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:

student loans and credit

Student Loans and Credit: 7 Steps For Improving Your Credit Score

Given that the majority of Americans are currently in debt, if you’re struggling with improving your credit score, you’re not alone. Student loans are one of the most commonly held types of debt and it can follow you for decades after graduation. The relationship between student loans and credit scores aren’t perfectly interlaced, lapses in payment will drag your score down.

Here are 5 tips for improving your credit score when you’ve got student loans on your back.

1. Stop Taking Out For Life Expenses

Whether you’re still in school or trying to make it through debt after, you need to start putting up some limits on what you’ll take out loans for. Even if we’re just talking about credit card expenses, you need to start paying for more of your everyday life expenses with cash on hand.

If you’re taking out more debt to pay for your day to day living, that cup of coffee or those groceries are going to cost you 20% more than the sticker price. Unless that sounds appealing to you, you need to take a break from taking out loans for things you can afford.

Going further into debt will only make your credit score even harder to up into a healthy place. Your first step is to change the behaviors that will get you further into debt.

If you’re unable to pay for your rent, bills, and living expenses, you need to make adjustments rather than taking out loans. Even small and steady payments can help to improve your credit score while small and steady increases to debt will have a much more damaging effect.

2. Budget

Your budget is your roadmap to getting yourself out of debt. Without a map, all of the resources in the world could be misspent, misallocated, and misdirected away from improving your financial health.

If you’re spending hundreds a month eating out or buying things you don’t need while your debt grows, you’re misdirecting your funds. You need to start by doing a triage of what you have versus what you need.

Track your spending carefully for an entire month. Every coffee, every movie night, every utility, and your monthly expenses should be accounted for. Add everything up for a month and repeat the pattern for two more months if you want to be sure about your figures.

Then track how much you make from week to week. If you have side gigs, add them to your total income until you get a monthly figure. Then subtract your total spending and cross your fingers that you get a positive number.

If you do, then it’s time to start paring back so you can increase how much you’re contributing to paying off debt. If you come up with a negative number or uncomfortably close to it, see where you could be cutting back on expenses.

3. Consolidate Your Debt

Consolidating your debt is the best thing you can do if paying off your debt immediately isn’t an option. If you’ve got a mix of different debts and loans from a variety of lenders and paying a variety of high-interest fees, juggling your payments can be a mess.

Trying to decide whether to pay off the smaller debt with the high-interest rate versus the slightly higher debt with the slightly lower interest rate is a struggle. Calculating which will cost you more, in the long run, doesn’t have to be a headache. You can find a financial services company to consolidate your debt so you can pay one monthly fee and one smaller interest rate.

While debt consolidation is available to most people with debt, not everyone takes advantage of it the way that they could be. When you’re in the soup of juggling repayment, earning income, and avoiding further debt, consolidation can take some of the weight off your shoulders.

4. Repayment Plan

Regardless of whether you took money out from a financial institution or you’re with the federal student loan program, there are lots of payment plans available.

If you’re simply not making enough money to pay your debt right now, you might qualify for a deferment. While you will likely accrue interest during this period, at least you won’t get into trouble for not paying enough on your loans.

You could also apply for an income-based repayment plan. Income-based repayment is catered to your financial situation and doesn’t demand that you pay back more than you can afford. Again, your interest growth might not change, at least you’ll be cutting down on your debt little by little, at a pace that suits your situation.

Every lending institution offers its own repayment plan, aimed at keeping you on track while ensuring the institution gets their money back.

5. Start Paying Off High-Interest Private Loans

Student loan interest rates vary based on the types of loans you get. Loans that go directly to your academic institution usually have lower interest rates than loans that you use for living expenses.

The ones that have the highest interest rates should be paid off first. They will cost you the most, the longer that they’re open. Choose low hanging fruit and take care of those. If you can’t consolidate your loans, pay them off in an order that will get them off your back fastest.

The sooner you pay off your loans, the more you can devote your extra money to saving for retirement and for the things you want the most in life.

The Relationship Between Your Student Loans and Credit Score is Complicated

Many people have student loans and a credit score that appears healthy. So long as you pay your student loans diligently and don’t take out more than you need, you can get access to good credit cards and mortgages. Management of your finances will take some effort but student loans aren’t a death sentence for your credit.

To ensure you stay on the path to repairing your credit, follow our guide for success.

rebuild credit

How to Rebuild Credit After a Divorce

It’s hard enough to talk about divorce. But it’s even more difficult to talk about what to do about money after marriage.

Money issues after divorce are a more excruciating issue than many married couples realize. The statistics are downright scary, particularly for women. Women married to men see a 20 percent drop in their income when their marriages end. At the same time, studies show that men’s income grows over 30 percent after divorce.

Sadly, the poverty rate among separated women is three times higher than that of men at 27 percent.

Then you factor in the cost of divorce, which can range from an amicable split at $250 to well over $100,00 for the most contentious breakups. The unfortunate reality is that money management in the aftermath of divorce is hard, but it’s also a time of renewal.

You have the opportunity to begin again.

While you begin your new life as a separated or divorced person, it is critical to do your best to take control of your finances so that you can rebuild credit. We’ve put together a guide to rebuilding your credit – and your financial life – after divorce.

Rebuild Credit: The Most Important Rule

As you rebuild credit and the rest of your new financial life, the one rule that matters most is using an income to pay your bills on time.

Almost everyone going through a divorce needs to build new skills. Living on one income instead of two or even on a brand new income means re-learning to budget. The nooks and crannies of your previous checkbook that felt so familiar no longer apply.

In some cases, you may need to learn how to take care of the bills. While paying bills today is less time-consuming thanks to features like auto-pay and paperless billing, you may still need to re-orient yourself if your partner always took care of this part of housekeeping.

In other words, don’t worry right now about credit building techniques just yet. Start by covering your bases each month and move on when you’re ready.

Pay Off Joint Debts and Close Your Accounts

Even after a divorce, you may still find yourself financially attached to your spouse. If you have joint debts, like a joint credit card account or loan, then those debts remain even when the marriage falls away.

Paying off these debts needs to be a high priority. You can’t rebuild your credit as a single person when you still owe debts as a married person.

Moreover, your ex-spouse’s financial decisions – like whether they pay the bill on time or at all – continue to affect your credit score even when your divorce is finalized.

If the debts are substantial and primarily belong to one person, consider restructuring the debt. Options like consolidation, refinancing, and balance transfers assign authority over the debt so one of you can move on.

If possible, sort out these joint debt issues during your divorce proceedings. The judge will assign someone responsible for the debt, and you can use it as a precedent during a restructure.

Finally, don’t forget to close joint accounts including credit card accounts and checking accounts. Future charges and missed payments would impact your credit score even if it were your ex-partner who was responsible for the debt.

How to Build Your Credit

With your joint debts behind you, you’re now ready to embark on your next journey: creating a financial life of your own. A new financial life also means building credit.

If you changed your name after you got married and intend to change it back post-divorce, file the relevant paperwork before opening new accounts or doing much else.

Check Your Credit Report

To start the work, pull your credit reports from all three credit bureaus. Read every single line to ensure every account noted is yours alone. Don’t forget to look for errors or other issues that pop up, which is an integral part of regular credit maintenance no matter the season of life you find yourself in.

Next, create a spreadsheet of all your accounts. Include the institutions, account numbers, and dollar amounts for everything related to your finances including assets and debts.

With a new name and an understanding of your finances, you’re ready to take the next step: opening new accounts.

Get a New Checking Account

Get yourself a new checking account in your name first. Talk to your bank and your current credit card companies to open accounts in your name without your former spouse’s details. If not, seek out new banks and lenders.

Choose your new relationships carefully. Avoid applying for too many new accounts or cards. If you recently completed a divorce, it’s likely your credit already took a hit. Even closing joint accounts damages your sore, even if it is not a significant hit.

Consider Bad Credit Options

If you are unsure of where you stand, consider trying a secured credit card.

Secured credit cards operate similarly to unsecured cards, but they require you to prepay the card before using it.

Secured credit cards are not only suitable for those repairing or rebuilding their credit, but they are also safer. You’re less likely to run into credit card trouble in the months ahead, which helps you over the long term.

Make New Plans

Building up your credit after divorce works much the same way as it did before and during your marriage. Paying your bills on time, avoiding more debt than you need, and maintaining a good relationship with your creditors and banks earns your credit back slowly but surely.

Looking for more information on managing your money and how to rebuild credit? We offer resources for improving financial literacy no matter where you are in life.

marrying someone with bad credit

Marrying Someone with Bad Credit: How Your Partner Can Affect Your Credit Score

Did you know that money worries are the biggest reason for marriages ending in divorce?

Many financial-savvy people work hard to build up a great credit score.

There are many reasons to ensure that you have a great credit score, from taking out a mortgage to negotiating your interest rates with banks.

Despite the advantages of a great credit score, around 30 percent of people have a poor credit score.

It’s just themselves who are negatively affected by a poor credit rating. Marrying someone with bad credit can harm you financially too. It seems that for some people “love conquers all”. According to a survey, around 20 percent of people would marry someone with a poor credit score.

It’s important to know what you’re getting into by if you marry someone with bad credit. Keep reading to discover more about the implications for putting love before money.

Do Credit Scores Merge Together?

Many newly married couples believe that tying the knot means a brand new credit record is created that brings together both people’s credit score.

In other words, it is assumed that credit ratings average out between the poor and great credit score. Thus forming an okay credit score.

This is absolutely wrong! Your credit scores do not merge together when you marry.

This is because your credit score is always attached to your Social Security number, which doesn’t change when you get married.

Once you’re married, your credit score doesn’t change and remains separate to your partner’s record. In fact, there is absolutely no recognition of marriage as far as your personal credit score is concerned.

When Does Your Partner’s Bad Credit Impact You?

Even though your credit score rating doesn’t merge together, you could still be affected by your partner’s poor credit rating.

In the following cases, you could find that you are negatively impacted because of your partner’s bad credit.

Apply for a Loan

Married couples often choose to apply for a loan together.

This could be a mortgage or another bank loan. Most lenders request the credit score of both partners. Both people are responsible for the loan repayments and therefore your documents will be considered separately, as well as, together.

If one member of the couple has a poor credit score, you could find that your loan application is denied. However, even if it is approved by the lender, you’ll probably have to pay a higher interest rate as a result of the poor credit score.

Apply for Rental Contract

If you can’t afford to buy your own property yet, you might choose to take out a rental contract instead. The property owner will also want to see your documents and credit score.

You could find that your application is also rejected because the property owner does not trust you as reliable tenants.

Add Your Partner to Your Account

Many couples choose to add the individual with the poor credit score to the bank account to the individual with the great credit score. Your account details will be displayed on your partner’s credit record.

But this won’t necessarily impact the existing credit record of your partner. There are several factors that contribute to a poor credit rating. Simply including someone with a great record on your account is unlikely to be enough to alter the poor score.

An alternative approach is to include your partner as a joint account owner. This could also boost your partner’s credit score. However, you could also risk damaging your own credit record by doing this.

Co-Signing Risks

Many individuals with a great credit score choose to co-sign for their partner. If you do this, you are responsible for the payment of any unpaid debts that your partner owes.

It’s important that you’re in a financial position to pay for any of these payments. Otherwise, you could also incur harm to your credit score.

What to do When Marrying Someone With Bad Credit?

It’s not all doom and gloom if you’re marrying someone with bad credit. There are many things you can do to make the most of a bad situation.

Keep Your Finances Separate

It’s important to keep your finances separate from your partner’s until they’ve fixed their credit record and paid any debts.

Most importantly, don’t add your spouse to your accounts or create a joint account yet.

Talk About Money

While it’s not the most romantic topic to talk to your new husband or wife about, it’s really important to make sure you’re both clear about your financial circumstances.

You can create a household budget together to make sure neither of you overspends on your monthly expenses. Always make sure you’re on the same page with any joint financial decisions.

Marrying Someone with a Poor Credit Record

Marrying someone with bad credit can undo all the hard work you’ve put into making sure you have a great credit score.

You could struggle to get a mortgage together to buy a home. You might find that you have higher interest rates when you take out a bank loan.

But it doesn’t have to be this way. It’s important to know what you’re getting into by if you marry someone with bad credit. This way you can talk about your finances with your spouse to come to the best solution for both of you.

Do you want to find out more about credit repair game plans? Check out our blog on how to start the credit score repair process.

steps to take for stolen identity

A Guide to How to Build Credit with a Credit Card

With about 80% of Americans currently carrying some form of debt, we know that building good credit can be a serious challenge.

One tool that you might not have realized can help you to boost your credit score and look great in the eyes of lenders?

Credit cards.

In this post, we’ll tell you the basics of understanding how to build credit with a credit card.

From understanding what a credit score is to mastering using a credit card to build credit, by the end, you’ll be ready to find the right card for you.

Read on to learn how to become a credit master.

What Is a Credit Score?

Before we talk about how to use a credit card to build credit, let’s take the time to clearly define what a credit score is.

Shockingly, 60% of Americans don’t even know their credit scores, let alone how to improve them.

In a nutshell, this number tells banks the overall likeliness that you’ll be able to repay any debt that you put on a credit card or take out in a loan.

Credit bureaus generate your credit reports based on information like how frequently you make payments, the amount of those payments, and whether or not you make them on time.

They’ll also take a look at your number of accounts. In some cases, they may look at the number of inquiries that have been made on your credit report, as well as the percentage of your overall credit limit that you’re currently using.

Be aware that most people actually have more than one credit score, and each score has a different method of calculation. In general, Equifax, TransUnion, and Experian are the most popular credit bureaus within the United States.

Unfortunately, about 45 million Americans don’t currently have a credit score.

This will make it fairly impossible for you to get approved for things like a loan for paying for college, buying a home, or even a new credit card.

The good news?

You can build credit with credit cards, even if you don’t currently have one.

Let’s talk about how to make that happen right now.

Why Using Credit Cards to Build Credit Is Smart

We understand that you certainly may have reservations about using a credit card to build credit.

However, doing so offers you several unique advantages.

First of all, look for a card that doesn’t have an annual fee. This means that, especially if you’re carrying a balance, you won’t have to worry about any extra charges that make it harder to pay off.

Also, be aware that you don’t even have to carry a balance on a card in order to build up your credit. So, if you can, make small purchases that you can easily pay for by the time your next statement is due.

You’ll also be able to buy more than you would have relying on your checking and savings accounts alone.

This is especially helpful if you have larger purchases coming up that you know you can pay for over time, but just not within a single payment.

Plus, most credit cards also offer excellent fraud and loss protection. Of course, if you’re carrying cash, you’re out of luck in the event of a robbery or a dropped wallet.

Finally, credit card companies offer awesome point programs in order to convince more people to sign up for them. This might give you great deals on flights, eating out, and a whole lot more.

Look for a card with a rewards program that most closely benefits your overall lifestyle. We also suggest meeting with an in-branch representative at your local bank.

They’ll be able to help you to find and get approved for the right card for your financial situation.

How to Build Credit with a Credit Card

Once you’ve chosen and have been approved for your credit card, it’s time to start using it to improve your credit!

First of all, always do everything that you can to make payments on time.

If possible, we strongly suggest that you set up automatic and recurring payments each month. This is especially key as many companies will charge you a late fee!

Always keep your balances as low as you can. In general, try to keep your balance at or below 30% of your available credit limit in order to improve your overall credit score.

Do everything possible to prevent yourself from maxing out your balance. This looks fairly terrible on your credit report.

Finally, if possible, keep it to one credit card at the beginning.

The more credit cards that you have, the more likely your credit report will be negatively impacted. The more cards that you have, the lower your average credit report will be.

So, focus on finding the right card, not on using tons of different cards to cash in on rewards that you don’t really need.

How to Build Credit with a Credit Card: Wrapping Up

We hope that this post has helped you to understand that building credit with credit cards is a smart move and not the bad idea that it’s often made out to be.

In fact, it’s the perfect way to give banks and lenders a better idea of your overall financial situation and responsibility.

Just remember to keep as low of a balance as possible and to make payments on time.

Looking for more information on how to build credit with a credit card?

We can help.

Be sure to keep checking back with our website and blogs for more tips on how to improve your financial literacy.

credit score after bankruptcy

What Happens to Your Credit Score After Bankruptcy?

Finances are a confusing subject for most people, yet everyone knows what “Chapter 11” means. In 2016 alone, there were a total of 819,159 bankruptcies filed. That means it’s not a rare occurrence.

Of those 819,159 bankruptcies, only 25,046 were by businesses. Therefore, most bankruptcies are being filed by consumers and not businesses.

Considering these numbers, it’s likely that you know someone who’s been affected by bankruptcy. If not, you’ve probably seen the topic broached more than a few times in entertainment or other media.

Once the paperwork is filed, the next question is, “What happens to a credit score after bankruptcy?” Read this guide to find out more.

Types of Bankruptcy

Before you even file bankruptcy, you need to consider what type of bankruptcy best suits your situation. Not all bankruptcies are treated equally, and not all bankruptcies affect your credit equally.

The two main types of consumer bankruptcies are Chapter 7 and Chapter 13.

Chapter 7

A Chapter 7 bankruptcy is the quicker type of bankruptcy. It will only take about a few months after you file to complete it. Of course, that’s only if you qualify.

Many people prefer Chapter 7 bankruptcy for its speed. However, this type of bankruptcy requires the filer to liquidate all assets. The money from liquidation then goes to the creditors. Finally, at the end of the process, all debts are discharged.

For other people, liquidation is not an attractive option. Sometimes, however, it is necessary. Unfortunately, this type of bankruptcy will remain on your account for ten years.

Chapter 13

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy can take years to file. Some people prefer this method, however, because it allows them to retain all their assets.

Instead, the filer will be responsible for settling all their debts with their creditors. Usually, this is done through a payment plan that can last three to five years. At the end of the plan, the remaining debt is discharged.

With this method, the bankruptcy will only remain on your account for seven years if you complete everything properly.

The National Average

There’s no way to really know how bankruptcy will affect your credit score until you file, but looking at national averages can help you get a better picture.

Those with a higher credit score take a harder hit to their credit. On average, someone with an excellent score will drop a couple hundred points. For example, if your score is 780, it may drop to something under 550.

Those with a lower credit score have less to lose. It’s most likely that their credit will drop somewhere between one hundred and two hundred points. If you have a fair credit score, like 680, you may end up with something like 530.

Either way, the bankruptcy filer will end up with a score that is somewhere around or below a 550.

Past Due Accounts

Most people considering bankruptcy already have some bad accounts in their credit file. They may have missed some payments, gone delinquent or default on a loan, or may have even had a foreclosure. If you’re considering filing for bankruptcy, it’s likely because of your past due accounts.

Even if you include these accounts when you file for bankruptcy, they will still appear on your credit report. Once they are discharged, however, they will have zero balance. This means lenders can still see them when you apply for credit.

Despite this, these accounts will no longer be listed as “past due.” This can be very relieving for anyone facing a mountain of debt.

Impacts on Your Score

A collection of derogatory remarks is often more harmful to your credit score than a single episode of bankruptcy.

As previously stated, if you have an excellent credit rating, you will see the largest impact on your credit score. If you have more, you have more to lose. If your credit was already suffering, the impact won’t be as large.

This impact is not uniform. The amount of debt discharged and the ratio of positive to negative accounts on your report will be factored in. Those with more severe debt situations will end up with a lower score than those with less debt.

How Others See Your Score

A huge reason why people resist filing for bankruptcy is fear. They are afraid that life will be just as hard after bankruptcy as it was before.

Thankfully, no one goes through this process alone. Filing for bankruptcy is not uncommon, and creditors know this. That’s why immediately after filing, you’ll find your mailbox flooded with offers.

After filing for bankruptcy, people are ambushed with credit card and car loan offers. Those who file for bankruptcy are often afraid that they’ll never get credit again, but these offers clearly disprove that.

Additionally, it’s not as hard to rent an apartment as it may seem. You may be required to pay a larger deposit, but many landlords are willing to overlook bankruptcy. It’s only attaining a mortgage that becomes a bit more difficult.

Improving Your Score

The best thing about bankruptcy is that it allows people to rebuild their credit score. It’s something you can begin to do as soon as your debts are discharged.

If you make the right decisions, you can get your score back into the 700s in just a few years. Make sure to scrutinize every financial decision you make during this crucial time.

One of the best ways to do this is with a secured credit card. These credit lines are much easier to manage and control. The most important thing is to make timely and consistent payments.

After a few years of good credit behavior, it will be as if the bankruptcy never happened.

Your Credit Score After Bankruptcy

Bankruptcy may seem like a life-ending event, but it doesn’t have to be. As you can see, hundreds of thousands of Americans go through the same predicament every year. Knowing these steps, you know what to expect from your credit score after bankruptcy.

At Credit Repair Answers, we can point you in the right direction to improve your credit after bankruptcy. Just make sure to check out our blog posts here.

fico score vs credit score

Fico Score vs Credit Score: What’s the Difference?

If you are thinking about opening a line of credit, you’re probably doing research about your credit score. But with so much information out there, it can be hard to know where to look.

Are you supposed to look at your FICO score or your credit score? Which one matters the most?

We wrote this article to help walk you through the differences between a FICO score vs credit score. Read on to learn more.

FICO Score vs Credit Score

FICO scores are used most commonly be lenders. However, there are other scores out there that can help you figure out where your credit is.

Other than FICO, there are a few other companies that use scoring methods to determine credit scores. One of the common credit scoring models, aside from FICO, is the VantageScore model.

FICO and VantageScore look at many of the same factors, but they differ just a little. And your credit scores will look different depending on which scoring model the company used and which credit bureau they got your information from.

A Bit About FICO Scores

In 1989, lenders began using FICO credit scores and since then the company changed its scoring methods many times. And, accord to FICO, today over 90% of lenders use FICO scores when deciding on whether or not a consumer is a safe choice.

FICO offers industry-specific scoring methods in addition to the base versions, like those for car loans, credit cards, and mortgages. This means that the score your mortgage company has and the score your car company has for you are going to be different.

FICO scores range from 300 to 850, and it takes the following factors into consideration when giving you your final score:

  • Payment history: 35%
  • Amount owed: 30%
  • Length of history: 15%
  • New credit: 10%
  • Credit mix: 10%

Different scores mean different things. FICO generally defines different credit ratings like this:

  • 800+: exceptional
  • 740-799: very good
  • 670-738: good
  • 580-669: fair
  • 579 or lower: poor

Industry-specific scores have a range from 250-900 and they’re tailored depending on the line of credit you intend to open.

Each one of the different FICO versions uses unique formulas that cater to the different kinds of creditors as we mentioned.

That means that if you had a car repossessed or missed a payment on your car loan, your FICO Auto Score will weigh those factors more heavily than your base score.

You can get a hold of your FICO score through different card issuers or a number of other tools as well.

Now Onto VantageScore

In 2006, Equifax, Experian, and TransUnion started a joint venture in order to provide consumers with a more diverse and fast-acting credit score.

While FICO requires you to have an account open for six or more months, and one account reporting to the bureaus within the last six months to get your score, VantageScore wants to give you your credit score with just one month of history.

VantageScore claims that over 2,200 institutions use their system when checking credit scores, and they’re based on the following factors:

  • Payment history: incredibly influential
  • Age and credit type: highly influential
  • Credit limit used: highly influential
  • Rational of debt: moderately influential
  • Recent behavior: less influential
  • Available credit: less influential

Those factors are roughly the same as FICO scores, right?

The ranges of credit score quality are a bit different, though.

  • 750-850: excellent
  • 700-749: good
  • 640-699: fair
  • 300-639: needs work

VantageScore runs from 300-850 and they are also constantly updating their scoring practices.

Proprietary Scoring Models

Just like FICO and VantageScore, the credit bureaus also have their own proprietary credit scores. But because lenders don’t use these when making decisions about credit, they’re called “educational scores.”

Why Are They So Different?

FICO and VantageScore are just two scores on the tip of the iceberg. There are dozens of other credit scores out there.

While all of these companies score your credit in a different way, they all place their focus on how responsible you are with the money that you borrow.

There are a couple of reasons why your scores are different.

Some scores are going to be from different dates. Your credit score is constantly changing, so make sure that you checked all of your scores on the same date to get the most accurate comparison.

Also, your credit scores are calculated with different scoring systems. These are proprietary, so we don’t know what they are exactly, but they are all just a little bit different.

Scores are also calculated with different reports. If your lender only reports to one of the three bureaus, some credit agencies could be missing some information.

You have to check your credit report for errors over time. It is unbelievably common for people to get their credit report and find that it is filled with errors.

So, Which Is Better?

Truthfully, no one credit score is better or worse than the other. They are all different, and different lenders use different scores.

However, most of the leading United States lenders use FICO credit scores, so they might influence your financial life a little more than the others.

The Final Score

In the FICO score vs credit score debate, it’s important to remember that they’re all different but equally important in some way.

It’s hard to keep all of your different credit scores in mind because there’s just so many out there and they’re all changing constantly. But, as long as you focus on repaying your debts and keeping a healthy line of credit open, your scores should all remain healthy.

Just remember to check them yearly to ensure that you haven’t missed something or that the reports aren’t incorrect.

For more information about improving your credit score, visit us today!

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5 Reasons You May Have a Bad Credit Score

Have you been told by the bank that you have a bad credit score?

Your credit score will affect how much money you can take out for car loans, home mortgages, and personal loans.

Credit scores range from 300 to 850, and a score of 700 or above is generally regarded as a good credit score. Many people have credit scores between 500 and 650 and wonder what they can do to improve that number.

If this sounds like you, you’ve come to the right place. In this post, we’ll take you through a few reasons that you might have a low credit score–and how to improve it.

1. Payment History

Are you paying all your bills on time?

Late payments and skipped payments have a negative effect on your credit score. Payment history is significant–it makes up about 35% of your credit score.

If you are trying to repair broken credit, one of the best things that you can do is sign up for automatic bill pay.

Also, review your credit report and see if you can pay off accounts that are in default. Defaults weigh heavily against your credit score and could remain on your record for up to six years.

2. Amount Owed

You might be surprised to learn that the amount of money you owe can count against you on your credit score.

If you have several credit cards that are maxed out, it can seem like you’re having financial problems. You should always keep your debt at about half your overall credit limit. The amount you owe makes up 30% of your entire credit score.

On the other hand, not having any credit history can count against you as well. If you’re just starting out, it’s probably a good idea to use a credit-building card to establish the fact that you can pay on time and in full.

3. Credit History

Lenders want to lend money to customers who have been at their address for at least several years.

If you want to improve your credit, you should register to vote at your home address. It may sound funny, but it shows that you intend to remain at your address for a long time.

Credit history makes up 15% of your credit score and takes into account the average age of your accounts. The longer you maintain accounts like your electric, gas, cable, and phone, the better it looks on your report.

If you have a bad credit score, it might be due to the age of your accounts. Experts report that people with credit scores of 800 or more have accounts that are at least 25 years old.

4. New Credit and Credit Mix

Every time you apply for a credit card, it affects your credit. Even if you do not get approved for that card, the application still counts as a “hard search” on your credit.

If you’re wondering, “Why is my credit score dropping?” it could be that you’ve got too many hard searches on your account.

Instead of applying for a wide variety of credit, try to apply only to credit cards that you know you’re qualified for. New credit applications only make up 10% of your credit score, but lenders want to see that you’re making good use of your existing credit.

Lenders also want to see that you are responsible for several different types of accounts. Keeping a low balance on your credit cards and paying your home mortgage and car loans on time will affect another 10% of your credit score.

5. Mistakes

When you’re checking out your credit report and starting to repair your credit, make sure you check all your accounts for errors.

Identity theft affects more than 15 million people each year. If you notice a misspelled name or incorrect address, it’s important to raise a dispute with the credit reporting agency.

Also, if you have used more than one name in the past decade, it’s important to make sure that your credit report is free of errors.

To improve a bad credit score, make sure that your longstanding accounts are listed on your credit report. It may take a little while to remove any mistakes, but the benefits to your credit report are worth the effort.

How Can I Repair a Bad Credit Score?

The first step toward repairing low credit scores is to thoroughly assess your report. You might want to contact a professional credit repair team in order to get you started.

Pay off any debt that you can, especially on accounts that have defaulted. Often, companies will settle for a lower payment just to have the account cleared from their books.

Make sure that your credit report has the correct address, name, and social security number. Take the time to correct any mistakes that you find.

Don’t apply for too many credit cards or loans all at once, and pay down your existing credit cards. You shouldn’t be using more than about half of your available credit.

If you’re in the market for a home or auto loan, you may want to take it out at a higher interest rate. If you can, pay more than the minimum amount each month and see if you can refinance after a few years.

Should I Contact a Credit Repair Website?

If you’re serious about repairing your credit, finding a good credit repair website is a good step to take.

The average American household owes more than $15,000 in credit card debt. Once you add in car loans and home mortgages, you could be carrying hundreds of thousands of dollars in debt.

The higher your credit score, the better the rate that you’ll get on new loans. If you invest some time into repairing your bad credit score before you go in for a loan, you could save thousands in interest.

Take the time and see how much you can improve your credit in six months. Make sure that you report any inaccuracies and that you’re paying off as many accounts as possible.

We have helped thousands of people with their credit repair. Drop us a line with any questions you have!

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5 Key Credit Repair Tips You Should Know

Bad credit is a more common problem than you might expect. Over 30% of Americans suffer from bad credit.

Another thing you might not realize is that bad credit makes your daily life harder and more expensive. For example, bad credit can lower your odds of getting a good apartment. It also drives up the costs of common bills such as utility services and car insurance.

Fortunately, bad credit isn’t a life sentence. You can do key credit repair activities that will improve your credit score over time.

Keep reading and we’ll cover five key credit repair tips.

1. Get Your Credit Report

Before you take any actions, you must know what needs work and what’s okay. That means getting copies of your credit reports.

You can get free copies of your credit report by visiting annualcreditreport.com. Why do this? Because your credit reports contain a ton of important information about your past and current financial activities.

Some things you might see on a credit report include:

  • Active credit cards
  • Payment history
  • Loans
  • Old addresses
  • Bankruptcy
  • Current debt
  • Legal judgments

You should take the time and read through all three reports. Look for things that lower your credit score like past due accounts, charged-off accounts, and lots of hard pulls.

When you apply for a line of credit, like a loan or credit card, the bank does a credit inquiry or hard pull. These inquiries stay on your credit report for a couple years. While an occasional hard inquiry doesn’t hurt you, lots of them make you look like a risk.

Also, keep an eye out for mistakes in the reports. Highlight those mistakes so you can find them easily. It’ll help with our next tip.

2. Dispute Errors on Your Report

Let’s say your credit report shows that you owe a collection agency some money. The only problem is that you already paid off that bill. It’s annoying, but it does happen sometimes.

All you really want is for the report to say that you paid the debt. You can go a couple of different ways to make that happen.

You can ask the collection agency, store, or credit card to update the credit bureaus. As a general rule, you should make the request by mail.

This lets you keep your own copies of anything you send. It also lets you use certified mail, which leaves a paper trail. Most organizations will simply update the credit bureau when they get your correspondence.

If they don’t respond and don’t inform the credit bureau, you must dispute the error with the credit bureaus. Again, send the dispute by mail. The credit bureaus must investigate within a certain period of time, typically a month to six weeks.

If the investigation goes your way, the credit bureaus will update your reports with the correct info.

3. Organize Your Debt

Fixing errors will help your credit, but you must also get problem debts under control.

Don’t assume your biggest debts pose the biggest problems. The longer a debt goes unpaid, the more it hurts your credit.

So, let’s say your utility bill is $400 and one month late. Let’s also say your cable bill is $120 and three months late. That late cable bill might damage your credit more, even though it’s a smaller bill.

Organize your debts in order of lateness. Put things in collection at the top because those are your oldest bills. Follow that with your late or overdue bills. Then, list debts with on-time payments.

Organizing your debts this way can help you decide which debts need attention first.

4. Reduce Your Total Credit Card Debt

Reducing your total credit card debt is a key credit repair tactic. The amount of credit card debt you carry determines your credit utilization ratio.

Your credit utilization ratio is, essentially, how much of your credit you use at any given time. The ratio goes up the closer you get to your credit limits. A higher ratio hurts your credit more.

Remember, it’s not only about how much credit card debt you carry.

Let’s say you and your buddy Tom both carry $1500 in credit card debt. Your total credit limit is $2000 and Tom’s total credit limit is $4500. Your credit utilization ratio is 75%. Tom’s ratio is around 33%.

Your ratio hurts you because it’s high. Tom’s ratio probably doesn’t hurt him much, if at all, because it’s relatively low.

Say you cut your total credit card debt to $700. Your ratio is now around 35% and will automatically improve your credit.

5. Deal with Past Due Bills

First things first–you should always pay survival bills first. Putting food, shelter, and utilities at risk is never a good idea. You need those things.

Eventually, you want all your old debt paid off. When making your first choices, though, you should probably start with past due bills. On-time payments play a big role in your credit score.

Getting bills current and keeping them current is a slow but certain path to better credit. Paying your past due bills also prevents them from turning into collection accounts.

After you get your current bills up to date, turn your attention to those collection accounts. They stay on your credit report for years, but paying them off does help your overall credit.

You also face a choice with creditors between paying in full or paying a settlement. A settlement will close the account, but it doesn’t help your credit as much. On the other hand, a settled account helps your score more than an open collection.

Parting Thoughts on Key Credit Repair Tips

Bad credit can make your life difficult in obvious and subtle ways. Improving your credit can only help you in the long run.

There are several key credit repair actions you should take. Get your credit reports and dispute any errors. Organize your debts so you know what you face. Deal with your past due bills and reduce your credit card debt.

Each of these actions brings you one step closer to healthy credit.

Credit Repair Answers offers information and advice about fixing your credit. For questions or comments, please contact us.

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Everything You Need to Know About Student Loans and Credit Repair

With over 1 trillion dollars of debt shared between millions of Americans, student loan debt is among the most common type of borrowed money you’ll find in the country.

This isn’t particularly surprising. After all, many student loans are taken on by people who just turned 18 on the promise of it being positive debt that will pay for itself in the future.

That may end up being true for some. But what if you have difficulty paying back that debt?

Will it affect your credit? Your opportunities?

And what about if you make payments on time? How would that affect your credit?

Our team at Credit Repair Answers has put together this article to educate consumers more on student debt, credit, and student loans credit score implications.

What are Student Loans?

Just to nail some definitions down, let’s quickly go over student loans. Student loans are money students would borrow either from the government or a private lender to attend a higher learning institution.

Student loans can be acquired for any degree type including an Associates, Bachelors, Masters, Doctorate, and Juris Doctorate.

Student loans can also be acquired for trade school certifications for those interested in jobs like an electrician or plumber.

How Does Paying Back a Student Loan Work?

Once approved for a student loan amount through your lending institution, paying back can work in a number of ways depending on the loan type. For example, some loans offered through the government are deferred interest loans.

With these loans, interest doesn’t start being charged to the principal loan value until after you graduate and have to start making payments. These are typically offered to students pursuing their first degree who represent a certain level of financial need.

Another loan type offered by the government as well as private lending institutions are standard loans. These loans begin to charge interest on the borrowed amount the moment the money is lent.

Some will still let you defer payments until after you graduate but that does not stop the interest from accruing. Depending on the amount borrowed and how long you’re in school, the amount of extra money you’ll need to pay as interest compounds on your loan can be immense.

A Little Bit About Credit

Credit is virtual commodity lenders use to judge how likely you are to act responsibly with money in the future. Credit is integral to your getting approved for quality future loan products such as a car loan, mortgage, and more.

Credit may also be a factor in deducing your eligibility for things like a particular apartment.

Typically, credit scores fluctuate based on a variety of factors. The most important two being the duration of your credit history (how long you’ve been actively borrowing money in some way, shape, or form) and your history with paying back your debt in a timely fashion.

Student Loans Credit Score Implications: How Do Student Loans Affect Your Credit?

Student loans are considered installment loans which get treated a little differently by FICA (the organization responsible for coming up with your primary credit score). This is in contrast to the way credit cards get treated, as they’re categorized as revolving debt.

With installment loans, you can carry a high loan amount and not get penalized for borrowing large amounts in the same way you would be if say, you borrowed a massive amount from your credit card.

Will Student Loans Hurt Your Credit?

Student loans are only likely to harm your credit if you’re not making payments on time and in full. FICA says that borrower’s on-time payment history accounts for over 1/3 of their credit score.

That means something as small as a single missed payment can cause big-time problems with your credit.

On a side note, given the amount of money borrowed on your student loan, having one could prevent you from getting other loan products. Some lenders look at your debt to income ratio to determine if they can lend you more. With $50,000 or so in student debt on your books, getting more money might be hard to get approved.

Will Student Loans Help Your Credit?

Carrying loans responsibly can significantly improve your credit. For starters, the longer you have a loan, the longer your credit history. The longer your credit history, the more your credit score goes up.

Also, every payment you make on time for your student loans gives lenders more confidence that you’re responsible with your money. So the more you pay back, the more lenders and your credit score will love you.

How to Repair Your Credit

If your credit has suffered as a result of not being able to handle your student loans, there are ways to bounce back.

For starters, if your monthly payment is too high, contact your lender and see if they will restructure your debt. It’s possible that they can make your monthly payments lower and extend the life of the loan.

Also, know that as you do catch up with payments and start paying on time, your credit will start trending in a positive direction. Credit is a very fluid rating so the second you start proving you can pay back what you borrowed is when you’ll start to notice your credit recovering.

Wrapping Up Student Loans and Credit

Student loans credit score implications can be scary for those who don’t know much about finances. Taking the time to educate yourself by reading articles like this will help you better understand how credit ratings and student loans relate to one another and will set you up for success in your financial future!

If you’re interested in learning more about all things credit, dig deeper into Credit Repair Answers. We offer a slew of free financial advice which works to answer all of the money questions plaguing your life!

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How the Credit Repair Process Can Help You Purchase a Home

5.51 million. That’s the total number of existing homes sold in 2017.

Newly built home sales, on the other hand, totaled to 612,000.

And did you know that more than a third of all buyers were first-timers in the residential real estate market?

This goes to show that despite the rising prices of houses all over the United States, people still want to purchase a home. It’s part of the American dream after all.

But what if you have bad credit?

Worry not, as you don’t have to give up hope yet. With the right credit repair strategies, you can still fulfill that dream of yours to become a homeowner.

And we’re here to tell you just how you can repair credit to buy a home. So, make sure you read this from start to finish.

Why You Need to Repair Your Credit in the First Place

Before we get into the nitty-gritty of fixing credit to buy a home, you should start with understanding consumer credit, credit score, and why there’s a need to repair it in the first place.

At its core, consumer credit refers to a debt someone takes on whenever he/she buys a good or service. You may have heard of the term “consumer debt.” This is the same thing.

It includes anything you purchase using your credit card, a line of credit, or a loan. That credit card you use for the majority of your shopping activities? That’s one type of consumer credit and is the most common form.

Your credit score, on the other hand, basically measures your creditworthiness. In other words, it’s how lenders perceive you and determine whether to let you “borrow” money from them. It’s a three-digit number that indicates how financially trustworthy you are.

Like with academic scores, the higher your credit score, the better. In most cases, good credit scores mean that consumers pay their loans on time. There are, however, many other factors that influence it, including the credit history length, types of credit, and total debt owed.

So, what happens that lead to people having bad or poor credit scores?

One of the most common reasons is for failing to make loan payments on or before their due dates. Another is for having only one type of credit. And there’s also the possibility of errors on credit reports.

It’s dangerous to think that the last won’t happen to you. As many as one in every five consumers may have an error on their credit report.

Remember: Your credit score can have a drastic impact on your life. After all, it’s a primary consideration lenders look at when deciding whether to qualify you for a loan. That bad credit you have may be the only thing getting in your way of finally becoming a homeowner.

Starting the Credit Repair Process

There are a number of ways on how to fix your credit score. Note, however, that repairing credit takes time and diligence. It’s totally doable, but it’s not an overnight fix.

First things first: Know what your credit score is. Just to give you an idea, the nationwide average last year reached an impressive 700. This signals a rise in consumers’ credit scores, although this still greatly varies based on age.

Also, some good news for you: Last year, over 50% of consumers in the country scored above 700. Only 20 more points and the score will already classify as excellent. This said, you should know that what seems to be an increase of only a few points can already make a difference.

Ensuring Your Credit Report is Spotless

To know exactly where your credit score stands, it’s best you get a copy of your credit report. Aside from letting you know what exactly your score is, this also lets you spot any possible errors in the report.

Remember: You won’t know that you’re part of the 20% of the consumer population potentially having errors on their reports unless you get an official report copy. So, once you have this, inspect it from top to bottom. And in the event you discover any mistakes, report it right away.

Every Payment Counts

The last thing you want is to take out a mortgage to fund your home purchase but have serious difficulties paying it. Pushing through a mortgage application despite your bad credit almost always mean higher mortgage rates. And the higher this is, the greater your monthly mortgage payments are.

In other words, you’d have these higher mortgage payments on top of your outstanding loans. This can be quite difficult to make good on, which then increases your risk of missing payment due dates. And whenever you fail to pay on time, your credit score once again takes a hit.

And the vicious cycle won’t end.

So, rather than taking on an even bigger debt, it’s best you pay off your current ones first. Every payment, no matter how small (minimum payment due), helps you lessen your debts. This doesn’t just reduce what you have to pay for every month; it also helps you improve your credit score.

From here, you have better chances of securing funding for your home purchase. And of course, greater odds of getting more reasonable mortgage rates.

Settle Payment Dues As Soon As Possible

Even the most prudent and responsible consumer can still forget about due dates. The thing about missing payments is that they automatically raise red flags for lenders. They also show up on credit reports, which means that lenders you’d want to work with in the future will see them.

One of the best strategies to never let a payment due go unpaid again before its due date is to set up reminders. Or if possible, set up payment schedules. This way, even if you forget about them in the hustle and bustle of your hectic work schedule, you’ll receive reminders or have them paid automatically.

Start Repairing Your Credit Now

As early as now, you’d want to begin the credit repair process. Again, because it takes time to fix a credit score. And of course, because you want to finally make that transition from being a renter to a homeowner as soon as possible.

Want more help with your credit score? Head to our website now for more tips and tricks like this!