips to improve your credit score

 

1. Review your credit report at least once a year

2. Contact your creditors or the credit reporting agency to have errors on your credit profile corrected

3. Apply for credit only when you need it

4. Keep balances below 50% on your credit cards

5. Pay off non-mortgage debt on time as quickly as possible