Top Credit Score

Top Credit Score

Credit Repair and Your Credit Scores – Common Questions

When did Credit Scoring begin?

All of Your Credit Repair efforts are designed to improve Your Credit Scores. There may be no more important number in your life. But where did credit scoring start? The FICO credit scoring model was created in the 1950s by two Stanford University researchers, Bill Fair and Earl Isaac. Automated FICO scores were first made available in 1989 and initially utilized by Credit Card issuers. But credit scores really became part of all of our lives in 1995 when Fannie Mae and Freddie Mac, the mortgage giants, asked lenders to incorporate the use of FICO credit scores in their approval decisions. The rest is history. Fair Isaac Corp. trades on the New York Stock Exchange under the Symbol FIC, and reported revenues of over 800 million dollars in 2007.

Why are lenders scores different from the ones I bought online?

Lenders purchase FICO scores from the three Credit Bureaus. But with the exception of Equifax, the credit bureaus do not sell FICO scores to consumers. The scores sold by TransUnion and Experian are their own proprietary scores. These scores may vary significantly from your FICO scores. This can be very confusing for anyone in A Credit repair program who wishes to monitor their credit scores. If you are working on credit repair and want relevant lender FICO scores you can purchase them at myfico.com.

Why do I have Three Credit Scores?

The Three Major Credit Bureaus compile data on consumers, and sell Credit Reports and a wide variety of marketing information based on this data. The three credit bureaus compete with each other, but because lenders have adopted the practice of minimizing risk by reviewing all three bureaus, the three bureaus are perceived as being equally important. Each bureau licenses the use of the FICO scoring software from Fair Isaac and Company and applies it to their database to produce a FICO score. All three credit bureaus must be addressed in your credit repair effort.

Why are my three credit scores different?

There are three reasons for the differences in your scores. First, creditors do not necessarily report to all three bureaus – if you examine your reports you will probably notice many differences in the content. Second, the timing of the reporting of information by each bureau is different – if you used a credit card recently your new balance is likely to be reported by each bureau at different times. And third, Fair Isaac modifies the software from time to time, and the bureaus do not all implement the new version concurrently. It is pertinent to your credit repair effort to know that when correcting reporting errors the information on each bureau may be unique.

I’ve heard that there are two types of inquiries, what are they?

There are two types of inquiries. Hard inquiries will affect your credit scores, and occur when you apply for new credit. Soft inquiries will not affect Your Credit Score, and are triggered most often by three different events; first, when you request your own Credit Report; second, when prospective lenders review your credit before offering you pre-approved credit; and lastly, when a current creditor conducts a periodic review of an existing account. Because inquiries have such a small impact on your scores, they are often addressed last in any credit repair effort.

How much will inquiries hurt My Credit scores?

Soft inquiries, as mentioned, have no impact on your credit score. Hard inquiries are likely to lower your scores between 1 point and 5 points. Credit repair efforts revolve around your credit scores, and it is useful to know that the FICO scoring model considers everything on your report all together. The affect of an inquiry, like other information on your report, will vary depending on everything else in your file. The more credit you have, and the more established it is, the less of an impact a single inquiry will have.

How can I increase my scores?

The categories of data that will impact your scores are your payment history, your account balances, the length of your Credit History, the balance of credit types, and the amount of new credit you have. Try to not make any late payments from this point forward. You should also attempt to pay your revolving balances down. And if you don’t have any open accounts, start the rebuilding process right away by opening two secured Credit Cards; your credit repair effort cannot succeed without open accounts, so take action today.

How much do My Credit Scores really matter?

Your credit repair effort should focus on improving your credit scores. Every loan you apply for will be underwritten based on your credit scores. Insurance companies are not allowed to consider your credit scores when pricing life and health insurance, but property insurers will consider your credit scores and may even deny you coverage if they don’t like what they see. In addition, prospective employers and landlords are likely to Check Your Credit. Make sure your scores are where they should be when you need them. If you have credit issues, begin your credit repair effort immediately.

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

About the Author

Jim Kemish, a nationally recognized credit repair and restoration expert, is the president and founder of Sky Blue Credit, a leading Credit Repair Service since 1989. Jim is also the president of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida.

What are the top 5 ways to build or rebuild your Credit score?

I've seen a few suggestions on the board, and put a few up myself as answering another person's question, but out of all the techniques out there, what are the 5 or 6 you find most effective?

Well first, it helps you know what makes up your credit score:

1. Payment history-35%
2. Total debt owed vs. available credit -30%
3. Length of time establishing credit- 15%
4. Types Of Credit established- 10%
5. Inquiries and new accounts- 10%

Now, with that in mind, you can let logic follow

1. Pay on time, since that's the most important component of your score

2. Like bdancer222 said, live within your means. Don't max out your credit cards. Use them lightly ($15-20) to where they can be easily paid off on time every month. It's important to use 25-30% of your combined avaialble credit for all your credit cards.

3. Don't close old accounts and start using them again. Since when you started using credit is also taken into consideration (#3.) It's important to make sure that you don't close any accounts that would shorten the average age of all open accounts making it look like you've established credit more recently. Accounts that have been opened for several years are considered "seasoned accounts" which carry considerable more weight than a bunch of accounts that have been opened more recently.

4. Don't just load up on one type of credit. Credit was designed for those who use it to show versatility. There's 2 types of credit: revolving [credit cards, lines of credit] and installment [furniture and appliance loans, car loans, personal signature loans, student loans, and mortgages] A good example of a balanced mixture of credit would be 3 credit cards (2 major, 1 department store) and 2 installment loans (car loan, student loan)

5. Don't apply for a lot of credit. Credit was to be designed out of a necessity basis. Each time you apply for credit whether you're approved or not, your score drops several points. And if in fact you do get approved it can take anywhere between 6 months to a year for it to start positively reporting. It ties in to the other 4 things I've mentioned. If you have one or two cards that you've had for quite some time with an excellent history, chances are the CC company will increase the limits on them to where you won't need additional cards. Taking on a slew of newer cards could give an impression that you're reckless with credit, although it may not be the case.

6. Lastly, monitor your report. A lot of times a person's credit can suffer because of something that's not even theirs. It's important to check what's on there and dispute anything that is incorrect with the credit bureaus. That's why the Fair Credit Reporting Act and other credit laws were put into place: to protect our rights as a consumer. Also, it helps if to make arrangements to pay the delinquencies that you may have. Although the collectors may not agree to it at first, but there would be a chance that you could negotiate a "payment for deletion" which is a payoff amount in exchange for removing it from the credit report altogether. Hopefully, if they agree, GET IT IN WRITING BEFORE PAYING. And also, don't use your checking account, a cashier's check sent certified mail, will do just fine.

So, these are the things I feel that will help you rebuild and/or build your score.

Hopefully you'll find these useful

Debt Management: Credit Boot-camp™ Top 4 Things That Can Hurt Your Credit Score

 

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