There’s a lot of talk these days about credit scores and the need to get and keep good credit. I have noticed that many people are uncertain of how to obtain accurate credit ratings for themselves and how to repair or improve their credit ratings. There seems to be a lot of mystery involved with this. Here is some information I obtained from some of the lenders I work with that might help demystify this process.How do I find out what my credit score is?
There are some sources who actually charge people to view their credit report. You should never have to pay for this nor should you waste time using sites that provide only partial information. Here are some good sites.
http://www.myfico.com/
www.annualcreditreport.com/cra/index.jsp
www.ftc.gov/bcp/menus/consumer/credit/reports.shtm
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm
http://www.facredco.com/
How do I repair and improve my credit scores?
Here are a few tips:
Late Payments- If you are at least 30 days late on any revolving or installment accounts (credit card, car loan) you are reported and it impacts your score negatively. You will continue to be reported for each additional 30 days that you are late (60, 90, or even 120 days late is shown). Get back on schedule and eliminate the late pays. This is an easy first step.
Maxed Out Credit - If your credit is “maxed out” it will have a negative impact on your score. Many people are unaware of this, and they use one card for everything. This can be bad because your score is based on a ratio of debt outstanding to credit available. If you have cards that you do not use, or that have no balance, it can be helpful to keep these accounts open and unused. This can actually help your credit scores.
It’s important to show long-standing accounts. Creditors like to see accounts have been open for long periods of time with no trouble (no late payments). It’s better to keep a credit card or account that you have had for a number of years open with no balance, rather than closing it outright.
Installment Loans - Creditors like to see that you have had installment loans that have been paid off on time. This includes car loans, student loans, etc.
Mortgage Loans - The biggest plus that you can have on your credit report is a timely mortgage. The most important “trade-line” on the credit report is the mortgage. A mortgage account that has been open for a long period of time with no late payments will boost the scores. You should NEVER be reported 30 days late on a mortgage if at all possible. It is MUCH BETTER to be late on any other type of account, if you have no possible options, then to be reported late on a mortgage. A mortgage loan that shows late payments, in some cases, will damage credit scores, but can also prevent you from refinancing a home or even getting approved for a new loan.
Bankruptcies:
10 years from the date of entry of the order for relief
Suits / Judgments:
7 years from date of entry or expiration of applicable statute of limitations, whichever is longer
Tax Liens – Paid:
7 years from date of payment
Tax Liens – Unpaid:
No limitation
10 years from the date of entry of the order for relief
Suits / Judgments:
7 years from date of entry or expiration of applicable statute of limitations, whichever is longer
Tax Liens – Paid:
7 years from date of payment
Tax Liens – Unpaid:
No limitation
Credit Inquiries- The number of times that your credit is checked will impact your scores. This typically is a small impact, perhaps a few points on your overall score, and it’s not a big deal for borrowers that have excellent credit, but it can be a bad thing if your credit scores are in the mid-to-low 600’s and you drop down a couple of points. Most of the time your score will recover those few points in the following weeks or months as you continue with on-time payments and the inquiries stop.
3 comments:
Very helpful tips! It's hard to put a $$$ value on a good credit score, but it can/will save you a ton of money in the long run if you keep your scores high.
The good information is always appreciated. Thanks!
This was very helpful to us, thank you for posting it.
The key to repairing bad credit is to write a properly formatted letter of dispute to one or all of the credit bureaus and send them out via registered mail.
Resources:
http://www.ezcreditrepairsolutions.com/anatomy-of-a-credit-dispute-letter/
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