In our post-crisis economy, good credit isn’t just nice to have — it’s essential if you want to level the playing field with lenders.

Credit scores are three-digit numbers lenders . . . → Read More: Raise your credit score to 740]]> As lenders continue to tighten credit requirements, getting a good interest rate — or a loan at all — requires that you understand how the scoring system works.

In our post-crisis economy, good credit isn’t just nice to have — it’s essential if you want to level the playing field with lenders.

Credit scores are three-digit numbers lenders use to gauge your creditworthiness, and until the financial crisis hit, a 720 FICO credit score was enough to get the best loan terms. Even people with lower scores could get decent deals, and at the peak of the lending boom it seemed that no score was so low that it merited a rejection.
How to fix credit report errors

How to fix credit report errors
These days, lenders typically demand 740 scores for the best mortgage rates. Lower scores mean higher rates or perhaps no loans at all. Fannie Mae, the giant mortgage-buying agency, recently lifted its minimum score requirement from 580 to 620.

People with top scores are still getting credit card and balance transfer offers. If their issuers raise their rates or lower their limits, they can move their business elsewhere. People with weaker scores, by contrast, are finding their access to credit slowly strangled. Issuers can push them around, and credit seekers have little recourse.

* Check mortgage rates near record lows

Less-than-stellar credit can hurt in other ways. After all, credit information is used by:

* Insurance companies to evaluate applicants and set premiums.
* Landlords to decide who gets apartments.
* Employers concerned about higher risk of theft from those with troubled finances.

Clearly, cultivating good credit scores is an essential 21st-century skill.

Though the credit bureaus must give you free annual reports, their important numbers will cost you. Now 3 sites offer free peeks at those scores, but how . . . → Read More: The truth about free credit scores]]> Though the credit bureaus must give you free annual reports, their important numbers will cost you. Now 3 sites offer free peeks at those scores, but how helpful are they?

Though the credit bureaus must give you free annual reports, their important numbers will cost you. Now 3 sites offer free peeks at those scores, but how helpful are they?

Consumers are entitled by law to free credit reports– which are simply records of your borrowing and repayment history — but the numerical scores derived from those reports will cost you, in part because credit-reporting agencies aren’t required by law to provide them for free to consumers along with the reports.

Now a handful of company Web sites give consumers at least free glimpses at their credit scores. The sites — Credit.com, Credit Karma and Quizzle — offer a window into the key factors that go into calculating your scores, what you can do to improve them and how your credit stacks up against other people’s. Last week, for example, Credit.com launched free credit report cards that show consumers how they’re likely to rate across five credit-scoring models.

All three sites, which have ties to the credit industry, aim to make money through advertising or through fees if users sign up for products offered on the site, such as credit-monitoring services, credit cards or mortgages.

As banks clamp down on lending, it’s become more critical than ever to know your credit scores. Financial institutions use them to determine the granting and pricing of everything from credit and insurance to cell phone use and, in some cases, employment.

This is the absolute fastest way to correct errors on your credit report and raise your credit score. However, it can only be done through a mortgage company or a bank. If you apply for a home loan and find errors on your credit report, request the loan officer to conduct a Rapid Rescore. But . . . → Read More: 10 Ways To Boost Your Credit Score]]> 1. Deleting Errors in 48 Hours

This is the absolute fastest way to correct errors on your credit
report and raise your credit score. However, it can only be done
through a mortgage company or a bank. If you apply for a home
loan and find errors on your credit report, request the loan
officer to conduct a Rapid Rescore. But don’t mistake it for the
credit clinic tactic of multiple dispute letters.

The Rapid Rescore strategy requires proper paperwork. You need
proof that the item is incorrect. It must come from the creditor
directly. For example, a letter stating the account is not your
account, a letter stating the account was paid satisfactorily,
a release of lien, a satisfaction of judgment, a bankruptcy
discharge, a letter for deletion of collection account or any
relevant evidence.

This is the same documentation a bank or mortgage company would
require for the credit accounts anyways. The difference is, now
you can improve your credit score and receive a lower interest
rate. The results are not guaranteed and will run you about $50
per account.

2. Deleting Negative Credit

This is the infamous area where you’ve heard of all the scams.
Credit repair clinics charge “an arm and a leg” and promise a
clean credit report. Sometimes even a new credit profile! People
spending hundreds, or even thousands, of dollars for something
they can do themselves.

Removing errors is simple. Deleting negative credit that is
accurate requires advanced methods. But that is not the scope
of this report. So I’ll focus on the deleting the negative
errors.

Credit report errors easily disappear by using a simple dispute
letter. If you have the paperwork proving the error as mentioned
above in Rapid Rescore, send copies of that along with the
dispute letter. This will make the credit bureau’s job easier and
you will get faster results.

If you don’t have the documentation to prove the error(s), send
the dispute letter anyway. According to federal law, the credit
bureau’s have a “reasonable time” to validate your claim. They
will contact the creditor for verification of your dispute. Then
the account will be reported accurately – or deleted. It has been
generally accepted the “reasonable time” to complete this task is
30 days.

If you’re not the do-it-yourself kind of person. Or don’t have
the time. You could hire someone who is very economical.

3. PiggyBack Someone’s Credit

This is a fast and great little credit score booster. But it
requires a very trusting relationship. Simply put, someone else
adds you to their credit account. For example, when applying for
a credit card, you may have seen the section to add a card holder.
If your trusting person adds you, their payment history is now
reported on your credit report too. If they have perfect credit,
now you have a perfect account.

To make this more effective, use an aged account. Imagine if your
trusted person has a 10 year old credit card account with a
perfect payment history and a balance of only 50% of the credit
limit. Wouldn’t you love to have this on your credit report? The
easy part is your trusted person just calls the credit card
company and requests a form to add a cardholder. Once completed
and activated, their entire account history and future is now
firmly planted on your account. Imagine if you secured 3-5 of
these accounts – especially installment accounts. Your credit
score could sky-rocket!

The challenging part? Finding the trusted person. Since you already
have a low credit score and bad credit, how eager will someone be
to make you a cardholder? Even your parents don’t want you to
damage their credit. But, no one says you need to possess the card!
In other words, your trusted person could add you as a card holder
and never give you the card or PIN or any information. Since the
bills and all account information is still mailed to the trusted
person’s address, you won’t know anything about the account. This
scenario could land you many trusted persons. And you still benefit
with a higher credit score.

4. Playing Round Robin

This strategy is one of the oldest credit building techniques
around. It used to be accomplished with secured savings accounts.
But now, it’s much easier with secured credit cards. In fact,
I’ve used this method myself.

Here’s how it works: Take ,000 (or what you can afford) and get
a secured credit card. Once received, get a cash advance of 70%
of your credit limit. Get a second secured credit card. Once
received, get a cash advance of 70% of your credit limit. Get a
third secured credit card. Once received, get a cash advance of
70% of your credit limit.

Open a new checking account with the final cash advance. Use this
account only for making payments on your three new credit cards.
If you make your payments on time every month, your credit score
will increase because you now have three new perfect payment
credit cards. (Initially, your credit score might drop a few
points due to the rapid, multiple accounts being opened. However,
be patient because within 4 months of no new accounts or any
delinquencies of any account, you will see your credit score
increase. Mine increased 60 points in 60 days!!)

5. Pay on Time

This one is quite obvious. But after 12.5 years in the mortgage
business, I discovered it still needs repeating. Your creditors
were gracious enough to loan you money. Now pay your damn bills!
If you don’t, your credit score decreases. EVEN IF ONLY 30 DAYS
LATE!

That’s right folks. For some reason people think, “I’m only a
few weeks late. What’s the big deal?” Well, for the loan company,
if you pay late but consistent, they make a lot more money with
late fees and more interest (if a simple interest loan). For you,
your credit score is damaged. If you think long-term and credit
score, I’m certain you would not have a cavalier attitude.

6. Pay Down Debts

This seems like an obvious method, doesn’t it? But it is not as
transparent as you might think. Remember, we’re playing with
high-level statistics and probabilities which evaluates and
forecasts trends in your behavior. Here’s what you do…

Never pay off your revolving debt in it’s entirety! Isn’t that a
surprise? Think about it. Your credit score is a reflection of
your ability to manage your credit. Paying off your debt is not
managing your debt. If you have a zero balance, how can you manage
it? You don’t. It no longer exists. And you cannot manage what
does not exist, right? Therefore, in terms of credit score, you
have demonstrated your ability to swiftly pay off accounts to
avoid managing them. Thus, slightly decreasing your credit score.

One exception, of course, is if you’re over extended to begin
with. Pay off what’s necessary to make your credit profile look
great. Then manage the remaining credit.

7. Don’t Close Accounts

Even if you pay off revolving debts, do not close the account.
The longer an account is open with no negative reports, the
better it reflects in your overall credit score. This is due to
the weighted-average in the credit score formula. Many credit
experts suggest a balance of 30% of your credit limit. That’s
ideal. But you can go as high as 70% and still maintain a
healthy credit score.

8. No New Credit

You must be vigilant in your credit behavior if you want the best
credit score. Therefore, do not get any new credit unless it is
absolutely necessary. Each time you apply for credit, an inquiry
is added to your report. This usually drops your credit score
slightly. When you have fresh credit, there is no track record
how you will manage (or pay) this account. Therefore, it’s a
higher risk which results in a minor drop in your credit score.
Remember, your credit score is about risk assessment.

Here’s what you do: obtain credit for your housing, transportation,
college or continued education and 3-5 credit cards. That’s really
all you need for personal credit. If you want more credit, request
a credit limit increase on your current cards rather than apply
for new ones.

9. Maintain A Mix of Credit Types

If you show you can handle different types of credit at the same
time, you are rewarded with a great credit score. In other words,
get installment loans like vehicle, personal loan or mortgage.
Get revolving credit like credit cards: Visa, Mastercard, Sears,
Sunoco Gas, Costco. By mixing it up, you demonstrate you can
manage your credit because you will have short term and long term
credit with a fixed payment. As well as a “variable” monthly
payment on your credit cards.

Keep these accounts open with a balance of 70% or less and paid
on time and you will witness your credit score climb to great
heights.

10. Don’t File Bankruptcy or Foreclosure

Here’s the most obvious advice: Don’t file for bankruptcy or
foreclosure. These stay on your credit report for 10 years and
always decrease your credit score. The older the bankruptcy or
foreclosure account becomes, coupled with re-built credit
history, the less of an impact they play on your credit score.

Contrary to popular beliefs, you can legally delete a bankruptcy
and foreclosure. It’s not easy. But it’s possible. See the
advanced methods for that solution.

To quickly rebuild your credit history after a bankruptcy or
foreclosure, use the Round Robin strategy above and get secured
credit cards. Now you can even get a car loan or mortgage right
after bankruptcy.

http://myLoanHero.com/go.cgi/daveczach.

Partly due to advertising on TV, . . . → Read More: What is a Good Credit Score?]]> If you are wondering, what is a good credit score, the answer can be as simple as a single number or more complicated. There are many credit scoring systems used in the United States. The Fair Isaac credit score scale or the FICO score is commonly used, but there are others.

Partly due to advertising on TV, radio and the internet, many people are now concerned about; what is a good credit score. For many years the credit score scale was something that only lenders and financial advisors were familiar with, but today consumers are more knowledgeable about credit. They want answers to questions like; what is a good credit score and what factors affect a credit score. Briefly, in this article we look at the credit score scale, from good to bad, the factors that are used to determine a credit score and some ways to improve credit scores.

You may already know that an individual’s credit score is used by lenders to determine “creditworthiness”. The lender is asking, “What is the likelihood that this person will repay this loan?” The original credit score scale was set up in the United States to prevent lenders from discriminating against a borrower because of factors such as race or marital status. If you ask a lender, “What is a good credit score?” The answer will depend on which credit score scale they are using. The FICO score is one of the most common, but an individual lender may use Beacon, Vantage or another credit score scale. In addition, each of the three major credit bureaus, Equifax, TransUnion and Experian, assigns a score to individuals with a credit record.

The FICO credit score scale runs from 300-850. If you are applying for a home mortgage and the lender uses the FICO credit score scale to determine creditworthiness, then his answer to; what is a good credit score, will be something like this. A person with a score of 760 and above will generally be eligible for the best interest rates and the lowest monthly payments. Other factors used to determine interest rates and eligibility include amount of down payment, income and income stability. Lenders assign higher interest rates to people with lower credit scores, smaller down payments and income instability. A number below 759 on the FICO credit score scale does not mean that the application will be rejected, only that the interest rate may be higher. A number below 600 on the credit score scale may be rejected. This person may not be considered creditworthy.

Credit scoring systems, such as the one created by FICO, attempt to take into account many factors that may determine the likelihood that a person will repay a loan. None of these factors has anything to do with income. A person may have an excellent credit history and score high on a credit score scale, but still be unable to repay a loan. So, the system is not perfect. It just happens to be the only one that we have. One may ask; what is a good credit score and what factors contribute to a good credit score. The answer from FICO would be, these factors are used to determine a person’s credit score; payment history, amounts owed, length of credit history, new credit and types of credit used. Payment history and amounts owed accounts for 65% of the credit score. Only FICO could tell you exactly how they created a numerical credit score scale using this information.

A credit score scale makes use of the information recorded on your credit reports. If you are interested in improving your number on the credit score scale, you can start by reviewing the information recorded on your credit reports. In response to a recently enacted law, the three major credit bureaus created a website, http://www.annualcreditreport.com, where consumers can view and print their credit reports at no charge. You will not see a specific credit score. You will not find an immediate answer to the question; what is a good credit score, but you can begin the process of learning more about your credit history. Some of the information on your credit report may be incorrect or outdated. If you are able to have negative credit history removed from your credit reports, then you will improve your standing on a credit score scale.

A lot of lenders have really strict . . . → Read More: How to Boost Your Credit Score]]> Your credit score is quite important whenever you are thinking about purchasing a home or car. This is because this three digit number is what will help to determine just how much of an interest rate you are going to have to pay for the money that you are borrowing.

A lot of lenders have really strict rules whenever it comes to the terms of loans that they process. These rules usually place a lot of emphasis on your credit score. So, you should know that even a difference of only two points can cost you thousands of dollars. This is because, according to the Fair Isaac Corporation, the interest rate difference here is approximately one-third of a percentage point. While this may not seem like a lot, whenever you have a $165,000 30-year fixed mortgage, this is a lot. In fact, it could cost you over $11,172 in interest alone. While these are only averages, it is still important to understand the differences here.

Most lenders practice tiered pricing today. Herein interest rates will rise as credit scores go down. Of course, each lender chooses their “break point” between the tiers. This means that one lender may bump up the interest rate if a score falls beneath 700 but another lender may not charge a higher rate until your credit score falls to 690 or below. Therefore, with some lenders it is important to raise your credit score just a couple of points.

Not only does the aforementioned information highlight the importance of doing everything possible to improve your credit score but it also highlights the fact that it is vital to shop around whenever you are looking for a mortgage. Mortgage lenders don’t see any sharp break points here though. Therefore, a good consumer should do whatever any broker will do and look for a lender that will offer them the best rate for the score that they have.

Before you go mortgage shopping you should take some steps to improve your credit score instead. There are numerous factors that will play into the calculation of your credit score. This makes it impossible to say that one specific action will increase your credit score by a set number of points. However, here are some guidelines to keep in mind:

1. Always pay your bills on time.
2. Keep your account balances low.
3. Only take out new credit whenever you really need to do so.

Craig Watts of Fair Isaac Corporation says that people who follow these three simple rules have really high credit scores. This is because they are being both cautious and conservative with their credit instead of treating it like a play thing.

While this is great advice, these things will take you some time. If you are in need of a few extra points to bump up your credit score quickly, this won’t work for you.

If your credit score . . . → Read More: Improve Credit Score – Ways To Raise And Protect Credit Score]]> When a potential creditor pulls your credit report, they will learn your employment, address, and credit history. Details about credit history are their primary concern. For this matter, it is important to maintain a good payment history with creditors. This will likely result in a better credit score, which affords better financing options.

If your credit score is low, making an effort to raise your score will serve to your advantage.

Benefit of Regular and Timely Payments

There is no secret method to obtaining a good credit rating. Even if you are unable to achieve a very high credit score, it is possible to maintain a good rating by simply paying creditors on time. Late payments and skipped payments can decrease your score by several points. If irregular payments become a habit, your credit score will continue to decline.

On the same line of thought, making regular payments will increase your credit rating. When outlining a plan for boosting credit rating, begin by paying all creditors on time. If possible, submit payments a few days before the due date.

Reduce Debts and Keep Low Balances

Too much debt will have a negative effect on your credit rating. Most consumers with maxed out credit cards are able to keep up with minimum payments. However, excessive debts make potential lenders nervous. In this case, it may be difficult to obtain prime rates on home loans and auto loans.

Low credit card balances will not have a damaging effect on your credit rating. Consumers are encouraged to keep credit balances below 25% of the credit limit. If your balance exceeds this amount, take the necessary steps to reduce debts. This may include paying triple the minimum payments, transferring the balance to a 0% interest credit card, or obtaining a debt consolidation.

Ways to Protect Credit Rating

In addition to boosting your personal credit rating, careful credit report monitoring is essential. Sadly, millions of people become a victim of identity theft each year. Proving identity theft is difficult. Thus, victims often have to live with the effects of having their identity stolen