Learn Little Known Facts About Credit Scores & Ratings:

Of the credit reports surveyed, 29% contained serious errors that could result in the denial of credit, 70% contained mistakes or errors of some kind, 41% contained incorrect personal demographic identifying information, 20% were missing major credit cards, loans, mortgages, or other accounts that are critical to demonstrating consumer credit worthiness. 

To the controllers of your credit file, you are just a number on a screen. They don't care about you or how they hurt you. They are a profit making organization who receives their revenue from the creditors. Yes your creditors! I you dispute items to the bureaus they will always side with the people who pay them, YOUR CREDITORS! Take control hire FLORIDA CREDIT FIX today. 

Call Len Terry Today (407) 853-2400 Get Started in controlling your financial destiny!

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The 3 national bureaus are 3 companies (that means they make profit in exchange for service/goods). They are not here for your good. They are companies looking to get paid. However, the Federal Trade Commission (a.k.a. "FTC") created the FCRA (or Federal Credit Reporting Act) which regulated how the bureaus operate and the rules they are held to.

The 3 major companies are:

• Trans Union
• Experian
• Equifax.

Your credit score comes from a company who made judging cards (approximately 10 of them, may more now as credit has progressed) to rate you compared to other Americans. The Fair, Isaac & Company took 1 million records from all the bureaus and started sorting them to find trends. The model became well known as the "FICO" model and is used by the bureaus. Think of it as a bell curve (small percentage doing extremely perfect or extremely awful, most of the numbers fall in the middle)

Creditors will likely use this score to evaluate your credit rather than actually thumbing through your report and looking at the actual detail. (this was the common trend, now practically everyone is just a Number. So make sure your number is accurate!). Creditors generally look for a score of 620 or more for most purposes. A score higher than 680 opens more doors and can often give you lower rates & larger purchases. Creditors make the rule for what score they fell comfortable with, and the FICO scores determine that score based on your history. So where do you fit in the picture? By having good credit history and looking for all the mistakes the bureaus make. An error by the bureau lowers your score, the Lender/Creditor does not review your report for accuracy (even if you have proof) it is all based on scores these days. (the score is supposed to take the review work away form creditors to make their job easier.)

So what things make up your score?… it is largely based on the following factors (see next section)

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We all know it. If you miss a payment, it shows on your credit. The problem is, this is one of the things scrutinized closest. This is the largest factor determined on your credit score .The number of unpaid bills you have, any collection accounts, or bankruptcies etc…impacts your score. And the worst part is the more recent the problem (in comparison to when the report was pulled by a creditor to issue credit), the lower your score might go. The credit model's main focus for score 

In fact, even something as significant as a 30 day late payment can have a tremendous negative impact on your score if it occurred within the last few months.

Things to really watch out for are repeat late payments. If you have a late payment from 5 years ago, and another one from 1 year ago, it's possible that the FICO scoring might predict that you will have a late payment again since you now have a history of it.

One simple analogy that most people can relate to is car insurance. If you get in an accident 5 years ago and again recently, then we all know your insurance rates go up. They go up because you are a higher risk in that you have a repeated pattern of accidents.  So make your payments on time if you have had late payments in the past, otherwise, they might be even more damaging than if it was just your first late payment ever.

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This area of you score determination is know as you "Utilization Rate". In other words you actual outstanding debt divided by the total available debt you have access to.  

The scoring models look at the balances on your credit to rate you. Since this makes up 30% of the score, that means pay attention to your balances! A good rule of thumb is keep cards below 35% of their limit. Here is a guideline you can keep mental note of when arranging your bills:

Installment Loans (i.e. Mortgages, Car Loans/leases, students loans, etc) - balance is not the major issue since these accounts have a pay off period. However, if you are late on an installment note, your credit may be impacted negatively.

Revolving accounts (i.e. Credit Cards, store cards, etc…) have revolving terms, so they get analyzed based on balance.  Compare your balance to the card limit:

• --higher than limit = Ultimate Bad- (probably means you have late fees, or you charge over your limit.)
• --75% to limit= Not good -(indicates you carry high balances)
• --50%-75% = this can still impact you negatively in some cases. (There is a phrase we've heard  "When it's more than 50% it's a debt; below that it's only 'extended credit')
• --33% to 40% = getting better. The # of cards like this is your primary focus. Still try to lower the balance
• --below 25% of limit= best scenario you can have!
• --0% balance = good, but not that good (surprised?!) Well, if you don't use credit, how can they score you? The unproven theory is, "That you could potentially charge up all your cards at once". A history of only using low amounts is better than no history of how much you use….and since Zero can't be judged…try using your card to buy gas or food and pay it off. During a credit pull, a balance of $200 with a card that has a $1,000 limit is very good! (assuming you have no late payments of course!).

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Starting from the date your credit is pulled and going back from there, you are assessed based on the time you have had credit open. The more time of using credit, the better. A longer track record gives insight to your credit habits. 

Also, the length of time you have been paying creditors back gives the scoring system the chance to figure out if you have been paying all long or not. Someone with new credit (less than 5 years) might not have enough payment history to give an accurate gauge of how much credit they can handle. 

Someone with a longer credit history has demonstrated the amount of credit they keep open and the balances they keep.

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When you apply for credit such as a car loan, credit card, mortgage, etc… a bureau inquiry is made and this is noted on your report. Many inquiries negatively affect your score as it seems you are applying for  more debt. The most recent 30 days is the most important when applying for a mortgage, but the most recent 6 months can still impact you greatly. If you are planning on getting a mortgage, watch the number of credit inquiries you do! 

The credit bureaus understand that people shop around for the best mortgage rate and need to have their credit pulled by a lender. So having your credit pulled multiple times by different lenders does impact you as long as all the pulls are within a couple weeks of each other. 

Now there is a downside to that, if you apply for other credit like credit cards, department store cards, student loans, car loans, etc...during that time, then beware your score could drop significantly! So if you plan on buying the new house & the new car at the same time….our best advise is to WAIT UNTIL AFTER YOU CLOSE on the mortgage before buying a new car and applying for new credit cards. You should also keep in mind that having 3-4 inquiries that you apply for per year for a credit history less than 5 years is a safe average, if you have 5 to 10+ years of credit history, you can probably have closer to 7 or 8 inquiries that you apply for. Have more than that can drop the score by more and more points.

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How many trade lines (loans and credit cards) you have open. Even ones without balances on them. The more you have, the higher the risk. Some news that might be shocking to you is that not all credit cards are looked at equally. Having loans from finance companies or department stores can detract from your score. The flashy buy now for 0% interest and no payments for a year is usually the best giveaway that the card falls into the classification of department store card. Even though unbelievable, statistics have shown that people with department store cards and Finance company loans and cards have the trend of making more late payments than people with a standard credit card from Visa, MasterCard, American Express, Discover, etc…). 

However shocking this may sound, if you have one of these cards, and a low score, this may be the culprit. You should do more research to find out if your credit card is a:

Tier 1 - Best Rating

Tier 2 - Medium Rating

Tier 3 - Worst Rating. 

So, what credit score do you need to attain that coveted tier 1 status? There's no single answer. Each lender uses its own calculations and level of risk tolerance to decide which borrowers get the best rates. So while you may be a tier 1 borrower with one lender, you may have tier 2 or tier 3 status with another. examples of finance companies are: Beneficial Finance, Household Bank, American General, etc.

Examples of department store cards range from furniture store cards, to popular shopping mall department store cards. Even home improvement store cards are considered department stores cards.

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Why Credit Scores Matter

Credit scores are decision-making tools that lenders use to help them anticipate how likely you are to repay your loan on time. Credit scores are also sometimes called risk scores because they help lenders assess the risk that you won't be able to repay the debt as agreed.

Having good credit is important because it determines whether you'll qualify for a loan. And, depending on the interest rate of the loan you qualify for, it could mean the difference between hundreds and even thousands of dollars in savings. A good credit score could also mean that you are able to rent the apartment you want, or even get cell phone service that you need.

Think of your credit scores like a report card that you might review at the end of a school term, but instead of letter grades, your activity ends up within a scoring range. However, unlike academic grades, credit scores aren't stored as part of your credit history. Rather, your score is generated each time a lender requests it, according to the credit scoring model of their choice.

Every time you set a major financial goal, like becoming a homeowner or getting a new car, your credit is likely to be a part of that financing picture. Your credit scores will help lenders determine whether or not you qualify for a loan and how good the terms of the loan will be.

However, credit scores are usually not the only things lenders will look at when deciding to extend you credit or offer you a loan. Your credit report also contains details which could be taken into consideration, such as the total amount of debt you have, the types of credit in your report, the length of time you have had credit accounts and any derogatory marks you may have. Other than your credit report and credit scores, lenders may also consider your total expenses against your monthly income (known as your debt-to-income ratio), depending on the type of loan you're seeking.

The information that impacts a credit score varies depending on the scoring model being used. Credit scores are generally affected by elements in your credit report, such as:

• Payment history for loans and credit cards, including the number and severity of late payments
• Credit utilization rate
• Type, number and age of credit accounts
• Total debt
• Public records such as a bankruptcy
• How many new credit accounts you've recently opened
• Number of inquiries for your credit report

• Most influential: Payment history on loans and credit cards
• Highly influential: Total debt and amounts owed
• Moderately influential: Length of credit history
• Less influential: New credit and credit mix (the types of accounts you have)

• Most influential: Payment history
• Highly influential: Age and type of credit, percent of credit limit used
• Moderately influential: Total balances and debt
• Less influential: Recent credit behavior and inquiries, available credit

• Your race, color, religion, national origin, sex or marital status (U. S. law prohibits credit scoring formulas from considering these facts, any receipt of public assistance or the exercise of any consumer right under the Consumer Credit Protection Act.)
• Your age
• Your salary, occupation, title, employer, date employed or employment history (However, lenders may consider this information in making their overall approval decisions.)
• Where you live
• Soft inquiries. Soft inquiries are usually initiated by others, like companies making promotional offers of credit or your lender conducting periodic reviews of your existing credit accounts. Soft inquiries also occur when you check your own credit report or when you use credit monitoring services from companies like Experian. These inquiries do not impact your credit score.

If you reviewed your credit information and discovered that your credit scores aren't quite where you thought they'd be, you're not alone. Since your credit scores use information drawn from your credit report, your credit activity provides a continually-updated basis of data about how responsible you are with the credit you're currently using. At Experian, we provide information that can help you see your credit in new ways and take control of your financial future. You can learn more about:

• How choices that you make can improve your credit score
• Why using secured credit cards can improve your credit history
• What a credit repair service can - and can't - do for your credit
• How to protect or restore your good credit after major life events like marriage, divorce, or the death of a spouse
• Why knowing your FICO® Score* is important when you consider making a big purchase
• When you know the kinds of activities in your credit that can affect your scores, you can work to take better care of your credit, too. Things like late payments, liens or bankruptcies all have varying levels of impact in your credit scores since they're reflected on your credit report, too. Getting familiar with your credit report can help you see the impact these kind of events can have in your credit.

How to Get Your FICO® Score for Free
Understand the reasons that help or hurt your FICO® Score, including your payment history, how much credit you are using, as well as other factors that influence your overall credit.
Get Your FICO® Score

There is no minimum credit score needed to apply for most loans or credit cards. However, you are less likely to qualify for a loan or credit card and less likely to receive favorable rates when your credit score is low. If you are trying to qualify for a conventional loan or credit card with a low credit score, you may wish to wait until your credit improves, so you can ensure you get the best rates possible.

Some mortgage servicers such as the FHA provide general guidelines for those with credit scores on the lower end:

• FHA mortgage loans require a minimum of 580 or higher with a 3.5% down payment.
• For FHA applicants under 580, qualification for a loan is still possible, but a 10% down payment would be required along with meeting other requirements. See FHA's site for more information.

In some cases, you might not have enough credit history to have a credit score. Depending on your age, there are several ways to establish credit.

If you are under 21, you must have a cosigner or be able to demonstrate that you have an adequate source of income to pay back any credit that is extended. With responsible usage, a parent cosigning a credit card (or adding you as an authorized user to one of their accounts) is a great way to help establish a positive credit history.

For others, the best way to establish credit may be to work with your bank or credit union to open an account with a small credit limit to get you started. Opening a secured credit card is another way to get started building your credit. Then, with time and good account management, a good credit history (and scores) will be within your reach.

Credit scores are not included with credit reports. Additionally, credit scores are not stored as part of your credit history. Your credit score is calculated only when your credit score is requested. Your credit score can change over time, based on your credit history—including late payments, amount of available debt, and more.

Joint accounts are meant to help individuals who cannot qualify for a loan by themselves. With joint accounts, all of the joint account holders, guarantors, and/or cosigners are responsible for repaying the debt. The joint account, along with its credit history, appears on the credit report for all account holders. When all payments are made on time, the joint account can help build positive credit. However, if someone defaults on payments, all of the joint account holders will see the default on their own credit reports. Depending on the severity of the late payments and negative information, everyone's credit scores could be impacted significantly.

When you get married, your credit scores (or reports) won't merge with your spouse's. Joint accounts you share may appear on both of your credit reports, but your credit history will remain independent.

Another common question is whether checking your own credit report or score can hurt it. The answer is no. Checking your own credit scores doesn't lower them. Checking your own credit report creates a special kind of inquiry (known commonly as a soft inquiry) that isn't considered in credit score calculations. Without the risk of harming your scores by checking your credit report and scores frequently, don't steer away from viewing them as often as you need to.

FICO is a registered trademark of the Fair Isaac Corporation.
VantageScore is a registered trademark of VantageScore LLC.

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1. After paying off a past-due account it is no longer considered negative:  The simple fact that an account had to go to collection is the negative item your credit score will suffer from. By nature, you are expected to pay your bills on time. Collections only happen to late bills, so whether you pay this or not does not “heal” your credit. It merely will show the account “paid in full” but you were in collection prior to that. This is an indicator that you are not a timely payer. On the other hand, if you feel that your account went to collection erroneously, then you definitely want to dispute that to have the collection removed as it was not your fault. Collections get sold too often and create more than one collection on your report. Only one company can collect, so you should determine who that is and have the others removed. If you owe money to a creditor, they are not just going to forget about it. Typically you will have to pay them something. Many people with collection accounts can negotiate a payoff figure appealing to both parties.
2. When I have a negative item deleted, it will return on a future credit report: Sounds good, but isn’t true. When you have an item verified and deleted, it stays off. With the exception to the rule that if you a creditor does not respond in 30 days, the bureau removes it temporarily until the investigation is done.  If your account is verified as inaccurate, erroneous or obsolete, it will be removed permanently. If after the 30 days time frame the creditor comes back with solid proof of the procedures used to report your credit were in fact followed and accurate, then the creditor can put the item back on your report as it was. Now there are other instances where an account may be sold to a new creditor and show up under a new name on your report. This scenario is almost impossible to avoid. You never know which bank is buying which bank and what they are selling behind the scenes. So an old item you thought went away simply was sold at the time you requested your dispute and was unverifiable with “the old” creditor. Our humble advise...check you credit annually like the government suggests and review it closely! Stop problems before they get too big and too distant.
3. It is impossible to remove negative listings, such as bankruptcies and foreclosures, from a credit report: Every type of negative listing has been successfully removed from  thousands of consumers credit reports. These negative items (bankruptcy, foreclose, etc) require a different approach during the dispute & investigation so they can be more difficult to remove from the credit report, but they do come off. Easier items such as judgments and Federal & State tax liens are just as severe as a bankruptcy based on the scoring model, yet these are easier to remove. A mistake can be made so easily. Many people have filed for bankruptcy and had accounts listed incorrectly in bankruptcy when they were not supposed to be. There can be many reasons how the error got there, but if you feel the item is not a bankruptcy, foreclosure, or repossession item, you should certainly exercise your consumer right to have the account verified.
4. Any consumer can dispute items on their own credit report easily: Well, Yes and No on this one. Disputing something takes no effort at all, but actually going through the process and not wanting to ever use another credit card again just because you are dealing with bureaucrats who don’t respond to your request (don’t forget…Credit Bureau’s are a bureaucracy! The name is not just a coincidence.) This comes down to how organized, professional, determined, knowledgeable, persistent and persuasive you can be. Credit bureaus are not a call center, nor are there any customer service hotlines. You have to be ready to do some work. By that we mean typing, tracking, calling, writing, mailing, logging, following up, verifying, digging up history, or whatever your credit report needs based on the errors you have.  Sometimes hiring a qualified professional to spend the time to review your credit with you is invaluable. Most credit consultants, after spending the time with you to going over your credit, can recommend the best solution for you. They typically offer to send out the dispute letters for you since they are now abreast of your profile and have most of the letters in a ready to go format.  Results can be tough if you are not prepared. The worst part is, if you attempt to fix without being prepared, you may not be able to hire a professional if you’ve done any further damage. Saying the wrong thing in a letter can move you backwards in your process to investigate errors.
5. If I declare bankruptcy, I can start over fresh: Basically, declaring bankruptcy is the WORST possible thing you can do.  A credit report is based upon your ability to manage your credit and repay your debts.  Once you declare bankruptcy, you are saying that you are unable to manage your debts and have resorted to the “easy way out”.  A filing date and discharge date will appear negatively under the public records section of the credit report.  In addition, each credit item that is included in the bankruptcy will also report negatively on your credit report.  Trying to remove these items after the fact is virtually impossible.  However, if you notice errors on the accounts that were included in your bankruptcy, those are still eligible for dispute. 
6. By filing a "100-word statement" if I am not satisfied with the results, will force the creditors to read my statement and take it into consideration: News flash…no creditor will consider the information in a 100-word statement. You are lucky if they even read it.  This is a waste of time and should not even be bothered with.  These statements only provide the creditor with validation that you are admitting to the negative statements on your credit report and have some kind of an excuse for them.

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