Stacy Wall
Forum Replies Created
-
Posts
-
It’s a grade for how you behave financially
It’s a grade for how you behave financially
Credit scores are best viewed as a grade for how you behave financially. If you are responsible with your money matters and are trustworthy, your grade (i.e. credit score) will be high and vice versa.
When lenders and creditors see that you have a high grade/score they know that you are likely to make your payments on time, and so they will be happy to lend you money and give you the best terms.
Over time, statistical data shows that credit scores are excellent predictors for the risk people pose to lenders. To be more specific, they are used to predict the likelihood of people making payments on time in the next two years.
There are three Consumer Reporting Agencies (Credit Bureaus) that collect consumer information and sell it to potential creditors. The 3 major credit bureaus are Equifax, Experian & TransUnion.
Credit scores are calculated from the information that is on your credit report using an algorithm. The most common algorithm is FICO, with almost 90% of financial institutions using it.
The basic principle of all credit scores is: credit history + current credit standing = good predictor of the future.
When you apply for credit, loan and various other services, the first thing a potential lender does is to pull your credit reports and scores from the credit bureau to asses your risk.
Because credit scores are such good predictors, they are uses to process applications for loans, mortgages, credit cards as well as insurance, cell phone contracts, apartment rentals and even job applications.
Because of this the federal government is regulating the consumer information business by means of legislation. The Fair and Accurate Credit Transactions Act (See FACT Act) that was put in place on 2003 entitles you to certain rights.
One such important right is that everyone is entitled to receive a free copy of their credit report from each of the 3 major credit bureaus every 12 months (See free-annual-credit-report.html for more information). You also have the right to receive your credit score upon request, but not for free.
For more information on the meaning of credit scores see what-do-credit-scores-mean.html.
Hope this helps.
Only if she can refinance
No bank is ever going to let you take your name off that loan. Your girlfriend got the loan only because you co-signed for her. You are pretty much stuck with it.
The only way to get your name off the loan is by either pay off the loan, or have your ex refinance the car by herself. Since two years have passed, assuming that you’ve made all payments on time, she may have good enough credit to get a loan on HER name.
The fact that you are only two years into the loan doesn’t help either, because chances are you still own more than what the car is worth. This means that she may be required to come up with a considerable down payment, probably 20% – 30%.
Either way your credit will remain in tact because the loan would show as paid in full.
Hope this helps
Yes it can and probably will
Unpaid parking tickets are classified the same as unpaid debts, and as such they are reported to the credit bureaus and go on your credit report.
You will probably get sued; they will get a judgment against you. That will have a really bad impact on your credit, plus you will end up paying much more – interest, fines, legal costs etc.
They can even revert to garnishing your bank account, putting a lien on you car and much more.
All of this will make your credit really bad, and will cost you a lot of money.
If I were you I’d pay these tickets.
It’s the worst idea ever!
So you intend to risk your home for something like credit score?
Sure, good credit is important. Reducing your utilization ratio below 35% should improve your score by 50-100 points, depending on what other negative stuff you have on your report.
But then what? How do you intend to pay back that loan? Borrow from your credit card?
Default on credit cards and you get bad credit. Default on that home equity loan and you lose your home. You do understand that if you won’t pay back the loan, the bank will come after your home, right?
If you want to improve your credit score, figure out how to pay off those debts.
Hard to tell. Probably 100-200 points
A fair assumption would be 100-200 points, but it’s really very hard to predict.
It depended on so many factors – how old are the collection account, what the balance is and what other derogatory items you have on your report.
Are these items a single entry time medical or utility bills? If that’s the case than a pay-for-delete may work.
If, on the other hand the items are regularly reported items like credit card accounts, car loan or other installment loans, than pay for delete won’t work because the original charge-off will remain on your report.
Collection agencies can only remove what THEY report. The original creditors charge-off would remain on your report, and your score will remain low.
In fact – It would even look worse since your payment to the collection agency would not show on your report, making it look like the items are resolved.
See why-pay-off-debts.html and how-to-pay-off-debt.html for a more detailed explanation.
Do you recognize the account?
There are several issues here. To start with – do you recognize the account? Is it yours or not?
If the account doesn’t belong to you then yes, you should dispute it and get it off your credit report. If the account does belong to you then there’s no point disputing it because it won’t go away. In that case, considering the low balance of the account – the best way to get it off your report is simply to contact the collection agency and pay it off.
Regarding the “Potentially Negative Closed” issue, I’m not sure what it means, and I doubt if it really hurt your score at all. Most credit monitoring services use third party score model that aren’t Fico. The NextGen Fico formula that was introduced on 2009 ignores small-dollar “nuisance” collection accounts in which the original balance was less than $100.
My guess is that this “Potentially Negative Closed” issue is a nuisance by itself, and that your “Real” Fico score did not suffice.
The only place to get a real Fico score is myFico.com. Credit Karma gives free credit scores to consumers, based on their TransUnion credit report. It’s within 50 points from your Fico. Good enough if you’re just curios about it. They also provide free monitoring service. Take a look at it.
No
Employers do not report wages (or anything else about you) to the credit bureaus. By law, your income is not a factor in your credit report/score.
However, landlords will probably ask for employer and income information on an application. Some will even call your employer and verify the information.
It’s called “Security Freeze“
You can “freeze” the access to your credit report very easily. It’s called Security Freeze.
When you put a security freeze on your credit report, the credit bureaus are not allowed to disclose your file to anyone, except those that you already have an existing account with (for purposes of account maintenance and monitoring).
Any other new creditor or lender will not be able to access your credit reports and scores, and therefore will probably won’t approve any credit or loan in your name, including to you!
If you need to apply for credit or loan, you need to unfreeze your credit report a few days before you plane on applying.
Freezing your file with the credit bureaus is fairly simple. Each of the 3 major credit bureaus has an online form that you need to fill in order to activate the security freeze. You need to repeat the process for each bureau separately. The service is not free. I believe that it cost around $10 per agency, per freeze.
When you put a security frees on your credit report you will be given a password or a PIN (Personal Identification Number) that you can later use when you need to unfreeze it.
See credit-report-freeze.html for more information & links to the 3 major credit bureaus’ online form.
A few thoughts
Mortgage companies want a clean credit report. You have no chance of getting approved with unresolved negative items.
Derogatory items do fall of after 7.5 years from first delinquency, paid or not. Paying or settling derogatory items doesn’t restart that clock. It has nothing to do with your liability. It’s only the reporting period on your report.
Collection agencies tend to sue just before the SOL expires and try to get a judgment. Since so many time has passed, I believe they didn’t file a lawsuit against you, or it would have already showed on your file.
Regarding a pay for delete settlement – that depends whether the original charge off is a one time (like unpaid doctor’s bill) or rather an on-going payment such as credit card. Collection agencies can only delete their entry, but the original entry (in case of a defaulted credit card for example) would still remain on your report.
At this point you should be able to settle for less than 10% in a lump sum payment. That would change the status to “Paid” or “Settled”, which should be good enough for the mortgage officer. For a pay-for-delete you will be asked to pay much more.
Just make sure you get any settlement agreement in writing before you pay and don’t give them direct access to your bank account.
Another option is simply to wait out the 17 months, but then you won’t be able to buy the house now.
Nothing to worry about
First, all payments have a 5 days grace period, where companies cannot legally report you as being late.
Second, All online payments have a time stamp on them. Although it may take 2 days to process your payment, by law it must be posted with the date you’ve paid it (i.e. only 4 days late).
Third, Wells Fargo Dealer Services in particular wait 30 days from a missed payment before reporting you delinquent.
You don’t need to worry about your score. Only thing you can expect is an extra $10 late payment fee.
You’re luck that you remembered to pay this time. My advice to people is to put it in their calendar, or switch to automatic payments if they can.
Good luck.
Yes, Student loans DO build credit
Any extension of credit goes onto your credit report and build (or ruins) your credit. Student loans are no exception.
The good thing about student loans is that as long as they are in deferment – they are reported as being paid. This is actually good because it helps building “payment history” even though you aren’t really making payments yet.
You may want to use your new credit card wisely. Make a few purchases, wait for the statement and pay it in full. Avoid carrying balance on your card. It’s very expensive (in interest) and does nothing to build your credit.
A credit score of 661 is not very good, but for someone with your age and status in life – it’s certainly above the average. With time your score will improve.
Just use the card
Utilization DOES play a part in your FICO score. What hurt your Fico score is carrying a balance of more than 35% of you limit (i.e. 35% credit utilization).
Even if your score takes a hit because of high credit utilization, it will immediately rebounds when you pay it off.
It really doesn’t worth the efforts to try and determine exactly when your card updates the credit bureaus and then try to schedule your payments to create a perfect utilization rate.
Just use the credit regularly as you need, pay off the balance in full and your score will be fine. It really makes no difference how much of your line of credit you use if you pay that balance in full every month. It all evens out in the end.
In fact, the fastest way to get your limit increased is to use 70%+ of your limit and pay the balance in full every month for about 9 months.
You should pay it
Paying the judgment won’t raise your Fico, but you need to pay it regardless…
To start with, Judgments stay on your report for 10 years, not 7. In addition, the person holding the judgment can renew it for additional 10 years, so your looking at 16 years of having it on your report.
Second, judgments can be used to garnish wages, attach bank accounts, and lien personal property. There are now collection agencies that specialize in buying up old judgments and collecting on them.
Lastly, even though paying of the judgment wont raise your score, lenders do check your report, and an unpaid judgment looks very bad when you apply for a car loan, credit card or even a job. Needless to say that you won’t be even considered for a mortgage without resolving this judgment (and all other derogatory items you may have on your file).
The longer you wait to pay off that judgment, the more interest it is accruing. Do yourself a favor and pay it today.
Good luck.
This is all you need
You can achieve amazing credit with what you have, but it will take a few years.
In order to build good credit you need at least two different types of credit (revolving and installment), which you already have.
Continue to pay that car loan. It will develop payment history on your report.
A paid off car loan will remain on your report for 10 years after it is paid off, and will have a positive effect.The credit card is a revolving credit account, and is great for building credit history.
Just be carful with it. For best credit, keep usage small (a few small purchases like gas and groceries), wait for the statement and pay it in full (not just the minimum). Carrying balance on your card doesn’t build credit (too much can actually lower your score) and costs a lot of money in interest payments.Don’t ever be late on payments. JA single late payment can ding your credit more than a whole year of timely payments can ever fix.
Good luck
Not sure but here are a few thoughts:
Part of credit scores is credit diversity (10%). Having a mix of credit types actually raise your Fico score. Since you sold your house and paid off the mortgage, you no longer have an active mortgage. This may lead to a drop in your score because your credit is les diversified.
Another thing may be your credit cards that you’ve mentioned you paid off. Have you stopped using them? If so, that might have the same effect as if you’re not using revolving credit at all, with possibly two negative effects:
- Less credit diversity that lowers your score further
- No stream of timely payment that build credit. That could lead to further drop in your Fico
You need to show activity on these credit cards.
Even with both negative effects on your score, I would expect a drop of maximum 50 points. Certainly not drastic, but enough to get you less-than-excellent terms.
The only one thing that could have dropped your score more significantly is closing the credit card accounts. I hope you didn’t do that. Closing revolving credit accounts (even if they are in good standing) is not recommended, and can really hurt your Fico. If that the case, then, well..
Hope this helps.
