Jeff Schuman asked:




You can spend years reliably and responsibly paying all your bills on time and building up an excellent credit score. But unfortunately unexpected things like medical bills or divorce can happen which can impact your score.

Here are some tips to help you to get through this and improve your credit score.

The important thing to remember is that nothing is forever. If you are late on a payment or even have to file bankruptcy this does not impact you forever. So what should you do if negative items occur?

First of all, if you feel that the item was inaccurate or misreported, then you can contact your credit reporting agency and challenge it. The credit bureau has a legal obligation to investigate and confirm whether or not the report was accurate.

If they can’t do this within 30 days, then they have to remove the negative item or correct it so that it reflects accurate information.

The next important thing to do is to make sure that the situation doesn’t continue to deteriorate. Try to pay all your bills on time. If at all possible, try to avoid paying any bill more than 30 days late since these get reported and reflect negatively on your credit score.

And if you are able, pay down the open balances on your credit card bills. If the amount of debt you have as a percentage of your available credit goes up, it negatively impacts your credit rating. So try to get your balances paid down as much as possible and you’ll find your credit score increase.

Beatrice

bionicturtledotcom asked:

The logistic function can be used to transform a credit score into a probability of default (PD). The advantages of the logistic are (i) it easy to calculate and (ii) as a cumulative distribution function (CDF) the output is, appropriately, a probability between 0 and 1.0. In this video, I show two approaches to the exponent, which itself is the negative of a product of vectors (-b*x). First, the two-factor linear probability model that produces a “credit score;” the credit score is then transformed into a PD. Second, an illustrated usage which starts with “internal credit ratings” from 0 to 100, with 100 representing perfect credit quality; in this case, the internal credit rating is adjusted to a scale usable to the logistic, then the logistic function is again used to compute a PD. The spreadsheet is available on our website!

Frederick

Jon Arnold asked:




If your credit rating isn’t where it should be, the question you need to ask is, “How can I raise my credit score?” Buying a car and it’s insurance rate, acceptance on home loans, a decent interest rate on credits cards, and even getting a good job, or opening a bank account are all parts of having good credit. Many people feel that having good credit isn’t important, if they buy everything with cash. The problem is, sooner or later, everyone needs to depend on credit for something, and good credit can save you a ton of money if you are watching for your future well-being.

FICO provides scores used by two of the three largest credit score providers, TransUnion, and Equifax. Because of using FICO, TransUnion and Equifax are fairly uniform in their data. The other credit score provider, Experian uses the “PLUS” system. Because of the discrepancies among these companies you must constantly be checking to make sure all information is correct. Good FICO scores will rate between 723 to 850, while the “PLUS” system has a good ranking between 501 to 990.

There are many ways to chip away at below average scores.

1. Find a Good Credit Score Site.

There are many credit score sites to choose from, whether it be a one time payment or a site that will provide month to month. There are also sites that will give you a one time accounting for free when trying their service. The service they provide is to watch your credit report and notify you if there are inquiries or any changes that you should be aware of.

2. Check Your Scores and Credit Limits.

First check and see if there are any errors on your credit scores. Errors may include problems that aren’t even yours. This happens much more often than you might believe, especially when using different credit scoring providers. You may be surprised to find settled debts still on your score as well.

3. Pay Down Any Credit Cards.

Use credit cards sparingly and pay them down every month. They may be an easy and convenient way to buy, but you do pay extra for the convenience and it adds up quickly. Remember that, with a good credit score, credit card companies will offer you higher credit limits. Be wary of these as well and only take on what you know you can handle. Do not cancel any credit cards before paying them off. This counts against you on your credit as a surrendered card and will cause a bad credit score. A good rule of thumb, if you must carry a balance, is to pay more than the minimum amount each month, and keep your balance under about 30% of your credit limit.

4. Stay in Contact with Creditors.

Creditors appreciate communication. If you are having problems, let them know and try to work out a payment plan to stop a bad credit report.

Avoiding bad credit is your responsibility, not that of the credit score providers. They do and will make mistakes. Therefore, it is important to check your credit on a regular basis and make sure that if mistakes are made, they do not end up on your report which will make your rating lower than it really should be.

Charlene

Sammy Holderman asked:




The threat of future unemployment has many people striving to greatly reduce their debt or even to not go into debt at all. Gone are the days of “plastic power”. So many people had their interest rates arbitrarily raised for no apparent good reason by their credit card companies, that the resulting exodus out of credit card debt has resulted in a much wiser and debt-savvy consumer.

Credit card companies have even been forced to add annual fees and resort to other tactics in order to stay competitive and it doesn’t look like that will change anytime soon. The recent recession, bordering on a depression, has kick-started a national movement towards more responsible spending. And that’s a good thing!

When it comes to your credit score, there are some misconceptions that could hurt you, rather than help you to keep your current good credit rating or to improve a flagging credit score.

One of the most misunderstood is the effect that a short sale of your home will have on your credit score, versus that of a foreclosure or bankruptcy. The truth is that if you are losing your home, the only difference that a short sale will make is on the property values of your neighbors. When it comes to your credit rating, a foreclosure, short sale and bankruptcy all have about the same effect. All of them will result in an annotation on your credit report for 7 years (10 years for a bankruptcy). But, the REAL truth is that you can recover your credit rating a lot quicker than that. If you avoid falling back into the same bad habits that got you into the mess you’re in and if you stay gainfully employed, you can recover your good creditworthiness in 3 or 4 years, even if you filed bankruptcy. One note here: almost immediately you will start receiving credit card offers in order to “repair” your credit. Read them carefully. Most have an annual fee and many of them will have a monthly maintenance fee. You will start out with a balance, sometimes of more than 1/2 of the credit card authorized balance, which will in no way help your credit score. Interest rates on the card will be exorbitant and remember those “bad habits” mentioned earlier? This is one of them.

Stay out of debt! Filing bankruptcy gives you the opportunity to start over, so do just that. As long as you are employed, even if you consider yourself now under-employed, get in the habit of saving. It used to be that one or two months worth of salary in a savings account would be beneficial. Now most experts recommend 6 to 8 months worth of living expenses should be set aside. If you become unemployed, this is the average length of time it will take for you to find another job. If you are very lucky, that job will pay the same or more than what you were making, but many find themselves doing something they never thought they’d be doing, like flipping burgers for minimum wage. There is no shame in that-a job of some kind is better than no job at all, but be prepared for the worse-case scenario.

Your credit score and credit report are also two different things. For example, your credit score cannot be viewed by your employer, or a prospective employer, though your credit report can. Some employers use your credit report as a measure of your responsibility, especially if it comes to positions where you are handling money regularly. Your actual credit score, on the other hand, can only be seen by a lender when you’ve applied for a loan or credit card, your insurance company or a utility provider and they have to pay for the privilege of viewing your actual credit score. They will use that score to determine the risk that they are taking by doing business with you and your score will affect the terms of the agreement, like interest you will pay or the amount of a deposit that you will pay.

You also want to carry a very low balance on any credit cards that you have. Somewhere along the line it became “common knowledge” that carrying a balance on your credit cards was a good thing. Yeah, it is-for the credit card company. They get to collect interest and finance charges. And, as long as you are paying on time, your credit score won’t take a hit…UNLESS you are carrying a balance over 15% of your credit limit on the card. Maxing out your credit cards will hurt your score the most and will put you in an untenable situation. It can take YEARS to pay off the debt if you only make the minimum payment. Credit card companies are now required to show you how long it will take it making the minimum payment and right under that on your credit card statement will be a recommended payment amount in order to pay the card off in a much lesser amount of time. Bear in mind that is only if you don’t make additional charges on the card. The best way to get out of debt is to double your minimum payment on your highest interest card. Once that is paid off, take the money that you have been paying on that card and put it towards the card with the next highest interest rate; then do it again, and again…until all of your cards are paid off. Remember when you got that card for “emergencies” only? Keep the one card that you have had the longest (that usually makes a difference in your interest rate) and close any cards that you have more recently acquired and that have high interest rates.

Your thinking has to change. Yes, it seems that every time you are close to getting ahead, something happens that sets you back a bit. Roll with the flow, but do everything in your power to reduce your debt. Set limits, make a budget and never buy impulsively. If you see something that you want, or even something you think that you need, make it a habit to think it over. Leave the store and put some serious thought into your decision. You may actually find that it is not something that you really need, but more of something that you want and that you can do without it. Then, if you determine that you absolutely NEED it…don’t charge it! Only buy it if you have the cash or save the money for it.

Getting out of debt is the absolute best feeling in the world and staying out of debt has payoffs far beyond that great feeling of relief and pride.

Jeff

Scott Brown asked:




What are inquiries?

When you apply for credit the creditor or lender checks your credit report to verify that you qualify for the credit or loan you are applying for. The “inquiry” is then reported to the credit bureaus and shows up on your credit report.

Does this affect your credit rating or score?

Yes, it does. Although only a few points are deducted from your score for each inquiry, having multiple inquiries may drop your score to a lower bracket, forcing a higher interest rate. You may not even qualify for the loan or line of credit at all.

Will requesting your credit report generate an inquiry?

This is a common misconception and is totally false. You should view your report at least once a month. Doing so will not generate any inquiries.

What if you did not authorize an inquiry, can you dispute it?

Yes. If you did not authorize any of the inquiries on your credit report you can and should dispute them. To dispute inquiries obtain your credit report, then make a copy of your credit report, highlighting the inquiries in dispute. Finally, send the copy of your highlighted inquiries along with a letter demanding the inquiries be deleted from your credit report to the credit bureau.

Is it worth it?

The next time you are out shopping and the salesperson asks you, “Would you like to apply for our credit line and receive 15% off your purchase?” Ask yourself, “Is it worth it?”

Darrell

Justin Smith asked:




Raising your credit score can be a fairly simple and straightforward process unless you have derogatory marks that need to be disputed (which will be explained below).

The reasons for bad credit can be as follows, high balances, bankruptcies, late payments, and many others. The most significant thing you can do to raise your score is to change your financial habits. Chances are that if you have a bad credit score, you did something to make it that way. Here are some of the best ways to quickly raise your credit score:

1. The most obvious: pay off your debt! This doesn’t include a home mortgage, but revolving balances such as credit card debt, a car loan, etc.

2. Make every payment on time. This is the most important factor in your credit score rating. If you have had late payments in the past, it will take some time to see real results from your on-time payments, but keep it up, sooner or later the credit bureau will notice the change in your payment habits. Develop the mentality that no late payment is acceptable!

3. If possible, pay over your minimum amount. This is especially important with credit card balances, and will reflect a slight boost in your score.

4. If you have paid off all your debt, and your credit score seems to be at a stand still, you might want to make small purchases each month with your credit card and pay them off immediately. Often times the credit bureaus like to see at least some kind of activity. Otherwise, they have no way to gauge how you are doing financially.

5. Be patient! Sometimes repairing credit can be a long and arduous process. Especially if you have had a bankruptcy. It can often take the better part of a year or more to see any significant raises in your score.

Clearing a derogatory mark on your credit report:

This is probably the most difficult in regards to credit repair. If you have requested a copy of your credit report, and notice a problem (an example would be a late payment mark), that shouldn’t be there, you need to take action to get the derogatory mark cleared as soon as possible. It is extremely important to get your credit score cleared before you attempt to get prequalified for mortgage.

Here are the steps you should take:

First of all, if you are in contact with a loan officer, you may want to describe the problem you are having to them. They can be very helpful when it comes to credit repair, and should know exactly what to do if you have a bad mark on your credit that is a mistake. In some cases, they may even call the creditor for you to address the situation.

Second, you should call your creditor and each credit bureau to find out which course of action you should take. In most cases, writing a letter will do. Here is an example letter:

Date 00/00/00

Dear Big Credit Bureau,

This letter is a complaint that you are reporting inaccurate and/or incomplete credit information on my credit report.
I am displeased that you have included the below information in my credit profile that includes the following errors. Credit reporting laws ensure that bureaus report 100% accurate credit information.

The following information concerning my credit report needs to be re-investigated. I respectfully request to be provided proof of this alleged item on my credit report. If this cannot be provided, the item must be deleted from my report as soon as possible:

CREDITOR AGENCY, acct. 123-34567-ABC

The listed item is inaccurate and/or incomplete, and is a serious error in reporting. Please delete this information, and supply a corrected credit profile to all creditors who have received a copy within the last 6 months, or the last 2 years for employment purposes. Also, please provide the name, address, and telephone number of each credit grantor or other subscriber.

Under federal law, you have 30 days to complete your re- investigation. Be advised that the description of the procedure used to determine the accuracy and completeness of the information is hereby requested as well, to be provided within 15 days of the completion of your re-investigation.

Sincerely,

your signature

Your Name

SSN# 123-45-6789

Unfortunately, you will need to write 3 separate letters to each of the 3 major credit bureaus. Here are the contact addresses for each:

Trans Union

P.O. Box 1000

Chester, PA 19022

1-800-888-4213

Equifax

P.O. Box 740241

Atlanta, GA 30374-0241

1-800-997-2493

Experian

P.O. Box 2104

Allen, TX 75013-2104

1-888-397-3742

Alan

Paul Sarwana asked:




Many people often wonder how they can raise their credit score. It is actually easier than most people think. There are many different steps you can take for improving your overall credit rating. Here are three essential steps you can take:

1. Obtain Copies of Your Credit Report

One of the first steps to increase your credit score is to obtain copies of your current credit status from the three main credit reporting agencies. As the three major credit bureaus, Equifax, Experian and Transunion may have different items on their reports you will want to compare them and thoroughly look over them.

Make sure that there are no errors or mistakes on the report that could be bringing your credit score down. Checking over your three credit reports will also give you a full understanding of where you stand and how much work you will need to do for your credit score improvement.

2. Make All of Your Payments on Time

Another way to raise your credit score is to make all of your payments on time. If you currently have any open loans or credit cards with balances, be sure that you make the full payment on time. Always make any and all payments by their given due date because anytime you make a late payment, it affects your overall credit score.

As well, work to pay off your credit cards and loans. You can simply do this by paying off the smallest credit card balance first and then working your way up the ladder. The less you owe on credit cards and loans, the higher your score will be.

3. Obtain or Not to Obtain a New Credit Card

While trying to boost your credit score, you will not want to obtain any new credit cards or loans. The more available credit you have available, the lower your score can become. Stick with the current credit cards you have, as well as work to pay them off as soon as possible.

If you are trying to repair your bad credit and currently do not have any open credit cards or loans, then you may want to obtain a credit card with a small credit limit. Each month you can put a small amount on the card. After you have had the card for a while and have made the monthly payments on time, your credit score will begin to improve.

So, whether you are starting from scratch or have damaged your credit rating, you can take some simple steps to raise your credit rating. The harder you work on improving your score, the quicker and easier it will happen. And before you know it, you will have the good credit score you desire.

Agnes

Frank L Froggatt asked:




There are millions of people in the U.S. today struggling to get by with lousy credit. If you are one of them, and have been looking for ways to improve your score, the following information could prove beneficial to you.

Each of us is permitted one free credit report per year. You can use that free report to find out what is causing your score to be so low. Its also an opportunity to determine if there are an mistakes on your report so you can take steps to have them fixed should you find any.

Be sure that any debts you have paid off are reflected on your report. For some reason many companies don’t report that last payment, so your report looks as though you still owe money on an account that has been paid in full.

You should be aware that each time your report gets looked at by a creditor, it shows. Several inquiries will damage your rating and reduce your score. Be exceedingly particular about who you let pull your report.

Collection companies can do terrible damage to one’s beacon score. They often list the same past due accounts repeatedly making it appear that you’ve neglected several accounts when it is really just one.

Paying off an older overdue balance before applying for a home loan will hurt your rating by making that balance a current collection. This will do short term damage to your score.

The balance you carry on credit cards can have it’s effect against your score as well. Very high balances and maxed out cards lower your score significantly. Even if you always make the payments on time. Consistently using only half your available balance will help raise your score.

Beacon scores are also affected by how long you’ve had a line of credit. Say for instance you got a charge card in college. If you still have that old card and have consistently paid it, this helps your rating. The opposite holds true as well. New cards, recent loans, and such have a negative impact on scores until enough payments have been made to establish that you are responsible about paying.

So to repair your score the first step is to check your report, noting any mistakes or duplicate reporting so you can have them removed. Remember ignoring the problem will not make it go away. The first step is always action. Inaction will get you nowhere.

Mildred

Paul Sarwana asked:




Many people find themselves trapped in bad credit due to various reasons, some due to misfortune while others suffer from this problem because of mismanagement of finances. No matter what may be the reason for bad credit, it is important for every individual to rebuild their credit rating.

As many people have successfully repaired their credit themselves you can effectively repair your credit yourself — without the help of a professional — even if you have a nasty bad credit. However, as bad credit repair takes times, you will need some patience and strong will power to get yourself out of your problems.

As you may already know there are three top credit bureaus, they are TransUnion, Experian, and Equifax. First, start out by getting credit reports and see what the various bureaus have to say about you. These credit reports shall be able to give you a somewhat clear picture of your credit history.

Once you have your credit reports, it is crucial for you to go through them thoroughly and pay attention to every intricate detail. In most cases, every consumer has at least one error on one credit report if not more; some may even have multiple errors on all three credit reports. This situation arises because the reports are created using the information provided by various creditors and the bureaus do not verify each piece of information provided to them.

There are several errors that are most commonly found on credit reports like old information, typing errors etc. Identify such errors in your report if any and make sure to report to the bureau, also have it removed at the earliest. Doing this can work wonders for your credit.

Taking informed decisions will no doubt help you turn your bad credit into good credit. For this, you would need to stop the habit of late payments. Ensure that you repay on time if not before scheduled time. By making sure that your repayments are smooth and without any flaws, your bad credit would soon convert to good credit.

Also, it is a good idea to keep your credit accounts to a maximum of 2 or 3. A huge number of accounts would get difficult to handle. Once you close all the additional accounts over a period of several months, make sure to report these accounts “closed” to the credit reporting agencies.

Ronnie

Santhana Chann asked:




People who have a bad credit often find it difficult to obtain a loan to supplement his needs. As bad credit is not desired by any company or individual to issue the loans, these people often tend to get to the edge of the road and lose their hopes. However, there are chances that one can improve his credit score and turn bad credit report in to a good one. Only then he can improve his chances of qualifying for a loan.

The quicker you turn from the bad credit score to the good one, the quicker you have the chances of qualifying for a loan. Moreover, doing this can save lots of bucks for you. There are certain ratings given to each individual based on his credit history. People who have a rating as ‘OK’ are highly prone to more loans than those people who have their credit history rated as ‘Fair’. This clearly implies that people with the ‘fair’ credit rating have to clear off all their debts as soon as possible to get qualified as ‘OK’. The unused credit does all the difference and stands as the major factor in determining the rating of an individual.

People with lower credit rating have to work along way to get into higher credit rating. They have to concentrate on the negative entries that they have allowed to enter in their credit history. One is always recommended to maintain a good score as only people who have a good credit score have the highest chances of obtaining a loan than any others.

Amy