Learn How to Handle Inaccuracies on Your Credit Report

Having a high credit score can make it easier to be approved for loans, rental agreements or even to get a job. If you notice that your credit score has plummeted unexpectedly, you need to take steps to rectify the situation right away. The following guide provides pertinent information you need to know about credit repair.

Many people assume that credit repair refers to fixing poor credit or building initial credit. This isn’t the case, though. Credit repair eludes to repair damage that has been done to your credit through inaccuracies. This can only be repaired by having the inaccuracies removed.

Credit Report

A credit report is a report that is created to show creditors, landlords or even employers your credit status. It can say a lot about you and you want it to be as high as it can possibly be. Having a low score on your credit report can insinuate that you’re irresponsible and untrustworthy. There are times when creditors report inaccurate information to the credit bureaus due to improper filing, paperwork not being filled out properly or simply because someone has a suffix that wasn’t added to their name when it should have been.

Learn more about your credit report.

Remove Credit Report Inaccuracies

Look over your credit report closely. You can get a free copy of your credit report from each of the three credit reporting bureaus each year. You want to check to see if there is any inaccurate information on the report. If there is, annotate the information about it, gather proof to show that it is inaccurate and attempt to contact the company that provided the inaccurate information to have them correct it.

Companies can file amendments to any filings that they make to the credit reporting bureaus if they know that mistakes have been made. They may require you to fill out some paperwork, but it will be well worth it if you can get the inaccuracy off of your record.

Click here to learn more about removing inaccuracies from your credit report.

Credit Repair Scams

It’s important to know that there are times when companies won’t take the time to correct inaccuracies. When this happens, you can hire a credit repair company to help you. It’s important to avoid credit repair scams , be sure that you work with a well-known, trustworthy company. Do research on them before providing any of your personal information. There are scam companies that will take your personal information and ruin your credit even worse than it already is if you aren’t careful.

Conclusion

It’ll take time before any inaccuracy is erased. It’s best to check your credit score on one of the free online credit score checkers every few weeks to see if the inaccuracy has been removed. If you go a month or more without hearing anything from the company or the credit bureaus when you try to rectify the situation on your own, take the next step and hire professional credit repair agents to tackle the problem for you. Once the credit repair company gets involved, it shouldn’t take long for the problem to be fixed.

References:

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THAT Is a Credit Factor? 7 Things You Didn’t Know Affected Your Credit

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Approximately 33 percent of Americans have credit in the “Bad” category.

This can adversely affect your ability to secure a loan, buy a new car, and even purchase a home. Therefore, no matter how you look at it, your credit score is something you need to stay on top of.

But, there are a handful of factors that can impact your credit score that most people aren’t even aware of.

Let’s take a look at 7 unconventional credit factors you need to keep an eye on.

1. Requesting an Increase For Your Credit Limit

It’s common knowledge that credit checks put a ding in your credit score. But, many people aren’t aware that they risk taking a credit hit when they request a higher line of credit for their account.

In order to determine if you’re financially reliable enough to warrant a credit line increase, some card issuers will run a credit check to see how your payment and usage history is holding up.

In this case, you’ll lose a few points after their check has been initiated. If your score is just on the border between good credit and bad credit, every point counts, so avoid doing so unless you have the points to spare.

2. Unpaid Parking Tickets

Parking tickets are notorious for ruining the rest of your day when you get one.

Whether your parking meter ran out, you were parked in a spot designated for someone else, or you were simply unknowingly parked illegally, coming back to your car to find that infamous slip of paper can be aggravating.

If you choose not to pay your ticket out of defiance, however, the balance may be sent to a collection agency for them to deal with.

Unfortunately, this occurrence goes on your credit report, and not even paying the ticket at this point can get it removed. So, next time you get one, make sure to pay it right away!

3. Closing a Credit Account

Many people are eager to close a credit card after paying off long-term debt. But, this can actually do more harm than good.

Having an extensive credit history is one of the factors that influence your credit score. When you close down a credit account, you eliminate the history from that card from being tracked by institutions that run credit checks.

Thus, it’s best to keep old credit cards open. A great strategy to use to keep your score high is to use an old card for only one or two types of monthly purchases, such as groceries, gas, etc.

If you purchase products or services that you need anyway, you’ll keep your card in utilization without your balance getting out of hand.

4. Cosigning a Loan

When applying for a loan, the credit check the lender conducts will knock off a few points from your credit score.

Cosigning a loan, however, can hurt your score in a different way.

Since your name is on the agreement, you suffer the consequences even if the individual you signed with doesn’t make their payment on time. This can prove to be especially stressful if you aren’t the one who receives the bills.

You should only cosign a loan for someone who you absolutely trust to be financially responsible. Otherwise, you could experience a drastic drop in credit that can negatively impact the rest of your life.

5. A High Credit Balance

This one’s a given.

The percentage of your total balance that you’ve used can hurt if you if you let it sit for too long at a high amount.

For example, if you have a credit card with a $4,000 limit and you’ve spent $2,500, your balance utilization is over 60 percent (this isn’t good).

As a rule of thumb, you’ll want to keep your utilization around 30 percent of the limit to show card providers that you’re using the card but aren’t going too crazy with your spending.

6. …And a Zero Credit Balance

This one comes as a shock to most people because it doesn’t quite make sense at first. Why would spending less money hurt your credit score?

There’s an important distinction to make here, though: having a low balance affects your score differently than having a zero balance.

When you have a low balance, it shows card providers that you’re responsible when making your payments and with how much you spend.

A consistent zero balance shows that you don’t use the card at all, which has a similar effect on your score as closing an account. This is due to the card issuer choosing to no longer send credit updates (or even deciding to close the account altogether).

7. Opening a Store Card

This is another one that catches a large number of people off guard.

Since choosing to open a credit account with a store can provide holders with plenty of financial benefits, it can be tempting to do so. This is especially true if you can save money on the purchase you’re making.

But, store cards are still credit cards, and applying for a new one can adversely affect your score. Keep that in mind next time you’re out shopping!

Credit Factors Can Seem Overwhelming

But they don’t have to be.

With the above information about uncommon credit factors in mind, you’ll be well on your way to making sure your credit score stays in stellar shape.

Looking for ways to boost your score? Check out this article for plenty of useful tips.

medical collections

Buried Under Medical Bills? Here’s What Medical Collections Will Do to Your Credit

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Given that nearly 80% of Americans are saddled by debt, an increasing amount of that is medical debt.

As many of these people in debt have put their money on credit cards or have taken out loans, these debts slip into collections often. If you still owe the hospital or treatment center, your medical debt is subject to medical collections, which can drag your credit score way down.

Here is what happens and what you can do about it.

What Happens to Your Credit Score

Your credit score is subject to being dragged way down when your medical bills get out of control and you fall behind your payments. As collection agencies report your delinquency to other financial institutions and credit reporting companies, you’ll see a negative impact on your financial future.

Once you’ve damaged your credit, other aspects of your life end up being impacted negatively.

Your ability to take out a loan for a car or a home ends up at risk. If you need car insurance, you’ll find that your insurance rate goes up as your credit score sinks. As medical collection agencies continue knocking at your door, your ability to get credit in other forms disappears.

If you’re looking for a way to avoid dealing with credit damage, here are four to steer clear of problems due to medical bills.

1. Pay Those Bills

First things first, you need to pay your medical bills on time. If you’re on a payment plan, pull out all the stops to ensure you pay your bills when they’re due. If you’re struggling to pay your bills, call up your financing company and renegotiate ASAP

While you might think you’re paying for everything as you should be, there’s a chance you’re not aware of what you owe. The confusing tangle of wires that makes up insurance, deductibles, co-pays, and co-insurance leaves a lot of people thinking they’re paying when they’re falling behind.

Don’t play dumb. Call your insurance provider to ensure that your medical bills get paid as they should be. Assuming that everything will work out is going to be your downfall.

After every appointment you make, add something to your calendar one month later that says “check balance”. This way, you’ll remind yourself to reach out to your medical institution and insurance company. Watch your mailbox too in order to keep from missing any important piece of mail.

2. Get an Itemized Bill

Most institutions won’t give you an itemized bill when you go to pay them. You’re more likely to get a general bill just telling you what you owe. If this is the case or if the bill looks bigger than it should be, an itemized bill gives you the chance to review your charges.

Not every insurance company communicates well with every financial institution or vice versa. Many people are billed without taking into account their insurance, meaning that their bill doesn’t represent what it should or how much they should pay. Some people wait for insurance companies to kick in, which may not happen, meaning that late fees and charges rack up while you wait.

Your itemized bill gives you the opportunity to negotiate payment with your health care provider. The charges that you get could be inflated, incorrect, or have been improperly added. You won’t know unless you get an itemized bill.

Contact the provider if the bill doesn’t look right to you. Be proactive rather than waiting for someone to bother you about your coming bill.

3. Negotiate with Collectors

If you’re at the phase where your bills are in collection, all is not lost. There’s still an opportunity for you to grab the reins of your bills and steer them a bit. When you’re contacted about a medical bill, negotiate with them not to report if you agree to pay it as soon as possible.

Some collectors are more amicable than others and stop the reporting mechanism as soon as a bill gets paid. However, double check that this bill is legit because false collection companies have found ways to scam consumers this way.

After you’ve paid the balance, your credit score may end up staying the same if you don’t ask the agency to remove the item. The term for this is a “pay for delete” and the collection agency must agree to these terms before it begins. Some agencies give you this statement in writing, but if they don’t, ask for it directly before you proceed.

Collection agencies aren’t required to take this step, so if they do, be appreciative and meet them halfway. If they need paperwork or a signature from you, hustle to get it done on time so that this process can play out ASAP.

4. Set up a Payment Plan

If you’re underwater with your medical debt and know that it’s too much to pay on time, set up a payment plan with the agency. If you’re still under the umbrella of the medical provider, work with them to pay on a monthly or weekly basis depending on your debt. If you catch them before your account goes into collections, you’ll save yourself a headache.

To improve your credit score, ask your medical provider to get the account back. Tell them you’re willing to pay it and put together a payment plan. This ensures that you’ll get that mark removed from your credit score and be back to dealing with the medical provider directly.

If they agree to do this, don’t make any mistakes. You can’t afford to make one at this point.

Medical Collections Are a Messy Headache

If your bills end up in medical collections, you’re headed for a nightmare of phone calls, nasty letters, and even garnished wages. Rather than wrestling with these collection agencies, get on top of things so that your financial future doesn’t end up impacted over your medical bills.

For a few credit cards to help rebuild your credit, check out our latest guide.

easy to get store credit cards

Is It Worth the Extra Discount? The Effect Store Credit Cards Have on Your Credit

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189 million adults in the United States have at least one credit card.

While the total number of credit cards in the United States has gone down slowly since the early 2000s thanks to stricter lending laws, people’s reliance on “buying money” from banks is still very strong.

Among the most popular types of credit cards that are in circulation are easy to get store credit cards.

For the uninitiated, a store credit card is a product that’s offered to consumers upon checkout. Typically, a cashier will ask if you’re a store cardholder and will offer you an intensive to sign up if not.

While taking on a store credit card may seem harmless, that’s often not the case.

To help you make an informed decision on store credit cards, our team breaks down some of the pros and cons of signing up for one. Keep reading to find out!

The Downsides of Getting a Store Credit Card

We’re going to open up our easy to get store credit cards pros and cons list with their drawbacks. Here are a few things to consider when getting store cards that could hurt you.

Credit Inquiries Ding Your Credit Score

It’s important to know that store credit cards are just like general credit cards in the way that they operate. The first similarity you’ll be exposed to between store cards and general cards is that both will pull a credit inquiry in order to determine your eligibility.

While soft credit inquiries can have little to no impact on your credit score, hard inquiries can leave a black mark on your credit report that can bring down your score by multiple points.

Furthermore, it can take up to 2-years for hard inquiries to fall off of your report.

Store Cards Have Low Limits and High Utilization Rates

An interesting factor that hurts people’s credit is utilization rates. That term means the amount of available credit you’re using in comparison to the amount of credit you’re being offered.

It’s considered best practice by many financial experts to keep your credit utilization below 30% on any given card. That can be a serious challenge when it comes to easy to get store credit cards.

Store credit cards typically come with much lower credit limits than general use cards.

For example, if your general use card comes with a $5000 credit limit and you charge $1000 to it, you’re below the recommended use threshold. If your store card only has a $1000 limit and you charge $500 to that though, you’ve nearly used 50% of your available credit.

Approval on New Cards Can Hurt Credit History

The average amount of time you’ve had credit can have a serious impact on your credit score. The longer your average history is, the higher your score will be.

Whenever you add a new credit card, including a store card, to your credit portfolio, your average credit history will go down.

While effects should be nominal, your score will still likely drop by a few points.

Store Credit Card Incentives May Drive Up Spending and Delinquency

We’ve all told ourselves at one point or another that a store’s deals are “so good” that you’d be crazy not to buy.

With an easy-to-get store credit card, you may routinely be offered 10% to 30% off of your purchases. That deal may lead to you going numb to the total amount your spending.

High spending leads to falling behind on payments and payment delinquency leads to your credit score plummeting.

Be sure that you never let a good deal pull your focus away from what you can afford.

The Advantages of Getting a Store Credit Card

Getting a store credit card isn’t completely void of perks. Here are a few you might enjoy.

Easy Establishing of Credit History

Since store credit cards have low limits and lax approval standards, it may be possible to pick one up as your first credit card and start establishing a credit history.

It’s important to have some form of credit history to start building your reputation as a responsible borrower. Easy-to-get store credit cards can facilitate that.

Responsible Use Of Your Store Credit Card Will Boost Your Credit

If you’ve never had a credit card before, getting a general use card that has a $1000+ limit might be more pressure than you’re ready to handle. With a store credit card that comes equipped with a much lower limit, you set yourself up for success by reducing your chances of overextending yourself.

This will make meeting your payment obligations easier.

If You Shop at a Store a Lot and Pay Your Balance in Full Each Month, You’ll Save Big-Time

The biggest advantage of easy to get store credit cards are the incentives they offer. If you shop a lot at a particular store and pay your balance in full at the end of each month, you’ll get deep discounts and won’t ever owe your store anything in interest.

This can add a lot of money to your bottom line at the end of each month.

Wrapping Up How Easy to Get Store Credit Cards Affect Your Credit

As we’ve described above, there are a lot of negative and positive aspects to using easy to get store credit cards.

The most important thing to remember is that, like any credit card, you must use your store card responsibly and pay it back as quickly as possible for it to really be a good deal.

If you don’t, you’ll quickly surpass any discounts you’re offered by overbuying and overpaying in interest.

For more of the best credit related advice you can find online, check out additional content on Credit Repair Answers today!

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9 Important Tips for How to Buy a House With Bad Credit

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Buying a home is a monumental step in many people’s lives, and is a long process on its own. The process can become even more difficult, and even impossible, when trying to enter it with bad credit. Having a bad credit score may make buying a home seem like a truly impossible task.

Bad credit can impact your purchase process in many ways. Many mortgages will reject you outright. The ones that are available to you will have very high-interest rates or will have an unrealistic repayment process.

Luckily, there are ways to work with your credit in order to buy the home of your dreams. There are steps you can take before and during the process to make your bad credit work for you and your family. Here are some important tips on how to buy a house with bad credit.

1. Shop in Your Budget

While this may seem like a no-brainer, defining your budget can be very difficult when you have poor credit. The general rule to follow here is that all of your home expenses should not exceed 1/3 of your income. With debts to pay off, you may want to look at an even lower figure than that.

In order to shop within your budget, consider looking into a home that will not cost you too much long term. You may want to look into cutting costs with a smaller land area, or maybe with fewer rooms that you may not need.

It may be difficult to accept that the home of your dreams is out of reach, but there are many great homes to buy that will have a minimal difference in the quality long-term, but with a much cheaper price tag.

2. Make a Large Downpayment

With a smaller loan needed, creditors will be more likely to grant you a better loan with a much-improved interest rate. In order to decrease your overall loan size, you’re going to need to place a larger down payment on a potential home.

If you’ve been trying to hold onto your savings, a home is the best place to dip into them. Homes are storers of value, and a larger down payment will save you money on interest rates in the long term. Try to see if there is space in your savings for your home’s downpayment to help your purchase abilities.

3. Expand Your Options

While you’re expanding your options when it comes to the home you buy, you may also want to expand your options on the loan that you look for. While some loans may seem great, there are many loans available that may fit your needs.

Some loans will not require a higher credit score. Other loans are formatted to people with bad credit and have other features that may be worthwhile to choose from. Make sure you talk to as many creditors as possible to find someone willing to give you a good deal.

4. Get a Cosigner

While it may be a difficult conversation to have, getting a friend or family member to act as a cosigner may help you significantly when acquiring a loan. If they have a good credit score, this may make you eligible for better plans overall.

If you fall back on your finances, your cosigner will be responsible for your credit. This may be a risk and difficult to ask for, but it will be a huge benefit for you if you can find one.

5. Get a Federal Loan

Federal housing loans often have looser requirements and are a significant source of loans for many Americans. They accept credit scores as low as 500 with very competitive interest rates.

Federal housing loans may be a huge benefit to you because of their availability. These loans are also known to require smaller down payments overall.

6. Lease-To-Purchase

One possible option to reduce your payment on your home, and thus your need for an extensive loan, is the lease to purchase option. With this choice, you can lease a potential home for a few years and proceed to buy it in the future.

This will also benefit you by giving you more time to improve your credit score. With this time, your credit score will improve and you will be able to receive a better loan for your needs.

7. Check for Errors

There is a possibility that your credit score has mistakes, and that will be a key step in improving it to be eligible for better loans. Make sure to do an investigation on your credit score when applying for loans.

By investigating your score, you can see where mistakes have been made that are hurting your score. This is a vital step to take when looking for a loan whether you have a good or bad score.

8. Be Patient

While you may think that buying a house now is vital, patience may be key in the long run. If you can take a few months to improve your score, make sure you do!

By improving your score, you will be guaranteeing more loan options, better interest rates, and an easier process for yourself. Take some time and fix your score, and revisit the option of buying a house later.

9. Fix Your Score

There may be no right answer for how to buy a house with bad credit. You may just not be able to buy a house with the score that you have.

Instead of focusing your attention on buying a house, focus your income and savings on helping your credit score. A good credit score can help you in many aspects of life and may open up the option of buying a home further down the line.

How to Buy a House With Bad Credit

Whether you have too much left on your student loans or were previously not great at paying off your debts, there are many reasons why you may be looking into how to buy a house with bad credit.

The most important thing to remember is that there are options for you, both in the short and long term. Be sure to investigate these options and find out which is best for you.

For more articles on loans and finances overall, be sure to visit our website!

What is the Fastest Way to Improve Your Credit Score? 9 Essential Tips

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Are you in search of the fastest way to improve your credit score?

Whether you’re looking to qualify for a mortgage, secure a student loan, or even lease a vehicle, you’re going to have to prove your creditworthiness.

Unfortunately, maintaining a good credit score isn’t always as simple as one might think. In fact, a recent study found that a quarter of Americans report having poor credit.

If you’re worried that your credit score may not be high enough, rest assured that all is not lost. In fact, there are steps that anyone carrying debt can take to improve their credit score.

If you’re looking to improve your credit score, you’re going to want to read this. Not only can a good credit score give you more access to loans, but it can also provide you with better payment rates.

Read on as we uncover nine simple and efficient tips on the fastest way to improve your credit score.

1. Set Payment Reminders

First and foremost, it’s essential to pay your debts on time.

With as many bills as the average American household is responsible for, it’s easy to let a few bills slip through the cracks. Over time, these bills pile up and interest quickly begins to accumulate.

To avoid this, set a simple calendar reminder for each bill in which you’re responsible for. This way you can ensure that you’re staying on top of each and every bill and that your totals get paid on time.

2. Avoiding Merely Transferring Debts

One of the biggest mistakes people make in managing their debts is avoiding payment.

Rather than paying the amounts owed, many will shift their debt load to another account. While this may provide short-term relief, it’s inevitably going to further complicate your debt load and result in negative consequences.

3. Get Current

If you’ve missed payments that are piling up, make a point in paying off all of these payments. After all, you cannot focus on making current payments until you take care of all your past payments.

The longer that you continue to pay your bills on time, the more your credit score will increase. As you continue to make routine on-time payments, you will begin to notice that your score improves faster.

Remember, poor credit does not have to haunt you forever. In fact, older debts (that are now paid) begin to carry less weight as time goes on.

4. Avoid Collections

Some missed payments may go into collections after only a few days.

Unfortunately, a collections agency has one of the most negative and long-term impacts on a credit score. In fact, once a bill goes into collection, this debt stays on your account for a period of up to seven years.

That said, it’s vital to avoid any late payments going into collections at all.

5. Keep Credit Card Balances Low

Oftentimes, banks opt to provide their clients with higher and higher credit limits.

However, just because these higher limits become available does not mean that it’s in your best interest to use them.

If you’re having trouble making your payments to start with, accepting a higher limit is best avoided. After all, high outstanding debt is more likely to have a negative impact on credit score rather than a lower amount.

6. Resist Opening Additional Credit Cards

Opening additional credit cards may be tempting to those who are having trouble managing their money.

This is especially the case nowadays when many stores offer incentives to buyers who open an associated credit card. This is also the case for many banks that offer a kick-back for their customers that open a new credit card.

While it may provide a short-term option for more available credit, this approach almost always backfires. The result is a credit score that suffers even more significantly.

7. Understand What a “Closed” Account Means

Many of those managing debt are tempted to close their troubled account(s).

Sure, this might be a positive step but it’s vital to comprehend what closing the account exactly means. After all, merely closing a poor account fails to make it totally disappear.

Although the account is technically “closed,” the details of the account remain open. This means that a closed account may still present itself on your credit report and have an effect on your overall credit score.

8. Avoid Significant Purchases

If you’re really looking to improve your credit score, it’s essential to avoid large-scale purchases during this time. Instead, your number one priority is to pay off your debts in a timely and efficient manner.

If you can avoid these large purchases, use the money to reduce your credit card balance. However, for those large and unavoidable purchases, opt to pay cash instead of credit during this time.

9. Credit Counselor

If you truly feel that you may have trouble making ends meet with your credit, be honest and speak with your creditors.

While they cannot wave a magic wand, they’re willing to provide you with some helpful advice and solutions. For example, they may direct you to a credit counselor that can work with you personally to help manage your debts.

They may also be able to point you in the direction of which credit cards to consider in the future. Some credit cards are better than others for offering more competitive interest rates and better managing your credit.

Fastest Way to Improve Your Credit Score

If you’re looking to maximize your finances and make the most of your money, you’re going to want to ensure that you have a worthy credit score.

A good credit score allows you to better qualify for loans and receive more competitive rates. For the average American, this includes everything from getting approved for a car or student loan to securing a mortgage.

Despite the significance of maintaining good credit, twenty-five percent of Americans are still battling poor credit. Fortunately, there are steps each and every person can take to increase their credit score.

While paying your credit in full is the fastest way to improve your credit score, these other tips and tricks are sure to contribute the cause.

If you’re suffering from poor credit, rest assured these steps can help improve your situation. For more credit repair answers, visit our blog!

What is a Good Credit Score to Buy a House?

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If you’re thinking about buying a home, make sure all your financial ducks are in a row.

Perhaps the biggest item to focus on is your FICO credit score. This score will be used by lenders to determine your loan worthiness and the interest rate you get. The better your credit score, the lower your interest rate will be.

The impact your credit score has on your payments cannot be understated. Even a half-point difference in your loan rate can result in considerably higher payments.

For instance, a $250,000 loan with a 3.5% interest rate over 30 years will have a monthly payment of $1,123. That same loan with a 4% interest rate is $71 higher each month at $1,194. That’s an extra $25,560 over the course of the loan.

But what is a good score to buy a house? What does your score need to be to get good interest rates?

Read on, because today’s we’re covering everything you need to know about the credit score you’ll need to buy a house.

What Is the Minimum Credit Score You Need to Buy a House

The minimum credit score you’ll need isn’t a hard and fixed number. In fact, it will depend on a number of factors, and some of them are not even directly related to you.

Economic factors, for example, are an important variable that will factor into the kind of score you’ll need to qualify. During the Great Recession and for a period afterward, lenders enforced tight restrictions on borrowers. It was not uncommon for applicants with excellent credit scores of 720 and above to be turned away.

Fortunately, the real estate market has improved in recent years. Lenders have relaxed their lending requirements. As a result, the minimum credit score you’ll need to qualify is much lower than it was in 2008.

What credit score you need is really going to depend on the type of loan you apply for.

Here are a few basic guidelines to consider.

The average credit score you’ll need to qualify for a house is approximately 600.

If you apply for an FHA loan, you’ll be required to have a minimum credit score of at least 580. That is the lowest score you’ll be expected to maintain to buy a house.

Fannie Mae and Freddie Mac back conventional loans, and to qualify for those, you must have a credit score of 620 or above.

This should give you a general starting point to work from as you get ready to buy a home.

What Is the Ideal Credit Score for Good Loan Rates

Here’s a general credit rating chart that is practical for most uses.

  • Poor credit: 300-579
  • Fair credit: 580-669
  • Good credit: 670-739
  • Very good credit: 740-799
  • Exceptional credit: 800+

While some lenders have different score ranking models, they generally follow this guideline fairly closely.

Credit Score of 300-499

Scores in this range leave you with rather limited options. Unfortunately, you will not be able to qualify for any loans on your own.

The best option if you have a credit score below 500 is to have a family member or friend purchase the home and add you to the title. Once your credit has improved you can try to refinance the loan into your own name.

Credit Score of 500-579

Those with a FICO score between 500 and 579 can qualify for loans backed by the Federal Housing Administration (FHA). However, the FHA will require a 10% down payment. It’s also important to note that all outstanding collections and judgments must be paid in full before closing.

Credit Score of 580-619

As your score gets higher you’ll find more favorable terms. With a score of 580 and above, you can qualify for an FHA loan with only 3.5% down. 580 is a good starting goal for your credit score in order to buy a home without having to come up with 10% down payment or more.

Credit Score of 620-699

We’re starting to see more lending options at this point. Most lenders will consider you for a Department of Veterans Affairs (VA) backed loan with a credit score of at least 620. VA loans usually have outstanding interest rates and they do not require a down payment.

The United States Department of Agriculture (USDA) also backs loans for those with credit scores of 620 and above.

620 is also the entry point for most conventional loans, opening the door for you to many different mortgage loan options.

Credit Score of 700-739

Having a credit score of 700 and above will help you qualify for higher value homes which require “jumbo” loans. You’ll also qualify for much better interest rates.

Credit Score of 740-850

No matter the scoring system employed by most lenders, 740 is generally considered to be the crossover point from good to excellent credit.

Borrowers with excellent credit get the very best interest rates. They also pay up to two-thirds less on their private mortgage insurance (PMI), thereby lowering your monthly payment considerably.

How to Improve Your Credit Score

If your credit score needs a little work, don’t despair. The good news is you can raise your credit score fairly quickly. Stick to a credit repair process to help you purchase a home.

Get a free copy of your credit report and fix any mistakes which are bringing down your score.

Continue to make payments on time each month to gradually improve your credit score.

One of the best things you can do to quickly raise your score is to lower your debt-to-credit ratio to 30% or less if possible. In other words, if your total available credit is $5,000, make sure you don’t owe more than $1,500 total.

The Bottom Line

As a general guide, 580 is the lowest credit score you’ll need to qualify for an FHA loan to buy a house.

A credit score of 620 and above will open you up to more government-backed loans and conventional loans. FICO scores of 700-739 will yield much better interest rates while scores above 740 will lower your PMI and offer the lowest rates possible.

Credit scores are not the only factor which goes into qualifying for a home loan. Debt-to-income ratio, employment stability, and the down payment amount are also important loan qualification variables.

What a credit score does is signal to the lender how likely you are to pay back the loan and not default. When you have a higher score, you’re considered less risky as a borrower. When lenders consider you a safe risk, it makes it easier for them to qualify you and give you favorable interest rates.

If you found this article helpful, please check out our credit repair blogs.

what is a bad credit score

What is a Bad Credit Score?

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Having bad credit can impact everything from your interest rates to how much you pay for insurance premiums. Some employers even check your credit score and may be reluctant to hire you if you have a bad credit score.

You might be asking yourself “what is a bad credit score?” If you’re unsure whether your score is good or bad, keep reading to learn more about credit scores, how they are calculated, what’s good and what’s bad, and how you can start fixing your credit if you have a bad score.

What is a Credit Score and How is it Calculated?

Your credit score includes a number of different things that give lenders an idea of whether you’re a good candidate to lend to. Two of the most influential factors in your credit score are your payment history and the amount of your credit limit that you use.

Paying bills late can negatively impact your credit score. Accounts that are more than 30 days delinquent are typically reported to the credit bureaus and can ding your score. The later the payments are, the more significant the damage.

Your credit utilization also is important. Experts recommend that you should use no more than 30% of your available credit. People with the highest credit scores use much less than 30% of their available credit.

Other things that impact your credit score include the length of time you’ve had credit or your credit history. The longer the better.

Having a mix of different types of accounts is also beneficial. If you have both installment accounts, which are ones with a fixed number of equal payments, such as a mortgage or car payment, and credit card accounts, your score will generally be better.

The number of recent credit inquiries can also hurt you. If you have had numerous credit inquiries in the last year, your score might be lower.

What is a Bad Credit Score?

Now that you know what goes into your credit score, let’s talk good, fair, and bad credit scores. There are three major credit bureaus: Equifax, Experian, and TransUnion. These companies collect your credit information and record it and then sell it to lenders or others who are checking your credit.

To calculate your credit score, companies use the information from the credit bureaus to come up with a number, which is your credit score. Most creditors and lenders use the FICO scoring system, which takes data collected from the credit bureaus to generate a score.

The creditor or lender viewing your score is who determines how good or bad it is. The FICO score is simply that: a numerical score. Whoever is viewing that score decides how they will rank it and how it impacts their decisions.

Both FICO and the other company that calculates credit scores, VantageScore, have a lower limit of 300 and an upper limit of 850. Although these companies don’t issue a rating of good or bad, there are some general ranges used to categorize credit scores. For example:

  • 720 and above is excellent
  • 690 to 719 is good
  • 630-689 is fair
  • Anything below 629 is bad

If you find yourself in the bad credit score range, or even in the fair range, you are definitely going to feel the consequences of your less-than-stellar credit.

Consequences of Bad Credit

The obvious consequences of bad credit are that you are unable to get approved for loans, or if you do, your interest rate is going to be higher because the lender views you as a risky borrower.

Not only are your interest rates impacted, but you might also find that you are not able to open new credit lines. Your insurance premiums are often higher, as insurance companies view you as risky.

Utility providers and cell phone companies also might require you to put down a deposit in order to turn on your utilities or get a cell phone plan. Landlords also might check your credit, and could turn you down or require a higher security deposit.

You might even miss out on your dream job, as many employers check your credit as part of the background check process. If you have a lot of debt, you might be passed over for a government job, for example.

How Can I Fix My Credit?

So your credit is bad. Unfortunately, you are not alone. 20% of Americans have scores below 600. The good news is that if you have bad credit, all is not lost. There are steps you can take in order to fix your credit and you can start right away.

The most obvious way to improve your credit is to pay down your balances, stop using your cards or pay them off every month, and get any delinquent accounts into a positive status.

You should also try to pay off any small, lingering balances, as your credit score is impacted by how many cards have balances. Getting rid of these small amounts and then focusing on paying down the larger balances will help. If you continue to use credit cards, choose one or two of these cards that are great for rebuilding your credit to put the bulk of your purchases onto.

You should also make sure there are no mistakes on your credit report. If there are, you should address these with the credit bureaus ASAP to get them off of your credit report.

With some time and patience, it is possible to improve your credit score.

Your Next Steps

Now that you can answer the question “what is a bad credit score” you can get to work.

First things first, you need to check your credit score and pull your credit reports. You can pull your credit report for free each year from each of the three credit reporting bureaus. Check your report for any errors and map out how you are going to start paying down your debt.

You can also get your credit score for free. Many credit card companies or other lenders off this service at no charge to their borrowers. You can monitor it daily, weekly, or monthly, but keep in mind that it takes about 30 days for changes to hit your credit report, so any changes in your credit won’t show up immediately.

Learn more about your credit and how to build and repair it on our blog. Work towards having an excellent credit score and you can expect to get the best interest rates and offers from lenders.

does a car loan build credit

Does a Car Loan Build Credit? 3 Ways to Improve Your Credit Score When You Buy a Car

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Twenty-six million adults in America suffer from being “credit invisible”.

Invisible credit happens when you don’t have any documented credit history. Having invisible credit can be the same as having horrible credit.

You’ll be stuck in an endless cycle of rejection. Rejection for housing opportunities, loans, and even employment prospects.

Having poor credit doesn’t only affect you financially. Did you know that financial stress is also harmful to your health? Worrying about money can cause anxiety, depression and even heart attacks.

Taking action is the best way to overcome your financial fears. There are smart ways to build your credit while also improving your life. For example, have you ever wondered, “Does a car loan build credit?”.

The loud resounding answer is yes, and we would love to show you how. You can have the financial health you’ve always desired. Continue reading to learn the three ways a car loan can help improve your credit score.

Why Does a Car Loan Build Credit

There’s a lot of confusion around why taking out a loan can improve your credit. Many people view taking out a loan as being in debt. Yet, you have to throw away this type of fearful mentality to grow.

Instead of viewing a car loan as debt, see it as an investment. An investment that will provide you with transportation and better credit.

So, why does a car loan build credit? The answer lies in the on-time payments. Your payment history determines about 30 percent of your credit score.

You’re on time payments will prove to lenders that you are financially reliable. Paying on time helps create a positive payment history. Contrarily, delinquent payments will directly damage your credit score.

Credit Report and Credit Score

First, it’s important you understand that your credit score and credit report aren’t the same things.

One good way to tell the two apart is to think of the report card you received in school. Your grades are like your credit score while the report is a summary of your grades.

Credit Score

Your credit score tells companies how reliable you are a borrower. The score itself is a three digit number.

The information compiled in your credit report creates your credit score. Usually, when you have a positive credit report you also have a positive credit score.

Credit Report

A credit report is a detailed document created by three major credit bureaus.

  • TransUnion
  • Experian
  • Equifax

Your credit report will summarize all your monthly payments. The report will give information on both your closed and your open accounts.

The summary also includes any companies who’ve looked at your credit. You’ll also be able to see any court-mandated settlements you owe.

First Know Your Credit Status

Before you rush over to the car dealership, you’ll need to know where you stand. Don’t start shopping for a new car until you know the condition of your credit.

There’s a lot of free websites you can visit to find out your exact credit score within minutes. If you are credit-invisible, prepare for a few small challenges in securing a loan. Lenders are more cautious when creating a loan for a first-time borrower.

But, this doesn’t mean you can’t find a good deal. Without any credit history, lenders may ask you to pay higher interest rates. It helps if you have a large down payment and a co-signer available for your car loan.

A large down payment, coupled with a cosigner, can help you secure the best financing.

How a Loan Appears on Your Credit Report

Credit reports have a lot of information and can be confusing to readers. Trying to read through the entire report will leave you with more questions than answers.

It helps if you know exactly where to look on your credit report for the information you need. First, locate the three reporting agencies (TransUnion, Experian, Equifax) on your report.

Next, locate where each agency lists your car loan. Once you’ve found the listing you can focus your attention on these two categories:

  • Type of account
  • Current Status

Being by looking at the type of account. Usually, your report will list your auto loan will as an installment account.

If you have a mortgage or student loan they will also appear as installment accounts. If you don’t have any installment accounts a car loan will help build your credit profile.

Next, you’ll want to review the account’s current status. It’s vital that your payments are always paid on time and in full. If you are diligent about making prompt payments your status will read as “current” or “paid as agreed”.

Initial Decrease in Credit Score

You may have wondered, “Does buying a car hurt your credit.” There are only two ways a car loan will hurt your credit score. The first is if you make late or delinquent payments.

The other way your score will go down is if you allow an excessive number of hard inquiries or credit checks. After you get your car loan, you may notice a slight decrease in your credit score.

When you’re shopping for a car loan lenders will be running credit checks on you. Usually, any hard inquiries that fall within the same 30 day period can count as one inquiry. Yet, this isn’t the case in all situations.

To be safe you should your car loan shopping to a minimum. Only allow a few agencies to run your credit making your choice.

Paying off Your Loan

Finally, it’s time for you to patiently watch your credit grow. Stay away from the temptation to quickly pay off your car loan early. Paying off your entire car loan will erase the debt on your credit report.

However, you’ll no longer be able to build credit by making on-time payments. Instead, you should wait and continue to make small scheduled payments. Once you’ve paid your loan off in full you’ll need to establish another way to build your credit.

You could take out another loan or start regularly using and paying off credit cards.

Empower Yourself to Grow Financially

Now you know the answer to the question “Why does a car loan build credit?”.

Credit Repair Answers wants to help you with all of your credit questions. We offer free information on everything credit related. Visit our blog today to find more articles related to credit.

You can also contact us today with any questions you may have. Stop stressing over finances and start taking action today.

get married

What Happens to Your Credit Score When You Get Married?

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What happens to your credit score when you get married? If your partner has a good credit score, will that impact yours? And what if their credit score is bad?

It’s important to know these answers, if only because there’s a lot of misconceptions and downright false information out there about this topic.

Fortunately, most of the elevator talk you’ll hear on the subject is untrue.

In this article, we’ll take a look at what happens to your credit score when you get married, dispelling some of the major myths and misconceptions about the topic as we go.

Let’s dive in!

Credit Scores- What Is It?

Credit scores or ratings determine your ability to secure a loan from a lender, as well as the terms of that loan. For example, someone with a good credit score that regularly pays their debts will be offered a better interest rate or, possibly, more flexible repayment methods.

Someone with a poor credit score, on the other hand, will be offered higher interest rates, less flexibility, or could be denied a loan altogether.

When someone applies for credit (in the form of a credit card, a loan, or a mortgage, for example), lenders want to know who is most likely to pay off the loan. They want to know the risk they are undertaking by lending you money.

As such, they’ll order a credit report to see how much of a financial risk you are by lending you money.

They use the credit score to determine if, and how, they will offer you a loan. From there, it is your decision whether to accept the terms they offer. Good credit health is important because it can determine where you can live, how you get to work, and how you pay for college.

What’s A Good Credit Score?

FICO credit scores range between 300-850. While there is no “credit definition” for being good or bad, the higher your score, the better. If you’re scoring in the range of 300 to low 400s, you may have some work to do before you can secure a good loan from a vendor.

Keep in mind that you have to have credit to have a score. Sometimes, a lackluster score is more likely to get a loan approved than having no credit history at all. In most cases, you won’t have a registered FICO score until you’ve logged 6 months of credit.

Getting Married & Your Credit Score

If you are about to get married, it’s important to have a conversation about credit scores before you tie the knot. One study found that 33% of couples that divorce attributes it to problems with finances.

Not to scare you, but it it’s important to have these kinds of conversations before things are official so that you’re both on the same page and can set goals with your finances together.

Your Score Is Yours

The first major misconception is that your credit score will drop if your partner has a low one, or it will increase and “balance out” as a result of you getting married. This is not true. Everyone has their own credit score and the major bureaus don’t merge the two scores when a couple gets married.

It is important to keep in mind, however, that applying for a loan together as a married couple will factor in both of your scores.

So while your score won’t change from getting married, the chances of you getting things like a mortgage, student loans, or money from the bank for another reason could increase or decrease depending on your partner’s score.

If you know your spouse has a bad credit score, it’s not necessarily the end of the world. Sure, you may not be able to get a loan right away and interest rates on joint loans can be higher, but there are always ways to work your way back up.

It may take some time, but so does most things worth waiting for.

Changing Your Name Doesn’t Matter

Another misconception is that taking your partner’s last name will affect or wipe out your credit score history. This is also not the case.

What will happen is that your new name will be listed but your new name will also be listed as an alias with the major credit bureaus.

The good news is that you won’t be starting over. Do keep in mind, however, that due to your change in name, there could be a few inaccuracies on your report as the bureaus catch up with your new name.

Especially in your first year or two of marriage, you’ll want to be diligent about checking for these and reporting them right away.

On Joint Accounts & Loans

If you decide to apply for a joint account or joint loans, both of your credit scores will be factored in. Just because you have the highest credit score doesn’t necessarily mean you’ll be approved or offered better interest rates.

The same thing applies if yours are lower, too.

The banks will factor in both scores and make their decision based on both of your credit histories. They will check your three credit ratings through the FICO Credit Score system. 90% of top lenders that check your ratings will use FICO, so it’s important that you know and check these three scores on a regular basis.

Your Credit Score When You Get Married- Wrap-Up

While there is plenty of misinformation out there about credit scores and getting married, generally speaking, your score stays your own.

That isn’t to say it’s not important to have a conversation with your spouse about credit. After all, many marriages struggle when they don’t take care of (or keep an open line of communication) about their finances.

It will benefit the both of you to have the conversation early on so you know what you’re working with.

Fortunately, even when you get married, it won’t change your score. So all your hard work will not be erased just by getting married.

If you’d like to learn more, check out this article on building credit with a credit card. Our blog is full of useful tips for repairing your score.

Best Credit Cards for Rebuilding Your Credit

10 Best Credit Cards for Rebuilding Your Credit

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Having bad credit doesn’t mean the world is over. Every problem has a solution and that includes your financial situation.

Getting the right credit card is key to rebuilding your credit. Here are the best credit cards for rebuilding your credit.

Best Credit Cards for Rebuilding Your Credit

Finding the best credit card to rebuild your credit may seem impossible, but it’s not. Here are 10 cards that are easy to apply to, accept poor credit applicants, and are perfect for rebuilding your credit.

1. Capital One Secured Mastercard

This Capital One secured card is ideal if you’re looking for a card with a low deposit. Usually secured cards need you to make a deposit equal to your credit line, making you have to come up with the entire deposit upfront.

Luckily, this card gives you a credit limit of $200 for a deposit and depending on the state of your credit you only have to deposit $49, $99 or $200. This card also lets you make deposits in installments.

Another perk is if you make your first five payments on time, you might even be able to get a higher credit line without deposing any more money.

The only catch is if you have severely damaged credit like bankruptcy, you might not qualify. You need an active credit or savings account to apply.

2. OpenSky Secured Visa Credit Card

You can get this card without a credit check, which is perfect if you have bad credit. This also means if you have super damaged credit, you still might be able to qualify. However, you will still need to meet some income standards.

Another perk of this card that makes it stand apart from the rest, is you don’t need a bank account to apply for this card. You can make your deposit and pay your bills with a debit card, wire transfer, check or money order.

The only issue is there’s no opportunity to upgrade with an unsecured card like OpenSky Secured Visa Credit Card. This card is ideal for anyone looking to rebuild credit and want access to traditional banking services.

3. Discover it Secured

This card is our pick for rewards and upgrading. This actually might be the best credit card for people with bad credit. It comes with no annual fee but also rewards like 2% cashback on up to $1,000 worth of spending each quarter on restaurants and gas.

You also get 1% back on all other types spending. If you are responsible with your account for eight months, Discover will review your account and you might qualify for an upgrade.

This only drawback is your deposit needs to be paid with a bank account, so if you don’t have one, you won’t be able to apply to this account.

4. Digital Federal Credit Union Visa Platinum Secured Credit Card

We like this card because it offers low interest and low fees. The ongoing APR is 13.25%, which is about half the rate of most popular secured cards, and much better than you can get on other secured cards.

The annual fee is $0 and there is no balance transfer or cash advance fees. Like with most secured cards, you need to make a security deposit equal to your credit limit. But the good news is this card doesn’t put a cap on how much you can deposit and how high your limit can be.

The only downside is you need to be a member of the Digital Federal Credit Union. The good news is there are actually a bunch of ways you can become a member, and a lot of people do it, but it’s still a hoop to jump through for this card.

Basically, it’s best to pay your credit card bill in full every month, especially if you’re trying to build credit. But you also must carry a balance and this card is less expensive than other secured cards.

5. Credit One Bank Platinum Visa with Cash Back Rewards

We like this card because it has $0 fraud liability which can give you a peace of mind. You also can find out if you qualify in less than 60 seconds, so there’s no waiting.

This card gives you 1% cash back rewards through eligible purchases and automatically reviews for credit line increases so there’s the possibility that you could get even more credit.

You’re also able to choose your monthly payment due date with this card, so you can conveniently align it with when you get paid or not at the same time as other major bills.

Another perk is you can easily view updates in your credit score with free online access with this card, although terms do apply. You also have to option to get account updates with text and e-mail notifications so you’re always in the loop.

6. Capital One Secured Mastercard

This card has no annual fee but still gives you credit-building benefits if you’re responsible with your card. Different than a prepaid card, this card builds your credit bu regularly reporting to the three major credit bureaus.

You also get an initial $200 credit line after you make a security deposit of $49, $99 or $200. The amount of your deposit depends on your creditworthiness. In addition, you can gain access to a higher credit line after you first five monthly payments without paying an additional deposit.

This card offers online access by phone or mobile app so you can manage your account 24/7. Another perk is this credit card is accepted at millions of locations worldwide, making it ideal for travel.

7. Green Dot Prior Visa Gold Secured Credit Card

This card offers credit lines from $200 to up to $5,000 with a low 9.99% interest rate on purchases all without a penalty rate. There are no minimum credit score requirements, so this card is ideal if you have bad credit.

Since this card accepts all credit score types, it’s ideal if you’re looking to strengthen your credit. As long as you’re responsible with the card, as it reports to three national business bureaus.

Overall, this card has a super fast and easy application process. All you have to do is choose your credit line and open your personal savings deposit account to secure your line.

8. Indigo Platinum Mastercard

If you have a less than perfect credit history, even bankruptcy, you can still qualify for this card.

Once you choose your free custom card design and start responsibly using your card, your account history is reported to the three major U.S. credit bureaus. This will put you in the right direction to rebuild your credit.

The application process is painless, and you’ll find out quickly if you qualify. You can also access your account online or on your mobile phone 24/7. This card also protects you from fraud if it’s lost or stolen, and it’s accepted wherever Mastercard is accepted.

9. Milestone Gold Mastercard

This card offers a quick pre-qualification which doesn’t impact your credit score. You will also find out instantly if you qualify, and previous bankruptcy is accepted. If selected, you get a free custom card design and free online account access.

There’s also zero liability for unauthorized charges on your card, and it’s accepted at over 35 million locations nationwide.

10. AvantCard

Despite its name, there’s nothing avant-garde about AvantCard. It’s application process is fast and easy. The card might periodically review your account for credit line increases.

This card will help strengthen your credit as long as you use it responsibly. There are no hidden fees, you can use it online, there’s no liability but unauthorized charges.

Rebuild Your Credit Today

Now that you know the 10 best credit cards for rebuilding your credit, get your card today. Most have quick and easy application processes, so what are you waiting for?

For more information and insight on credit repair, check out our blog.