Credit Inquiries – What’s The Big Deal?

May 23, 2016 by · 1 Comment 

How Credit Inquiries Impact Your FICO Score

It’s no secret that FICO scores and other credit risk scores consider credit inquiries when calculating your credit scores. A credit inquiry, if you are not familiar with it, is a record of who pulled your credit report and on what date.

If you want to bone up on inquiries you can do so here. I wrote that article for Mint a couple of years ago and the content is still accurate today.

When it comes to credit applications, many consumers are worried that by applying for credit they might lower their scores. That is certainly a possibility. Credit inquiries can lower your FICO scores. Notice I used the word “can” and not the word “will.”

The True Impact of an Inquiry

Before you choose to not apply for whatever it is you’re applying for, consider the fact that inquiries have a marginal, at best, impact on your credit scores.

Further, just because an inquiry causes your score to go down it may not cause it to go down enough to change any lender’s mind.  Going from FICO 790 to FICO 786 because of new inquiries is likely going to be an irrelevant change when it comes to your credit application.

You’ll also want to keep in mind that the majority of credit applications result in one new inquiry on one of your three credit reports.

Applying for a new credit card doesn’t mean all three of your credit reports are being accessed. Only one is going to be pulled so the new inquiry will only appear on that particular credit report. That means your FICO scores at the other two credit bureaus are not impacted at all.

The only exception to this rule is a mortgage application where the lender or broker will likely pull all three of your credit reports.

The Grand Scheme

Something else to keep in mind…credit inquiries really aren’t terribly important in the grand scheme of things. Inquiries account for up to 10% of the points in your FICO scores. When it comes to pieces of the FICO score pie, it’s the smallest piece. The age of your credit report is more important than your inquiries.

FICO just released some data quantifying the true impact of inquiries to their scores. 57% of consumers are getting the maximum number of points from the inquiry category, which means inquiries are not lowering their scores at all. Inquiries are one of the top four reasons your FICO scores aren’t higher only 11% of the time.

And finally, only 4% of consumers lose more than 20 points in their FICO score because of inquiries. According to Frederic Huynh, one of FICO’s credit score scientists, “The bottom line is that I would not characterize inquiries as being a very important score factor relative to other predictors.”

Bigger Fish to Fry

If you’re concerned about your FICO scores then there are certainly bigger fish to fry than inquires. Negative information and paying your bills on time makes up a 35% piece of the pie. The various debt related measurements account for 30%. How long you’ve had credit is worth 15%. And, the diversity of account types accounts for 10% of the score points.

Keep in mind that when you pull your own credit report through sites like www.annualcreditreport.com, the inquiry has no impact on your scores. And, if you subscribe to a credit monitoring service or choose to purchase your credit reports through any of the retail websites, those inquiries also do not impact your scores.

By John Ulzheimer for Mint.Com

 

mint.com/blog/credit/how-credit-inquiries-impact-your-fico-score-052012

Why credit scores are different

May 20, 2016 by · 1 Comment 

 

 

 

 

 

 

 

 

Many consumers go beyond getting their free annual credit report from the nationwide credit reporting agencies, Equifax, Experian and TransUnion. These consumers pay for monthly subscriptions to a credit monitoring service with the goal of knowing their credit score at any point in time and receiving alerts when someone uses their personal information or accesses their credit history. It takes many people by surprise when they purchase credit scores just before applying for credit only to find the lender’s credit score disclosure does not match. Why is that the case, and what can you do?

What Credit Scores Tell Consumers and Lenders
Credit monitoring services and nationwide credit reporting agencies make money by selling credit scores to consumers, lenders and other businesses that use credit scores for decision-making. You, as a buyer, borrower or consumer, can buy educational credit scores from a credit monitoring service. Educational credit scores help you prepare to apply for loans, manage your debts and eliminate fraud or identity theft. Mortgage lenders, auto loan companies, credit card providers, insurance companies, landlords and employers buy credit scores from credit reporting agencies. Credit scores help them determine if you will pay your bill on time, in full, every month; predict if and when you might fall delinquent on your accounts; or evaluate if and when you are likely to default on your credit obligations. Whatever they’re being used for, credit scores should be based on the same information for both lender and customer, so why are scores from different sources so different? Two reasons credit scores differ are discrepancies in reporting methods and different scoring models.

Issues with Reporting Methods
Common discrepancies in reporting methods include:

  • Consistency – not all data furnishers give information to all credit reporting agencies.
  • Timing – data furnishers may provide the same information to all agencies but at different time schedules.
  • Accuracy – changing personal information, i.e. names or addresses, has to be matched to the correct credit file.
  • Privacy – Credit reporting agencies do not cross-share details on inquiries and information with each other.

Lenders and other creditors can choose what information to report, when to report it and which agencies to report to. Some lenders report monthly to all three agencies. Other creditors, like collection agencies, may report quarterly or only when there is activity on your account. Some agencies only report to a single credit reporting agency. A one-week difference in reporting information to the agencies could make a difference in your score from each one. Since reporting agencies do not cross share information with each other, the report and score you buy may not contain the same information that the lender report and score contains.

Scoring Models
Each credit reporting or monitoring agency uses a different method to calculate your score. They base these calculations on complex mathematics, statistical or algorithmic models. Scoring models are proprietary systems and are protected by trademarks, patents and copyrights.

There are three types of credit scores that credit providers purchase:

  • Generic scores – predict general payment performance
  • Industry scores – predict performance on specific type of credit
  • Custom scores – predict performance by company’s customer base

Generic credit scores are used by credit monitoring services to educate you, the consumer. You can use a credit monitoring service to learn how to get your score from what it is today to where you need it to be in the future. You can also use this service find out how late payments, opening new accounts or paying off debts may change your scores over time. Again, these are educational items and there is no guarantee you will achieve a certain score at any time.
Industry credit scores tell, for example, car lenders how you have paid your car loan, but that score may be different from a mortgage or credit card score. If you have had an automobile repossession, your auto industry score may be low in comparison to your mortgage industry score if you have never had mortgage delinquencies. Lenders may have their own in-house system to calculate a custom score based on their specific credit products and customer base. These scores often rank you in comparison to other customers and may work more like a grading curve than a general purpose credit score.

Take an Active Role in Providing Your Own Credit Information
You cannot control what credit scores you or a lender will get at any time, but you can know what information is in your credit file and keep it up to date. Make sure your name, address, birth date, Social Security number and employment information are current and correct. If you have a common name make sure other people’s information is not in your credit report. If you have received collection agency notices, check for reporting with the original creditor. Duplicate items can affect your credit score. When you correct or dispute an item, make sure you do it with all three bureaus, Equifax, Experian and TransUnion.

The Bottom Line
Finally, educate yourself about the different types of credit scores, credit reporting agencies and credit monitoring services in the market. Visit their websites to learn about their scores and services. Here is a list of providers most often used by consumers and industry.

CreditXpert Score Affinion www.privacyguard.com www.identitysecure.com
Experian PLUS Score Experian www.experian.com www.freecreditscore.com www.freecreditreport.com www.familysecure.com
Equifax Credit Score Equifax www.equifax.com
FICO Score EquifaxFICO www.equifax.com www.myfico.com
VantageScore TransUnionVertrue www.transunion.com www.truecredit.com www.privacymatters.com
www.freescore.com
www.creditdiagnosis.com
www.creditadapter.com

Read more @:sfgatedotcom

 

 

How to Read a Credit Report

May 18, 2016 by · Leave a Comment 

Read a Report

Once you’ve obtained a copy of your credit report, you’ll be able to see what your creditors are saying about you. There’s just one problem — credit reports can be a little confusing. Never fear! Elite Financial, LLC is here to help. In the following paragraphs you’ll find a step-by-step explanation of how to read and interpret each section of your credit report.

I.D. Section

Here you’ll find identifying information like your:

  • name
  • current address
  • social security number
  • date of birth
  • spouse’s name (if applicable)

Easy, right? But don’t just skim over this section. Read all the entries to make sure everything is correct. One bad piece of information and the credit history listed on your report could be wrong.

Credit History Section

This is the meat of the report. It contains a list of your open and paid credit accounts and indicates any late payments reported by your creditors. Although it may seem a little tedious, it’s essential that you read through this section very thoroughly. If you find any information that is incorrect or accounts that don’t belong to you, you’ll need to submit a dispute letter to the credit-reporting agency.

The basic format for the credit history section is as follows:

  • Company Name – identifies the company that is reporting the information.
  • Account Number – lists your account number with the company.
  • Whose Account- Indicates who is responsible for the account and the type of participation you have with the account. Abbreviations may vary depending on the reporting agency but here are some of the most common:
    • I – Individual
    • U – Undesignated
    • J – Joint
    • A – Authorized User
    • M – Maker
    • T – Terminated
    • C – Co-maker/Co-signer
    • S – Shared

 

  • Date Opened – This is the month and year you opened the account with the credit grantor.
  • Months Reviewed – Lists the number of months the account history has been reported.
  • Last Activity – Indicates the date of the last activity on the account. This may be the date of your last payment or last charge.
  • High Credit – Represents the highest amount charged or the credit limit. If the account is an installment loan, the original loan amount will be listed.
  • Terms – For installment loans, the number of installments may be listed or the amount of the monthly payments. For revolving accounts, this column is often left blank.
  • Balance – Indicates the amount owed on the account at the time it was reported.
  • Past Due – This column lists any amount past due at the time the information was reported.
  • Status- A combination of letters and numbers are used to indicate the type of account of the timeliness of payment.Abbreviations for the type of account are as follows:
    • O – Open
    • R – Revolving
    • I – Installment
    • Abbreviations for Timeliness of Payment varies among agencies. Numbers are used to represent how current you are in your payments. Current or paid as agreed is usually represented by 0 or 1. Larger numbers (up to 9) indicate that an account is past due.
  • Date Reported – Indicates the last time information on this account was updated by your creditor.

Collection Accounts Section

If you’ve had any accounts referred to collection agencies in the last seven years, this is where they will be reported. The name of the collection agency will be listed along with the amount you owe and, in some cases, their contact information. If a collection is listed on your report that doesn’t look familiar to you, contact the credit bureau and submit a dispute letter.

For your own piece of mind, you may also want to contact the collection agency (Or have Elite do it for you) to determine the nature of the account. Here’s why.

  • You may find out that the collection account is NOT yours. Perhaps it belongs to someone whose name or social security number is very similar to yours. If this is the case, ask the collection agency to acknowledge this fact in writing. They should send a copy of the letter to you AND the credit reporting agency so that the mistaken information can be cleared from your report.
  • You may find out that the collection account IS yours. If so, it is in your best interest to determine the accuracy of the amount of the collection account and make arrangements to satisfy your obligation as quickly as possible. Once the collection account has been paid, you should request a letter from the collection agency to this effect. Again, make sure the credit reporting agency gets a copy of the letter so that they can list the account as paid.

 

Courthouse Records Section

This section may also be referred to as Public Records. Here you’ll find a listing of public record items (obtained from local, state and federal courts) that reflect your history of meeting financial obligations. These include:

  • Bankruptcy records
  • Tax liens
  • Judgments
  • Collection accounts
  • Overdue child support (in some states)

Look closely at all the information listed here. If anything is mistaken, contact the credit bureau and submit a dispute letter.

Additional Information

This section consists primarily of former addresses and past employers as reported by your creditors.

Inquiry Section

Contains a list of the businesses that have received your credit report in the last 24 months. If you find the names of businesses that sound unfamiliar, you should find out who they are and why they’re looking at your credit! The credit-reporting agency may be able to help you with contact information. Remember, only companies that have received your written authorization should be able to check your credit history.

Time information is retained

The length of time that information remains in your file varies.

  • Credit and collection accounts will be reported for 7 years from the date of the last activity with the original creditor.
  • If you’ve filed a Chapter 7 or Chapter 11 bankruptcy, this information will be reported for 10 years from the date filed.
  • All other courthouse records will be reported for 7 years from date filed.

As always, contact our office for more information. 909-570-9048

Mapping the Path to Your Credit Report

May 3, 2016 by · Leave a Comment 

 

Wonder how your credit report is created? Sometimes it’s best not to know how the sausage is made, but in this case some extra knowledge may be enlightening.

John Ulzheimer, a credit expert, worked with the Web site Credit Sesame to create a graphic map showing how various types of information make their way — or not — into your credit report.

In most cases, Mr. Ulzheimer said,  the credit bureaus — like Equifax, Experian and Transunion — receive information from institutions where you have accounts, like credit card issuers or home loans or student loan lenders. In industry lingo, these are known as “trade” or “tradeline” accounts, he said.

Those accounts make up the bulk of the information in your credit report. Institutions provide the data under agreement with the bureaus, in exchange for access to credit files so they can evaluate the creditworthiness of applicants. Institutions aren’t legally required to report credit information — but if they don’t, they lose the benefit of having access to credit reports.

When credit bureaus get customer data, he said, they generally audit it before posting it to your credit file, to help avoid errors and disputes. A batch of data with an unusually high proportion of delinquencies, for instance, might be sent back for double-checking.

When lenders seek your credit report in response to an application for a credit card or a loan, it shows up as a “hard” inquiry. Too many such inquiries may cause your credit score, which is based on information in your credit report, to dip.

Some inquiries don’t affect your score, however. They include requests made as a result of applying for insurance or for service from a utility company, Mr. Ulzheimer said, and requests you make yourself for a copy of your credit report.

Some public records, like bankruptcy filings or federal tax liens, usually appear on your credit reports because the credit bureaus have electronic access to federal courts through the Pacer document system. But civil judgments filed with state and county courts may or may not show up on your report, since not all of those courts make such information available electronically. Credit bureaus may be able to find the information through database services, but its appearance in credit files is generally less consistent than legal information generated by federal courts. (In other words,  you may get lucky.)

Have you ever had a legal judgment appear on your credit report? What impact did it have?

By ANN CARRNS

For Credit Sesame

 

Why Do Insurance Companies Use Credit Reports and Scores?

May 2, 2016 by · 4 Comments 

credit scores

Section 604 of the Fair Credit Reporting Act says that the credit reporting agencies, Equifax (EFX), Experian (EXPN) and TransUnion, may furnish reports to any company that intends to use that information for the purpose of underwriting insurance. So, at the Federal level, the use of credit reports for underwriting insurance is perfectly legal and many of them do so. The real question is, why do they do it?

Insurance companies have the same issues lenders have: understanding the risk of doing business with certain consumers. It’s not necessarily the risk of being paid or not being paid for their services (premiums). It’s more so the risk of providing a policy for someone who is more likely to file claims and thus be a less profitable customer. It’s all about the money.

The primary difference between banking and insurance is that insurance policies are all secured, essentially. If you don’t pay your premiums they’ll cut you off, which could lead to you losing your home (it’s called a non-monetary default) or you getting arrested for driving without insurance. Determining whether or not you’ll pay your premiums is not the primary reason some of them pull your credit reports and credit scores.

The primary reason is to determine if they even want to do business with you and/or under what terms. Despite what many believe, how you manage your credit is very predictive of what kind of insurance customer you’ll be. It’s predictive not only of your likelihood of filing claims but also predictive of how profitable you’ll be. If it weren’t, insurance companies wouldn’t spend the money buying millions of credit reports and scores each year.

They’re Not The Same Credit Scores

Much like the financial services environment, the insurance environment relies heavily on credit scores. This isn’t anything new. However, the type of score they’re using is not the same type of score banks and other financial services companies use. In fact, they’re very different.

The scores used by insurance companies are called Insurance Credit Bureau Scores or Insurance Risk Credit Scores. They are developed by a variety of companies, including FICO and LexisNexis.  LexisNexis develops the LexisNexis Attract Score, which is very commonly used by insurance companies.

Insurance scores consider credit information and/or previous insurance claim information. So, if you filed an auto claim or a homeowner’s claim it can be considered in your insurance score and it can result in a lower score. And if you’re assuming the presence of claims means that you’re a less profitable insurance customer, well, you’d be right. Yes, it’s all about the money.

But They’re The Same Credit Reports

While the scores used by insurance companies are different, the reports they use are the same as the reports used by financial services companies.  The reason: all credit reports originate from the same three places; Equifax, Experian and TransUnion. Point being, there are no secret credit reports that insurance companies use to set your premiums.

Insurance Inquiries Don’t Hurt Your Credit Scores

Enough bad news. When you apply for insurance, the insurance company may or may not access your credit reports and scores. There is no guarantee that they will, in fact, pull your credit reports. But, it’s a safe bet.

If the insurance company does choose to access your credit report and score, there will an inquiry posted to the credit file.  It will clearly be identified as being from your insurance company.  And, more importantly, it will systemically be coded as coming from an insurance company.  This is good news because insurance related inquiries are not counted in your credit scores.

You will be able to see them, but no other entity will be able to see them.  And, credit-scoring systems don’t not consider insurance-related inquiries so they’ll never lower your credit scores.

I’ll end on that high note.

By John Ulzheimer here

http://www.mint.com/blog/how-to/insurance-credit-score-03072011/

Fix My Credit

April 28, 2016 by · Leave a Comment 

Life After BK

 

Looking to a fresh start for the new year? Want to take advantage of the historically low rates? Maybe you need to buy a car this year? What ever it is… Look no further! We are the credit repair company for you! We service the entire United States. Our core help is local, how local? Yucaipa, Redlands, Moreno Valley, Highland, Beaumont, Banning, San Bernardino, The High Desert, The Low Desert, Mountain Cities. We have a strong presence in Riverside, CA and Rancho Cucamonga as well. All it takes is a single phone call, email or find us on Facebook for more information.

 

Yucaipa, Redlands, Moreno Valley, Highland, Beaumont, Banning, San Bernardino, The High Desert, The Low Desert, Mountain Cities. We have a strong presence in Riverside, CA and Rancho Cucamonga as well. All it takes is a single phone call, email or find us on Facebook for more information.

Fontana, Rialto, Bloomington, Colton, Grand Terrace, Etiwanda, Ontario, Loma Linda, Rubidoux

How to Delete and Remove Tax Liens

April 27, 2016 by · Leave a Comment 

Here is ANOTHER happy camper! We get to see results like this ALL the time and it is very rewarding. Here is a great example…

Our client signs up for our services in July and within 60 days we are able to get the IRS to “Withdraw” (Meaning DELETE) 4 tax liens…1 of which is reporting to the credit bureaus.

Would you like to see results like this for yourself?

 

What are you waiting for? Call us today!

Amazing results

Does Opting Out of Credit Card Offers Improve Credit Scores?

April 25, 2016 by · Leave a Comment 

opt out

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/

Effective Credit Report Repair Tips

April 22, 2016 by · Leave a Comment 

 

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.

What determines your credit score?

April 1, 2016 by · 1 Comment 

FICO Scores are calculated from a wide variety of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages reflect how important each of the categories is in determining your score. These percentages are based on the importance of the five categories for the general population. The importance of these categories may vary for particular groups – for example, people who have not been using credit long might find less importance on amounts owed and greater importance on payment history. Paying your bills on time and paying down account balances are the top two factors that can help or hurt your credit score regardless of who you are and what your credit situation is! Here’s a breakdown of how your credit score is calculated:

• 10 % Types of Credit Used
• 10% New Credit
• 15% Length of Credit History
• 30% Amounts Owed
• 35% Payment History

Knowing and more importantly understanding these figures can help a great amount towards getting your credit score back on track. Follow us on Twitter and Facebook.