Credit Score Recovery…
Wondering how long it will take your credit score to recover from a home foreclosure or short sale? That depends on how good your credit was in the first place, says John Ulzheimer, a credit score expert who blogs on the subject for mint.com.
Somewhat depressingly, the better your credit score was before your mortgage woes started, the longer it will take you to recover. Citing data from credit reporting firm FICO, Mr. Ulzheimer said it would take roughly three years for a consumer with a 680 FICO to recover to that level after a foreclosure, compared with seven years for someone with a 780 score. That’s because high scores require “pristine” credit files, he said, while a middling 680 doesn’t.
Late mortgage payments follow the same pattern. A person with a 680 score who pays 30 days late can bounce back to that level in about six months, compared with three years for someone with a 780 score. His (somewhat obvious) advice? Don’t miss payments.
This is where we can help. Want to get back to that status from earlier? Simply contact us for information on how to get your credit life back on track.
By Cesar Marrufo
ELITE FINANCIAL, LLC
Cesar is an expert in the credit repair field, with over 10 years experience reading and analyzing credit reports. For more information or for help with your credit, visit www.elitefinancialllc.com or call (909) 570-9048
Ask the Expert: Does Opting Out of Credit Card Offers Improve Credit Scores?
September 16, 2013 by John Ulzheimer
The world of consumer credit is loaded with myths, some more stubborn to debunk than others. Credit scores are used by employers, you build credit faster by carrying credit card balances, credit scores reward you for being in debt, opting out will improve your credit scores. None of these things are actually true and it’s the last myth that I’ll address today.
What is opting out?
Today when you get home from work or school and check your mail you’ll likely find one or more credit card offers from credit card issuers. Those offers are likely of the “preapproved” variety, which means the credit card issuer has actually determined that they are willing to offer you a credit card even though you never asked for one.
The credit card issuer purchased your name, along with many others, from one of the credit reporting agencies through a process called “prescreening.” Prescreening is the process whereby the card issuer gives the credit bureau a list of criteria and wants a list of consumer names and addresses that meet that criteria.
So, for example, I might ask one of the credit bureaus to provide me with list of 1,000,000 names and addresses belonging to consumers who live in the metro Atlanta area who have VantageScore credit scores above 725, don’t have any late payments in the past 24 months, and don’t have more than $10,000 of credit card debt. This is called “selection criteria.” Of course, the credit bureaus have to tap into their credit file database in order determine who meets this criteria.
If the credit card issuer acquires your name and address using this method then they have to make you what’s referred to as a “firm offer of credit or insurance.” This is normally done by sending you a credit card offer in the mail saying that you’ve been pre-approved for some amount of credit. All of this will result in a “promotional” inquiry being posted on your credit report.
The Fair Credit Reporting Act gives consumers the ability to prevent the credit bureaus from selling their names to lenders through a process called “Opting Out.” You can do this for free at www.optoutprescreen.com. You can opt out forever or for a shorter amount of time. After a few months you’ll stop getting preapproved credit card offers in the mail.
The opting out myth
Some people suggest that you will improve your credit scores by opting out. The problem is that it’s not true. Opting out has no impact, at all, on your credit scores.
The only direct influence opting out has on your credit reports is to prevent new promotional inquiries from being added. But, promotional inquiries are of the “soft” variety and they have no impact on your credit scores anyway so preventing them doesn’t do anything for your scores.
Advantages to opting out
That certainly doesn’t mean there’s no value to opting out. You’ll certainly reduce or fully eliminate credit card offers, which means less mail to throw away or shred. And, because those credit card offers can be used by credit card fraudsters to open new cards in your name opting out can help to minimize your risk of credit card identity theft. But, that’s where the value ends.
Original article here: http://www.creditsesame.com/blog/ask-the-expert-does-opting-out-of-credit-card-offers-improve-credit-scores/
Student Loans, Credit Reports and Credit Scores
“John, I have 8 student loans on my credit reports. Can you tell me how these loans are affecting me? Will the loans hurt or help my credit scores?”
The answer to the question, “Will student loans hurt or help my credit scores” is a bit complicated and actually depends upon a variety of factors. It is equally possible for student loans to have a positive impact upon credit scores as it is for the loans to have a negative impact. The ingredient which determines how student loans affect your credit is…YOU. More specifically, the way you manage your student loans determines how they impact your credit scores. For a deeper explanation, take a look at these examples.
The FICO credit scoring model treats student loans the same way it treats installment loans. Installment loans, such as auto or mortgage loans, have fixed monthly payments for a set period of time. It is true that the amount of debt a consumer carries does factor into credit score calculation. However, FICO and other credit scoring models are not nearly as concerned with the amount of student loan debt a consumer owes as they are with the amount of credit card debt the consumer owes. A consumer can actually have a large amount of student loan debt (and other installment debt) and still be awarded stellar credit scores as long as the loans are being paid on time. In fact, if you establish a history of on-time monthly payments then your credit scores might even benefit from your student loan accounts.
Having 8 student loans may seem a bit excessive and even unbelievable to some people. Yet, it is an entirely common occurrence since student loans appear on credit reports on a disbursement by disbursement basis. If you took out 1 student loan for every semester of your undergraduate study, you would rack up 8 student loans.
Credit scoring models pay a lot of attention to how consumers pay their bills. This fact applies to all accounts which show up on credit reports – student loans included. When consumers make their student payments habitually late or when they do not pay the bills at all, they should expect some seriously negative consequences where their credit scores are concerned. Plus, if a consumer has a group of student loan accounts which are not being paid in a timely fashion the credit score damage can be multiplied even further.
Protect Your Credit – Play Defense!
Former college students are currently sharing nearly $1 trillion dollars of student loan debt according to a recent study by the Federal Reserve Bank of New York. If you currently have outstanding student loan debts here are a few tips which may help you to protect your credit scores from potential damage.
1. Don’t ignore your loans.
If you find yourself in a position where you cannot afford to pay your student loan payments, pick up the phone and give the lender(s) who carry your loans a call. You might have deferment, forbearance, forgiveness, or income based repayment options available to help you.
2. Consider consolidating.
Student loan consolidation has several potential benefits. Consolidation might increase your credit scores since only one outstanding student loan would be reporting to the credit bureaus instead of multiple accounts. Also, you might be eligible to receive a lower interest rate on your consolidation loan than you received on your original student loans. Finally, if you consolidate a large number of student loans into just one new loan and, God forbid, you experience the inability to make your student loan payment at sometime in the future then you would only have late payments show up on one account instead of multiple accounts. Don’t get me wrong, late payments on even one account can cause your credit scores some serious damage – though possibly a little less damage than late payments on multiple accounts would cause. Consolidating your student loans might just be a win-win-win situation for you to consider.
Posted By: John Ulzheimer | September 4, 2013 |
Why You Have 49 Different FICO Scores
As a consumer, you hear a lot about the importance of maintaining a good credit “score.” Most often, that means your FICO score — the score developed by the company of the same name to help lenders evaluate the creditworthiness of a potential borrower. But it probably makes more sense to talk about your credit “scores,” plural.
That’s because other outfits produce credit scores, too — and FICO itself has many different varieties of scores, depending on the type of loan you’re seeking. In fact, John Ulzheimer, a credit expert, has worked with Creditsesame.com to create a snazzy infographic (which you can click on above, and then zoom in on) showing a total of 49 different versions of your credit score under the FICO umbrella.
That’s right, more than four dozen. Why so many?
FICO created the basic formula — the general purpose FICO, if you will — that is used to crunch consumer credit data for all loan types. The credit data is collected by the three major credit bureaus (Equifax, Experian and TransUnion) and analyzed by FICO to create a single, three-digit score. So there’s three versions of the basic score, just for starters.
But FICO also has several other versions, customized for the specific type of loan in question — say, an automobile loan, a mortgage or a credit card. Each is also offered by the credit bureaus, under their own brands. And each version may have multiple releases, as FICO’s formula for crunching the data is updated. So you can see how the versions pretty quickly add up to nearly fifty.
All this can be very confusing for consumers, Mr. Ulzheimer says, who may wonder, “Why is the score I get here not the same as what they get there?”
That issue is currently under review by the Consumer Financial Protection Bureau, because consumers may pay for a credit score from various consumer Web sites but get a generic FICO or other score, which may differ from the actual score a lender is using to evaluate their creditworthiness.
For now, the main point to keep in mind, Mr. Ulzheimer says, is that the same general principal applies to keeping your scores attractive to lenders: Pay your bills on time, maintain low credit-card balances and apply for credit only when you really need it, “not to save 10 percent at the mall,” he said.
Have you paid for your credit score recently? Did you find it useful?
By ANN CARRNS
Here they are….
|Experian, FICO Risk Model V2 – Personal Finance|
|Experian FICO Risk Model V2 – Installment Loan|
|Experian, FICO Risk Model V2 – Bankcard|
|Experian, FICO Risk Model V2 – Auto|
|Experian, FICO Risk Model V2|
|Experian, FICO Risk Model V3|
|Experian, FICO Risk Model V3 – Auto|
|Experian, FICO Risk Model V3 – Personal Finance|
|Experian, FICO Risk Model V3 – Installment Loan|
|Experian, FICO Risk Model V3 – Bankcard|
|Experian, FICO Risk Model 08 – Mortgage|
|Experian, FICO Risk Model 08 – Auto|
|Experian, FICO Risk Model 08 – Bankcard|
|Experian, FICO Risk Model 08|
|Experian/FICO Advanced Risk Score 1.0|
|Experian/FICO Advanced Risk Score 2.0|
|FICO Risk Score, Classic 98|
|FICO Risk Score, Classic 98 Auto|
|FICO Risk Score, Classic 98 Personal Finance|
|FICO Risk Score, Classic 98 Installment Loan|
|FICO Risk Score, Classic 98 Bankcard|
|FICO Risk Score NextGen|
|FICO Risk Score NextGen 03|
|FICO Risk Score, Classic 08|
|FICO Risk Score, Classic 08 Auto|
|FICO Risk Score, Classic 08 Bankcard|
|FICO Risk Score, Classic 08 Mortgage|
|FICO Risk Score, Classic 04|
|FICO Risk Score, Classic 04 – Auto|
|FICO Risk Score, Classic 04 – Bankcard|
|FICO Risk Score, Classic 04 – Installment|
|FICO Risk Score, Classic 04 – Personal Finance|
|BEACON 09 Mortgage|
|BEACON 09 Bankcard|
|BEACON 09 Auto|
|BEACON 5.0 – Mortgage|
|BEACON 5.0 – Auto|
|BEACON 5.0 – Bankcard|
|BEACON 5.0 – Installment|
|BEACON 5.0 – Personal Finance|
|BEACON 96 – Auto|
|BEACON 96 – Bankcard|
|BEACON 96 – Personal Finance|
|BEACON 96 – Installment|
Trying to fix a mistake in your credit report by providing a detailed set of documents to credit bureaus could be a waste of time.
The Consumer Financial Protection Bureau, in a report released (in 2013), suggested that the three major credit-reporting firms–Equifax Inc. EFX -0.69% , TransUnion LLC UK:EXPN +1.60% and Experian PLC –may not be giving adequate consideration to information submitted by consumers disputing their credit reports.
Federal law requires credit-reporting firms to send suppliers of consumer data — including credit-card companies, banks and collection agencies — notice that includes “all relevant information” supplied by the consumer.
Do Gas Credit Cards Still Make Sense?
Gas credit cards have been around for decades and offer rewards, like regular credit cards. But do they still make sense for consumers? MarketWatch’s Jennifer Waters explores this issue on Lunch Break.
But rather than pass along documents, the industry uses a computerized coding system to describe the complaint. The big three credit-reporting firms “generally do not forward documentation that consumers submit with mailed disputes or provide a mechanism for consumers to forward supporting documents when filing disputes online or via phone,” the report said. See the full report.
For example, if a consumer has evidence that a debt has been paid off, the credit bureau may not pass along that information to his or her credit-card company or a debt collector.
Norm Magnuson, a spokesman for the Consumer Data Industry Association, which represents credit-reporting firms, said the industry’s system is adequate and handles a huge volume of complaints quickly and efficiently.
“The lenders are getting all the information they need to resolve the dispute in a timely manner,” he said.
An industry-funded study from last year that found that 95% of consumers were satisfied with the dispute-resolution process, Magnuson said. Representatives of Equifax, TransUnion and Experian either declined to comment or couldn’t be reached for comment.
The report didn’t come to any conclusions about whether the credit bureaus are out of compliance with this piece of the law.
The consumer bureau found that credit-reporting firms resolve 15% of complains on their own, passing along 85% to the financial institutions that provide reports on consumer activities, known in the industry as “data furnishers.”
Credit reports are used by lenders to evaluate potential borrowers for home loans, auto loans and credit cards. Earlier this year, the consumer bureau began overseeing the industry, and plans to evaluate whether the firms are providing accurate consumer information, handling consumer disputes appropriately and preventing fraud.
The consumer bureau’s report “sheds light on a process that’s tilted against the consumer,” said John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site.
The CFPB report also found that fewer than one in five consumers get copies of their credit report every year.
By Alan Zibel http://www.marketwatch.com/story/why-credit-bureaus-fail-to-fix-errors-2012-12-13
6 More Credit Myths Debunked
I know what you’re thinking, didn’t you already send out an article like this? Yes, I did. But this list is different. Here are 6 new Myths that are uncovered for you:
Myth #1: FICO, the company, calculates your FICO scores
In order for your FICO score, or any of your credit scores, to be calculated two things have to be married; your credit report and a scoring model. FICO, the company, does not maintain your credit reports. As such, FICO cannot calculate your FICO scores. The FICO scoring software is installed at Equifax, Experian and TransUnion. This gives the credit reporting agencies the two things needed to calculate a FICO score. That means your FICO scores are calculated and delivered to lenders by the credit bureaus.
Myth #2: The credit bureaus grant or deny credit applications
Believe it or not, this is a pretty common myth. It’s so common that Federal law requires lenders who have denied your credit application to communicate with you that the credit bureaus had nothing to do with their decision. The credit bureaus simply provide lenders with your credit reports and credit scores. That’s where their involvement with the loan approval (or denial) process ends. If you’ve been denied, it was the lender that denied you. You can plug FICO into this myth as well, as they also have nothing to do with the approval or denial process.
Myth #3: Equifax, Experian and TransUnion are credit rating agencies
These companies are legally defined as “Consumer Reporting Agencies” and more commonly referred to as credit bureaus or credit reporting agencies. Credit rating agencies are companies like Moody’s, Standard and Poor’s or Fitch Ratings. They’re the guys who assign letter grades to certain types of debt obligations. Sometimes, FICO gets lumped in with the credit bureaus and the incorrect designation of a credit rating agency.
Myth #4: Credit reports and credit scores are the same thing
This myth is so prevalent that it has lead to the most common misunderstanding relative to credit scores, which is that they’re used for employment screening. Think of credit reports as a car and credit scores as the stereo upgrade that doesn’t come standard with the car. A credit score is a product sold along with credit reports, just not to employers. The interchangeable use of the terms is improper.
Myth #5: FICO is a credit reporting agency
FICO is a lot of things, but none of those things is a credit reporting agency. The credit reporting agencies gather, maintain, and sell credit-related information to lenders, insurance companies, consumers and other parties. FICO does not have a credit file database. They’re an analytics company.
Myth #6: A charge card and a credit card are the same thing
The only thing similar between charge cards and credit cards is that they’re both made of plastic and you can buy stuff with them. A credit card allows you to roll or “revolve” a portion of your existing balance to the next month, a process that will result in the assessment of interest. A charge card is a “pay in full” product, in that you have to pay off the balance, in full, every month.
Charge cards almost always have annual fees, which help the issuer to make money in the absence of interest. Credit cards generally rely on interest and fees for their financial contribution to the issuer’s bottom line. Charge cards are not nearly as common as credit cards but they’re a pretty decent option if you want the convenience of plastic without the possibility of getting deep into debt.
By; John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling.
So you would like to take advantage of the current housing market but you don’t know where to begin? Here is a quick 7 step list I discovered that can help you get started. Happy house hunting!
1) Get your credit in as good shape as possible. Your credit score can make a big difference in your interest rate and lenders are a lot stricter than they used to be. You can start by ordering a free copy of your credit report from each of the credit bureaus at annualcreditreport.com as long as you haven’t done so in the last 12 months. One study showed that about 70% of credit reports have errors in them so check to see if there are any in yours that could be hurting your credit score and if so, be sure to have them corrected.
You can also use a site like creditkarma.com to see your credit score for free and more importantly, figure out what steps you can take to improve it. The key things are to make sure you make your debt payments on time, pay off as much of your debt as possible (except perhaps car and student loans, which tend to be relatively low interest), and be careful of closing accounts. If you have a credit card that is charging you an annual fee, see if you can convert the card into a no-fee card rather than close it.
2) Be ready with your down payment. Ideally, you would be able to put down 20% of your home’s purchase price to avoid having to pay PMI (private mortgage insurance). If you can’t put down 20%, mortgage companies will usually offer you a smaller “piggy back loan” to help bridge the gap but those loans have higher interest rates.
Don’t dip too far into your savings though. Try to keep at least 3-6 months of expenses set aside for emergencies. If you don’t have enough money available in your regular accounts, you can access up to $10k without penalties from IRAs for a first-time home purchase and your employer’s retirement plan may allow you to borrow from your retirement account with a longer time to pay off home loans. There’s always the “family and friends” route too.
3) Try to pick a mortgage with a fixed rate for the longest time that you think you’ll be keeping the home. That’s because you could see your monthly payments jump up on a variable rate mortgage when interest rates eventually start climbing. On the other hand, fixed rate mortgages have higher interest rates so it may not make sense to pay more to lock in a fixed rate for longer than you need it.
4) Choose the right loan term for your needs. A 30-yr loan has lower monthly payments and can be advantageous if you’ll make good use of the savings by investing them or paying down high interest debt. You can always make extra payments if you want to pay the loan off sooner. But if you’re honestly more likely to splurge the money you save each month, the 15-yr loan could be better since it will cost you less in interest and be a form of forced savings every month.
5) Shop around for a mortgage. Even a slightly higher rate can mean paying significantly more over the life of the loan so don’t just talk to your existing bank. Consider credit unions, which often offer lower loan rates because they’re non-profit. Some brokerage firms like Charles Schwab offer mortgages and sometimes provide discounts for people who keep a lot of money with them. You can also try Web sites like bankrate.com and eloan.com or an independent mortgage broker who can shop around from multiple mortgage companies to find the one that can offer you the best deal. You can then use this calculator to compare the loans.
6) Figure out how much home you can afford. Remember, just because the mortgage company will loan you the money doesn’t mean you should take it. There are rules of thumb like not spending more than 28% of your income on mortgage payments but every person’s situation is different. Two people may have the same income but one may need to save more for retirement or have to make large private school tuition payments for their kids. Take a look at your current saving and spending needs to see how much you can realistically afford to pay each month and don’t forget to leave some room for the potential “hidden expenses” of home ownership like utility bills, HOA fees if applicable, and repairs and maintenance.
7) Start house hunting. Once you’ve gotten pre-approved on a mortgage, work with a real estate agent experienced in the neighborhoods you’re interested in and look at homes that are within your affordable price range. Make sure you look at several places even if you fall in love with the first one you see as you may change your mind with more perspective. Finally, don’t forget to have fun. If you’ve made it this far, you’ve earned it!
4 tips to raise your credit scores
1) Check your credit reports for errors
a. Annual Credit Report.com
c. Online Websites
2) Review your credit reports with a professional
a. Credit Analysts
b. Mortgage Loan Officer
- Loan Advisers
3) Keep your CC balances below 30% of limit
b. Keep your cards active
4) Before paying any collection accounts, ask a pro
a. May re-age the account and it will show as a newer derogatory account
b. If you do negotiate, use your balance as leverage for a removal/deletion
Credit repair, done right, can do wonders for your credit report and your scores too! Here are a few tricks of the credit repair trade that will really make your scores move fast. Put them to work individually, or all at once, depending on your own needs, and watch the magic happen.
1) Open Accounts Right Now!!!
The FICO scoring model will give you bonus points for opening new accounts after a period of bad credit. It is all in the timing. Those old cards that survived the tough times are still worth something, but when it comes to credit repair FICO wants you to prove that you still have what it takes to get back in the swing of borrowing money. If your credit is crummy, secured credit cards are ideal. Small is good! Open now, pay on time, keep your balances low, and your scores may rise over 100 points in the next six months.
2) The Balance-Limit Connection
This credit repair tip is just as urgent for those opening new accounts today as it is for those managing already well seasoned revolving accounts. A little change in your balances can send your credit scores flying or diving. Have you maxed out a card lately and then checked out your scores? This is a fairly recent FICO tweak which can work for or against you. Try to use less than 30 percent of your limit for the best result.
3) Take a Look!
Have you seen you credit report lately? If not, why not??? There may be errors lurking and a simple dispute or challenge to the credit bureaus may be all it will take to get your scores back on track. Not sure how to check your report or how to dispute? Contact a professional right away. Good luck!
By Cesar Marrufo
ELITE FINANCIAL, LLC.com
Consumer Protection Through Education.
Sen. Dick Blumenthal wants explanations from the three credit rating bureaus about a New York Times report about a VIP list they allegedly keep that favors the rich and famous over everyone else.
The Connecticut Democrat wrote a letter Monday to Equifax, Experian and TransUnion about the reported separate system in which errors and disputes are resolved faster and with more attention than with other consumers, who must rely on an automated system and outsourced customer support to clear up mistakes.
“I am deeply troubled by the implication that your companies are neglecting the majority of consumers and providing preferential treatment for wealthy, famous or well-connected persons, and I ask you to confirm or deny these reports and provide more information on your dispute resolution process,” he wrote in the letter.
“An error-free credit report is vital to a consumer’s financial health, and consumers must be able to quickly resolve disputes and mistakes with the cooperation of the credit reporting bureau,” he wrote. “Every consumer deserves this cooperation, not just the rich and powerful.”
But the credit bureaus deny keeping VIP lists.
“We did respond to the senator, and to be as clear as possible, we do not have VIP lists that provides preferential treatment to anyone,” Tim Klein, a spokesman for Equifax, told FoxNews.com.
“We received the letter, and will be providing a response to Sen. Blumenthal,” Gerry Tschopp, a spokesman for Experian, said in an email to FoxNews.com. “As we’ve stated before, Experian does not have a VIP list.”
The New York Times interviewed an Arkansas resident who said she had been denied employment and credit because her filing was mixed up with a felon who had the same name and birthday, and a Louisiana consumer struggled to remove errors from her credit report that stemmed from a mix-up with a less credit-worthy person with the same name, similar address and Social Security number.
The newspaper also interviewed a number of consumer lawyers and advocates who accused the credit bureaus of lacking an incentive to improve the system because their main clients are the creditors, not consumers.
But Klein cited a new study from the Policy and Economic Research Council that showed less than 1 percent of all credit reports reviewed by the consumers prompted a dispute that resulted in a credit score correction and an increase of a credit score of 25 points or greater. It also showed that one half of one percent of all credit reports reviewed by consumers after the dispute process ended had credit scores that moved to a higher “credit risk tier” as a result of the dispute.
“We’re not perfect by any stretch, but we get it right a preponderance of the time,” he said.
Published May 17, 2011 | FoxNews.com