Credit Repair services » Fico Credit Score

What Is A Good Credit Score?

admin — Fri, 30 Apr 2010 02:01:00 +0000

If you have ever gone shopping for a new car or made an attempt to purchase a new home then you are probably familiar with your credit score. Even if you haven’t made any type of purchase that required you to obtain a loan or credit due to the amount of money involved you’ve probably still seen or heard the words credit score mentioned on the television or in a business or financial article. The reason for this is because our financial well being in today’s complicated credit/loan society revolves around that very powerful three digit number known as our credit score.

There are many ways to explain what exactly our credit score is, but frankly trying to sort out the scientific and mental calculations involved only serves to give me one big giant financial headache. The main point to remember here is that the credit score determines an individual consumer’s credit worthiness as seen in the eyes of the three main credit score companies or bureaus as they are sometimes called. The score is based on a combination of a consumer’s current credit situation and their previous credit history with many additional mitigating factors.

The three main credit bureaus are Trans Union, Equifax and Experian. Each company has developed (with the Fair Isaacs Company) their own unique method to determine your FICO (credit) score. Don’t be alarmed by this because although each credit bureau has their own method for determining your credit score the numbers remain standardized across all three companies. For instance a 700 with Trans Union is equal to a 700 with Equifax and Experian.

So what exactly constitutes a good credit score? In order to determine that we first need to know the scoring parameters that makes up the scoring scale. As previously mentioned your credit score is influenced by a variety of factors such as outstanding debt, your credit history, the types of credit you current have or use and your payment history. These factors when analyzed form a score that can run anywhere from a low of 375 to a high of 830 or 900 depending on which expert you ask. These numbers generally serve as a guideline that a credit lender can then use to incorporate into their own credit rules that are tailored to their company’s in-house credit program. However generally speaking a credit score higher then 650 has the potential to be considered good credit in most cases. The national average for the FICO credit score varies. I’ve seen it as high as 723 and as low as 676. With that said a consumer with a credit score higher then 700 is considered excellent, a credit score between 601 – 699 is decent and anything less then 600 could probably use a financial makeover in order to raise the credit score.

Keep in mind that these categories could fluctuate depending on the national average and also remember these numbers just represent a guideline for lenders to use when determining your credit worthiness based on the FICO credit score. It’s their in-house line of credit rules and regulations that will ultimately decide if you have a high enough credit score to obtain financing at the most favorable terms offered by their company. Once thing is for sure the higher the credit score number the easier it is to receive credit and the more favorable the repayment terms are as far as interest rates go.

By: Tim Gorman

Credit Repair Shocking Insights

admin — Sat, 27 Feb 2010 14:02:21 +0000

Credit Repair and Credit Scores

Credit repair is on everyone’s mind these days. And credit scores are for sale everywhere. There is only one problem. None of these advertised credit scores are the same as the credit scores that lenders use when making credit decisions. Whoa. That’s right. People spend huge amounts of money to buy credit scores which they mistakenly believe are relevant to their life. What the heck is the story? You want to know? Okay. I’ll tell you!

Lenders Use FICO Scores

Lenders use a type of credit score called the FICO score. FICO stands for Fair Isaac Corporation, the creator of this important score. The credit bureaus gather consumer credit data and run their data through the FICO credit score software to produce the scores that lenders use to make decisions.

Avoid Knockoff Scores

If you are starting a credit repair project or plan to get a loan in the near future and want to know where you stand you should purchase your FICO scores. But if you buy your scores from one of the credit bureaus websites you will get the bureaus own proprietary scores. And you will be no wiser than you were before because these knockoff scores can easily be 100 points different from your FICO scores; deceptive for your loan information, and useless for benchmarking your credit repair.

It’s About Money Honey

Alas, the credit bureaus realized they could make more money by creating their own version of a credit score and selling it to the public. If they sold genuine FICO scores to consumers they would have to pay fees to Fair Isaac. Lenders demand FICO scores; it’s a simple fact, they would never settle for less. Consumers on the other hand seem to be clueless. But there is a reason that consumers are clueless, the credit bureaus don’t offer any transparency, just a sales pitch.

Credit Repair and the Right Stuff

It’s all about your FICO scores. If you are going to benchmark your credit repair effort or plan to get a loan these are the only scores that matter. And you can get them online at the website for Fair Isaac Corporation, MyFico.com. The cost is about $50 for all three scores. Now are your ready to hear how these important scores work? Here is a mixture of the information published by Fair Isaac and some practical credit repair tips from yours truly, and I do know a bit about this, so listen up.

Major Credit Repair Weight

Fair Isaac is happy to tell you that the major part of your credit score is based on two categories. These are your payment history, weighing in at a hefty 35% of your score, and your account balances, tipping the scale at 30% of your total score. This is a bare bones fact, and much useful credit repair info is left unsaid, so I guess I’ll say it. If you care about your credit scores you need to focus on your revolving balances.

Revolving Account Bombs

Revolving balances are the lynchpin of your credit scores, and hence your credit repair effort. You can have a decade of perfect credit under your belt. You may have paid off a dozen cars and made every payment on time, but if you run up your credit card balances to the max and then check your credit scores you are in for a rude awakening. Maxed out credit cards will devastate your scores. Do you want some numbers? Okay. A maxed out card can erase 100 points from your score. An over-limit card can knock 150 points off; it’s a credit repair disaster. But wait, there is more.

Credit Repair Leverage

I don’t want you to feel like this is all bad news. Revolving debt is conversely the most powerful credit repair tool you have at your disposal for pumping up your scores. FICO recognizes 5 different balance tiers: 20, 40, 60, 80, and 100 percent usage. If you are getting a loan in the near future and have the resources to pay your balances under 20% of the limit your scores will be shining.

The Rest of the Story

The other ingredients relevant to your credit repair task include the age of your accounts, coming in at 15% of your score, new credit and inquiries at 10%, and the type, or mix of credit at the final 10%. These remaining ingredients are minor and for most people will take care of themselves as life goes on. I should, however, add that it is valuable credit repair advice to avoid opening new accounts before applying for a major loan, and to keep those inquiries to a minimum. Cheers!

Copyright © 2008 Ian Webber. All Content. All Rights Reserved.

By: Ian Webber

Credit Repair Scheme Promises Fast Score Increases But May Be Illegal

admin — Mon, 21 Dec 2009 05:18:55 +0000

Establishing a good FICO credit score isn’t all that difficult; all you have to do is pay your bills on time. But if you have a bad credit score from a history of not paying your bills promptly, repairing your score and building it up to a level where you can get competitive loan rates can take time. It can take several years of paying your bills on time to build up your score and it can take seven years to wipe out a judgment or a bankruptcy from your credit report. Most consumers, understandably, would rather not wait that long and there is not shortage of companies that promise to repair credit quickly.

Several companies are offering dramatic increases in credit scores of up to 200 points in as little as 60 days using something known as “seasoned credit.” The concept is simple – if you are added to the credit account of someone with good credit as a cosigner, that good credit will add to your own credit score. What these companies do, for fees ranging up to $5000, is arrange to add your name as a cosigner to the accounts of willing participants who have good credit of their own.

Adding a cosigner to an account isn’t illegal; husbands and wives add each other to their own accounts all the time. What is illegal about this scheme is that it is a deliberate effort to manipulate credit reports and credit scores. If it is done for purposes of qualifying for a loan for which the borrower otherwise wouldn’t qualify, such as for a mortgage, it constitutes fraud.

In addition to the questionable legality of the practice, there are some other reasons why this sort of credit “repair” should not be attempted. The idea of having someone else’s credit rub off on you works both ways. Customers of these companies have no idea whose accounts their names are being attached to, and if those customers stop paying their bills, then their credit score will go down along with yours. None of this is under your control; you are stuck with whomever they stick you with. Since these companies advertise that once your score increases, you can become part of their “good credit network”, it only stands to reason that you may have your name attached to that of a person who only recently had a bad payment history, too.

Increasing your credit score by 200 or more points in 60 days’ time sounds like a great idea. But the risks of paying someone thousands of dollars to do it for you are great. It is better to build your credit the old fashioned way. Take your time.

By: Charles Essmeier

How Do I Repair My Credit?

admin — Tue, 01 Dec 2009 02:15:51 +0000

The answer to the question; how do I repair my credit; seems to depend on who you ask. If you ask Fair Isaac or one of the credit bureaus, they will tell you that it takes time and patience. Some “experts” say that only time can repair bad credit. A leading credit repair company says that bad credit can be deleted. In response to disbelief, they show tens of thousands of deleted listing, including bankruptcies.

When you ask; how do I repair my credit, the most common answer is review the information on your credit report. Due to a recently enacted law, consumers can view and print copies of their credit reports at no charge by visiting http://www.annualcreditreport.com. If information on your credit reports is inaccurate, obsolete, misleading or unverifiable, you can dispute the items with the credit bureau. You can write to the creditor that made the report and ask that the information be removed. You can do this on your own or you can hire a leading credit repair company to do it for you.

Often depending on the products that they sell, different companies will give you different answers to the question; how do I repair my credit. For instance, companies that offer credit cards to people with bad credit tell people that these credit cards will improve their credit. However, this may not be the case. Typical unsecured credit cards for people with bad credit charge fees that are nearly as high as the initial credit limit. According to Fair Isaac, inventors of the FICO credit scoring process, amount of “available” credit is a big determining factor in your credit score. Simply having a credit card will probably not improve your credit score. A leading credit repair company says that removing negative items from your credit reports will have the single biggest impact on your FICO credit score.

Disreputable credit repair companies may advise you to apply for an EIN, if you ask them; how do I repair my credit. This is a technique that is not recommended by a leading credit repair company. An EIN or employer identification number is a number used by the IRS to designate a business. If you do not own a small business, you should not apply for one. Some companies which advertise personal credit report repair recommend that a person apply for an EIN and use that number instead of their social security number when applying for credit. It is illegal to provide false information on a credit application.

So, after you look at the many answers to; how do I repair my credit, you will probably see that there are many ways. Some work. Some do not. Some are illegal. You can choose to do it yourself or you can hire a leading credit repair company to do it for you. If you wait for bad credit to be removed from your personal credit report, then it will take a long time and you will not improve your credit scores. Even people with the worst credit can obtain a secured credit card, have a friend or family member with good credit list them as a co-applicant and work to achieve personal credit report repair. If you do nothing, your scores will not improve. There are companies that sell software programs, credit repair kits, books, CDs and DVDs on the subject of credit repair. You are not the only person asking; how do I repair my credit. There is also a lot of free information. It will take time and patience if you try to do it on your own, but it can be done. You may see quicker results if you hire a leading credit repair company and for certain problems a credit repair lawyer is best.

By: Patsy Rose

Credit Repair Tips for Consumers

admin — Sat, 03 Oct 2009 17:39:20 +0000

Many Americans have had problems with credit, sometimes through no fault of their own. Perhaps you are one of those Americans that have experienced difficulty with credit, perhaps you have maintained a stellar credit history, but your credit report tells a different story. The sad fact is that nearly 80 percent of the credit reports issued in the United States contain correctable errors.

Whether you have experienced some problems with credit in the past or your credit report does not clearly or truthfully represent your credit history, a less than flattering credit report may mean the you are denied credit altogether or will be asked to pay a significantly higher rate of interest than someone with a higher FICO credit score.

There are some very simple things that can be done to improve one’s credit score that require little or no effort on your part. For example:
Avoid overspending by establishing a realistic and manageable budget If your debt to income ratio exceeds 25% take steps to reduce that ratio. Try to keep your debt to income ration under 15% thereby allowing a cushion for emergency needs. If you haven’t done so, establish a savings account, an investment account and begin to build a financial cushion. Even when money is tight, one can save a minimum amount each paycheck. If you can save through tax sheltered savings through your employment all the better. The point is save for your future. Get regular copies of your credit reports. Read and understand those reports. It often helps to consult a professional in the field to help you interpret what the reports mean. If you discover errors on the report, and the probability that you will is high, get them fixed immediately. If you don’t know where to start, consult an expert. Don’t avoid your creditors. If you have come on hard times the worst thing you can do is avoid your creditors. The bottom line is they want to get paid without having to take drastic steps to collect what is due them. Talking to the creditor, negotiating a deal you can live with, and making the agreed upon payments goes a long way to add positive information to your credit report. If your credit report is less than perfect it helps to get positive information added to your credit report. If you don’t know how to do this, consult an expert in the field. Finally, protect your Social Security number at all costs. Don’t give the number out to anyone but a trusted person. Don’t ever fill in your SSN on an unsecured web site. When asked to verify your SSN ask the person to read it off to you and you will tell them if they are correct. If they won’t do this you are being scammed. Ask if you can just verify the last four digits of your SSN. If this is not acceptable then you are being scammed. Ask if there are alternate identification numbers you can use other than your SSN. If not, then you must conclude that you are being scammed.

This advice is simple to follow. The consequences for not following these simple suggestions can be devastating. One client I am currently working with is paying over 20% interest on a car loan because of errors on his credit report. His car payments include over $300.00 of interest each and every month he makes a car payment. If he cannot refinance this car he may pay up to $15,000 extra in interest over a 60 month period than if he were able to finance the car at a reasonable rate through a prime lender. Your credit report tells an important story. Make certain it tells the right one.

By: Roger Passman