Tracy Winters
Forum Replies Created
-
Posts
-
Not necessarily an id theft
It’s more likely a credit report error. It’s very unlikely for an identity thieve to use someone else’s identity for a mortgage, because it can be easily traced back to him.
Identity thieve almost always apply for personal loans and credit cards, max them out and then default on them.
It’s more likely that it’s a clerical error by the credit card company, the mortgage company or the credit bureau. Dose the mortgage appear on your credit report from all the 3 major credit bureaus or just on one?
If the account appear on just one credit report, it’s probably a credit bureau error that can be sorted out by a simple dispute.
If it appears on your report from all the 3 major credit bureaus, it can be a clerical error made by the mortgage company or by the credit card company you applied to. You can find the mortgage company details in the “Contact Information” section of your credit report. Start investigating with them.
If you do have reason to believe that this is indeed an identity theft, follow the steps in this ID Theft Guide for more help with ID theft.
It’s not absolute, but highly inadvisable
If you want to get the best rates – then yes it’s absolute. Even if your scores are high enough (mid 700 is high, but not very high) and you’re almost guaranteed to get approved, your rates are sill influenced by your scores. Even a small drop in your score can put you in a lower credit tier, meaning thousands of dollars more in interest payment
If your score is marginal, than you really must to follow that 6 month rule if you want to better your chances to get approved.
Rate shopping counts as only one inquiry
There are three separate issues here. To start with, Fair Isaac (the company that created Fico) recognizes the importance of rate shopping. Fico formula allows for rate shopping without it hurting your credit score.
When you shop for a car loan, student loan or a mortgage, all inquiries made in a defined period of time (45 days in the new Fico formula and 14 days in the old one) count as just one inquiry in your Fico score. That way when you shop for better rates you don’t hurt your score. This however doesn’t include credit cards, personal loan etc. See rate-shopping-and-credit-scores.html for more information.
Second – one, two or even three inquiries a year will have a very small impact on your credit score. However, once the Fico formula recognizes too many hard inquiries, it will drop you score significantly, and add a comment about you having too many hard inquiries in the past 24 months. There is no pre determined threshold at which this occurs. It is different for each credit profile (See credit-report-inquiries.html for more information).
Lastly, remember that credit scores plays only a small part in the lending decision. Lenders (especially mortgage lenders) look at your actual credit report. Also remember that the car loan will be included in your total debt to income ratio, and may make it difficult for you to get approved regardless of your score.
It takes years to build good credit
You’ll need at least 24 months of consistent, on-time payment history to get your credit score to an acceptable (average) level.
Adding your wife as an authorized user on your credit card will build her credit score. It’s called Credit Piggybacking, and it’s a fairly common practice. Make sure you both use the card for regular purchases, wait for the statement and pay it in full every month. That will build good credit while avoiding interest.
Be advised that credit score account for only small part of the lending decision. Lenders will look at your actual credit reports, will probably considered them to be thin and will take extra care approving you on a mortgage. Especially your wife – her sole item on her credit report being your credit card.
During that time, get a book called “How to Buy your First Home”, or “Buying a Home for Dummies” and get yourself educated on the subject. Best $20 you will ever spend your whole life.
It won’t have any negative effect, but it also won’t build you good credit
Paying off your student loans in one lump sum is actually a bad idea (with respect to credit score). It WILL save you a lot of interest, though.
Installment loans build credit by making monthly payments over time. Paying off student loans early does nothing extra for your credit, because they do not count in your credit utilization. Stopping the payments simply means that you have no positive information on your file, so your credit score won’t improve.
Sometimes it is just smarter to think with your pocketbook and not worry about credit scores. You can build your credit using a (secured) credit card just the same. Much cheaper than paying interest on your student loans. Use the card for regular purchases, wait for the statement, and pay the balance in full every month. That will build your credit and avoid interest.
So if you want to pay off your student loans on one payment just to improve your credit, don’t. If you’re doing it because of other financial management considerations – go ahead.
Good luck
No. No. No…
NEVER open another credit card or any other new line of credit 6 months prior to applying for a mortgage, and especially not a secured credit card (they are for people with bad or no credit history). Opening a new line of credit will only lower your score, and it will take you 6 months to level off again.
Increasing the limit on any of your existing credit cards as suggested below won’t help either, because you carry no balances. Your utilization is 0% anyway, and having a higher credit limit won’t improve that. It can only help if your utilization is higher than 30%.
Having a month to raise your score by 15 points is almost impossible. The only thing that can do this is good stream of timely payments, but that would take a couple of months. Each time you make a timely payment, your score inches up a bit. 16 points is just too much of an increase to achieve in just one month.
Yes. You are confusing SOL with FACT Act reporting time limitations.
Like so many people, you are confusing two completely separate terms.
What determine the time frame for taking legal actions against you and filing a lawsuit is the Statute of Limitations (SOL) that has nothing to do with credit reports. The SOL varies between states and type of debt/contract. Typically, it starts from the date of last activity or last payment, and so even making a single payment can restart it.
The FACT Act is what determines the time frame for showing debts on your credit report. Per the FACT Act, derogatory items age off your credit report after 7-1/2 years from date of first deficiency (default), whether paid or unpaid. Nothing can restart that clock. However, this doesn’t mean that you no longer owe. It only means that it no longer can be reported to your credit report and adversely affect your credit score.
By the way, collection agencies may still try and continue to attempt to collect debts from you even after the SOL has expired. They’re hoping you aren’t aware of the SOL and pay up if they threaten you enough. They might even file lawsuits against you. In the event that they do, you can always use the SOL as an affirmative defense.
See why-pay-off-debts.html and how-to-pay-off-debt.html for more information.
Checking your own score is ALWAYS a soft inquiry
Whenever you check your own credit score or report (it makes no difference) it’s always considered a soft inquiry. It may appear on your credit report, but it doesn’t count in your Fico score.
If you’re looking into buying a home, you should pull your credit reports from all the 3 major credit bureaus and check them (All 3 reports are free once every 12 month. See free-government-credit-report.html for details). While credit scores matter, credit reports are far more important. If you have any unresolved negative item (e.g. collection accounts, credit card or loan defaults etc) you won’t get approved. You need to resolve these items before you apply.
While credit reports are free, scores are not. All three major credit bureaus now sell consumers Vantage scores that are on different scale than Fico and are therefore useless. Third party monitoring services use Fakko scores, which are not accurate and therefore useless as well. There is no comparing these and they are a waste of money.
Creditors use FICO. The only place you can get real FICO scores is myFICO.com. However, that may not be very handy as well because there are few versions of Fico. While you can purchase only the “Consumer” version, mortgage lenders use the “Factual” version which tends to be slightly lower than the consumer version you can access (See understanding-fico-scores.html for more information).
If you want to get a feeling as to where you’re standing, get a free score from CreditKarma.com. They offer a free credit score that is based on your TransUnion report. It’s not a “real” FICO but within 50 points or so. Good enough to give you an initial feel for your score.
Good luck
It has no effect on your score, but…
Credit union account or any other bank account for that matter are not reported to the credit bureaus. They do not appear on your credit report, and therefore has no affect on your credit score.
The above it true unless your account shows negative balance. If your account has a negative balance, you need to pay it or else it will be closed, sold to a collection agency and then it WILL get reported to the credit bureaus and will have a negative effect on your score.
Banks tend to close accounts that show no activity after something like 5 years or so.
Your account may be already closed without you knowing it. If you want to keep it open, make a deposit or withdrawl every year or so.If you don’t plan on using it, close it via a written letter, and ask for a confirmation that the account is closed and with $0 balance. Keep that confirmation forever.
Try to get a 2 month deferment
Being late on a car payment, even just once can lower your credit score by 60 – 100 points, depending on how high your score was prior to this (See late-payments.html). If you miss payments by 60 days or more, the impact is even larger.
Late payments remain on your credit report for 7-1/2 years, but their impact on your credit score diminishes with time. After 2 years they have a lesser effect on your score.
You have two options to keep this from happening:
- You can try asking the lender if they’re willing to waive the payment for the month and tack this month’s payment onto the end of the note. Some lenders may be willing to do this “one time” through the life of the loan.
- If you’re still under 30 days late, try asking for a 2 month deferment. Tell them you need it because of unexpected medical expenses not covered by your insurance. It may work.
In any case, make sure not to pass the 60 days late, because it will have a significantly larger effect on your score, plus no creditor will waive a late payment if it’s over 30 days.
100% SCAMMED!
There’s no job. But you can probably relax. No damage is done except to your pride. That scammer isn’t interested in stealing you identity. He’s only trying to get you to sign up for some credit reporting site using his affiliate link. The only thing he’s after is the commission he would receive for getting people to sign up under him.
You might want to take note of all those big yellow banners on Craigslist warning about jobs scams in particular or any other scams in general. There are no real jobs and those asking you to provide a credit report or the report number are scammers/identity thieves.
After you signed up for the credit site, you can expect the scammer’s next email would say: “sorry, the job is filled”.
You might as well expect more emails from that scammer and others, now that you are on his potential suckers list. He will use various emails, from various different companies, with stories about great jobs, sexy signals etc. Don’t respond to any.
See credit-report-scams.html for more information and tips regarding credit reports scams and how to identify and avoid them.
Both are hard, if not impossible to get
Personal loans are very hard to get, even for people with excellent credit. Besides good credit you need to show sufficient income, employment history and low debt to income ratio.
Refinancing a car may prove to be difficult as well. Lenders are only willing to refinance a percentage of the current value of the car, and you won’t necessarily get a better rate.
In fact, it’s very likely that you won’t be able to refinance at all because the car has depreciated and you owe more than the value.
Are you sure you’re talking about an actual credit card or a debit card tied to your bank account?
Your card may read Visa or MasterCard, but it can be a debit card. What you say makes no sense because credit cards are not tied to a bank account, so even closing a bank account doesn’t mean that you need to close the credit card account as well.
It makes sense if it’s a debit card, because they ARE attached to a bank account, so switching bank account requires issuing a new card.
To answer your question: The activation process is just a security measure, and has nothing to do with the account. The account is open, accrue fees and interest and will show up on your credit report whether you activate the card or not.
If you’re not planning on using this credit card, close it via a written letter and request conformation that it’s close with a zero balance. Keep it forever. It’s not unheard of for people to find a charge-off on their credit report from a credit card they thought was canceled. Please see close-credit-card.html for more information. Follow the instructions there and use the sample account closing letter.
Closed accounts in good standing will remain for at least 10 years on your credit report. They have no negative effect on your score. They just don’t count much as open, active accounts.
Don’t worry about the APR
APR stand for Annual Percentage Rate. If you pay your statements in full every month (the right way to go) than you should not be concerned about it. APR only matters if you don’t pay the credit card balance in full every month. If you carry a balance from month to month – you are charged interest. The interest is calculated by dividing the APR by 12 to get a monthly rate. Your average daily balance is multiplied by the month rate. That’s the interest, and it is added to your account.
Carrying a balance on your credit card can be very expensive (it’s like buying everything 20% more expensive in your case!) and doesn’t help a bit to your credit score. Not to mention that very soon you end up buying more than you can actually afford and sink into heavy debts.
What build credit is timely payments, month after month. As long as you wait for the statement and pay the balance in full every month – a credit card is an excellent way to build credit.
Keep in mind that the new laws require people under 21 to provide proof of sufficient income to qualify for a credit card or have a parent co-sign instead. Most credit cards will want to see at least 12 months of full time work history to go with that income. If you don’t get that card, you may have to start with a secured credit card – you pay a deposit which is held as collateral against the line of credit.
See establishing-credit-history.html for more information.
Good luck
I wouldn’t rush to file bankruptcy
Paying off derogatory items on your credit report does not improve your score. The damage is done, and only the passage of time can cure it. Derogatory items age of your credit report after 7-1/2 years whether unpaid, paid or settled.
That doesn’t mean that you don’t need to pay off your debts. The collection agencies can take you to court and get a judgment against you. Your debts can balloon because of interest and legal fees. Not to mention that you won’t be able to get new credit with un-resolved charge-offs on your report (See why-pay-off-debts.html for more information).
Filing for bankruptcy won’t remove the items any faster. Individual derogatory items will STILL appear on your report for 7-1/2 years, while the actual chapter 7 bankruptcy will appear on the “Public Records” section of your credit report for 10 years.
Filing bankruptcy only eliminates your liability to pay the debts, but does nothing to improve your credit/score. In fact, it’s the worst thing you can do to your credit. Much worse than 4 charge-offs.
BTW, you can’t just file bankruptcy over a few charge-offs. The conventional wisdom is that $10,000 is the minimum debt for filing a bankruptcy.
Filing for chapter 7 bankruptcy is not free, and cost $2,000 on average. So if your total debt was less than this amount, say $7,000 or so, then these $2,000 would probably be better spent settling your debts for less with the collection agencies.
Good luck
