Tracy Winters
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Absolutely
Closed accounts that are not in good standing impact your credit score severely. However, because in you case the account was closed by the lender there are two options – Have you continued to make timely payments on this closed account, or did you stop making payments? It makes a big difference as to how much it hurts your score.
If you’ve sopped making payments (the worst option) then the account is probably charged off by this time and probably on its way to collection. Charged-off accounts have very serious impact on your score. Probably more than a hundred points.
If you’ve continued to make the payments on time then almost no harm is done. It may be impacting your score a little because the balance-to-limit ration on closed accounts is 100%, but once the account is paid off that adverse affect on your score will be gone. In fact, the account would look as it is in good standing, which is actually good. Simply continue to pay until it’s completely paid off.
As to your other two cards with zero balance – you need to continue and use you open cards/card to build your credit. A very important part in building good credit is a stream of timely payments. You need at least 24 months of timely payment if you want to build good credit.
Simply use them for a few small purchases, wait for the statements and pay them in full (to avoid unnecessary interest payments).
Good luck
You need to wait a few month for a limit raise
First, you don’t even have a score yet. It takes at least 6 month to start scoring.
Second, I’d wait a little before asking to raise your limit, at least 6 month.
A single hard inquiry will only lower your credit score by a few points. Nothing to worry about.
The inquiry will probably go down as a soft inquiry, because you already have business with them. Maintenance inquiries by creditors are soft inquiries. They will appear on your credit report but are not considered by Fico.The best way to get your credit limit raised is to use most of your limit, wait for the statement and pay it in full every month. Some credit card companies will even raise your limit automatically, but you can also ask for it. But wait a few months. It’s too early now.
As to your second question, the amount reported to the credit bureaus is the same amount your balance shows at ever month closure. It would be $30 in your case.
Hope this helps.
It’s not reported
You have to be more than 30 days late from the due date for them to report it to the credit bureaus.
It won’t appear on your credit report, and will not affect your credit score.
What you CAN expect is a late fee and increased interest on you next statement.
See Late Payments and Credit Scores for more information.
You got two FAKKO scores. None are Real.
My guess is that you’ve checked your score at a credit monitoring service. These services use their own scoring formulas, and therefore they are different and completely worthless because no creditor uses them. There’s even a name for these scores – they’re called FAKKO scores, as in fake–o.
The only place where you can purchase your real FICO score is myFico, but even it will be useless to you. This is because creditors and lenders use different versions of the Fico formula that is especially adapted to their needs.
Mortgage brokers use a formula called ‘Factual’, while auto lenders use the ‘Auto Enhanced’ version. These versions are not available to customers, and the only way you can get them is by actually applying for a mortgage or a car loan. Your lender will then pull your score thru his system and will disclose it to you.
The only version consumers can purchase at myFico is a generic version of Fico called ‘Standard’. Scores for the car loan version tend to be higher while the mortgage version tend to be lower than the consumer version.
Another thing to remember is that since credit scores are data-base driven, they can change from one day to the other.
Hope this helps
No
So many people are confused about this subject. Having a bank account has nothing to do with credit history.
In order for a person to have a credit history – one needs to use credit. That means using credit cards, taking personal loans, car loans, a mortgage etc.
Products that are not related to credit such as pre-paid credit cards, rental contracts, utility bills, cellular contract etc. do not build credit.
However, once you don’t pay your bills they end up at a collection agency, and then they will negatively affect your credit history even though they aren’t a credit product by themselves.
Hope this clears the subject for you.
They only make it a little harder..
I’m not sure which services you’re referring to, but Lifelock certainly doesn’t live to its expectations. It merely puts a freeze on your credit reports.
Freezing your credit is currently the best way to slow down identity theft and minimize the chances of it occurring to you. However, you don’t need liflock for it. You can do it yourself (See Credit Freeze for more details) for much less.
Their Billion dollar guarantee is a nice gimmick, but legally you are never responsible for damages done in your name as part of an ID theft fraud.
The statistics shows that the majority of identity thefts are cause by people you know – family, friend and co-workers. You should take extra care to protect your information especially from the people you fear the less. Follow these tips to better protect yourself against identity theft.
Usually 640 for a standard mortgage, 500 for an FHA
You won’t get a straight answer for this question, simply because there isn’t one. It depends on the type of loan you choose, the lender you use and how well you qualify in other areas.
The traditional minimum credit score for mortgage used to be 620 for many years. But in 2010 a lot of lenders have increased their minimum to 640. This is for traditional loan that doesn’t receive any form or government backing.
You will need a minimum credit score of 680 in order to qualify to Fannie Mae or Freddie Mac programs. If your score is between 620 and 680 you will need to come up with at least 20% down payment, or look into an FHA loan.
Fannie Mae and Freddie Mac used to offer mortgages to people with credit scores below 620, but most of those programs are long gone.
For an FHA loan, which is a loan that is insured by the government, the required minimum credit score for mortgage has also been raised to 500, but that’s only good enough to qualify for financing. As of 2010 you will need a minimum score of 580 if you want to take advantage of the 3.5% down payment, which is the biggest benefits of an FHA loans.
If your score is between 500 and 580, you are not eligible to the FHA’s maximum financing option, and would need to come up with at least 10% down payment.
That being said – it may be very difficult to find a lender that will actually approve you with a score of 500 or 580, because most lenders apply stricter requirements than the FHA guidelines. So in practice you may be required to a minimum score of 600, 620 or even 640 even for an FHA loan.
People should also be aware that mortgage companies use a special Fico formula called Factual. Only lenders can see your Factual Fico score, which is usually lower than the ‘Standard’ Fico scores that you can get at sites like myFico or at the credit bureaus. The only way you can see your ‘Factual’ Fico score is by actually applying for a mortgage and having the mortgage officer pull it in his system.
Minimum credit score for mortgage by itself is not enough and doesn’t guaranty loan approval. While up to 2010 a credit report with one or more derogatory items would be considered acceptable, today lenders expect a clean report for a standard mortgage approval.
For an FHA loan, people with old derogatory items may still be considered, but they will have to demonstrate that past credit problems are resolve. In particular:
- Late payments (more than 30 days) on rent or mortgage payments are not acceptable.
- A person must have no more than 1 to 2 payments on revolving credit (e.g. credit cards) and none more than 60 days past due within the past two years
- People with past bankruptcies or foreclosures may be considered, provided the reasons were valid and the applicant has shown a good faith effort to reestablish credit (this means 2-4 years of rebuilding credit).
Another thing to keep in mind is that lenders will also look at your income to debt ration, the size of down payment you can come up with, your other debts, your ability to cover closing costs and your employment history.
Lastly, keep in mind that there are exceptions to any rule. A person with a Fico score of 615 but with very little debt who can come up with a large down payment might still get approved, while a person with a Fico of 640 but with mountain of debt might get rejected.
Because of this, having a score that is above the minimum credit score for mortgage doesn’t guaranty anything. The only way to know for sure if you qualify for a loan is to actually apply for one. Only a lender can tell you if you meet their standards.
Continue Payments
Usually, if you have the funds than it pays to pay-off loans. However, since you’re not paying interest on the loan you benefit nothing by paying it off (assuming you’re financially responsible and won’t blow off that money).
Instead – invest the cash in something that pays interest, and continue to make timely payments on the loan. This should build you credit, which can further save you money on insurance rates, future loan terms etc. You will need to make at least 18-24 monthly payments for e decent credit score.
I would also consider a credit card. Credit cards are a very cheap way to establish credit. If you pay the balance in full you never pay for interest, and so it cost you nothing to build good credit.
Use the card for regular purchases like groceries or gas, wait for the statement, and pay the balance in full every month. This will build good payment history for you and will boost your score.
Any credit card builds credit
With one exception (prepaid credit cards) – all credit cards build credit.
Secured credit cards, student credit cards, retailer’s credit card, store credit cards – they all build credit.
You need at least two years of timely payments to have a decent score. However; if you only have one account, your credit file will be too “thin”, and you may not qualify for large loans, especially a mortgage.
Mortgage lenders look at more than just your score. You will need a clean credit report (no delinquencies or other derogatory items) and sufficient activity on your report – at least 2 or 3 credit cards (try getting a store card) and at least one installment loan (either a student loan or a car loan).
When it comes to getting a mortgage approved, you will need to demonstrate a minimum of 2 years stable employment history, and sufficient income. These factors may have more weight on the lending decision than your credit score.
Hope this clears things for you.
No
Accurate facts cannot be removed by anyone. You rebuild your credit by paying current and future bills on time.
Re: Credit scores what they mean
It’s really very simple. Credit score are simply a grade for your financial behavior. If you have a good grade it means that you are financially responsible and trustworthy, and you are to be trusted to return money that you lend. If on the other hand you have a low grade, it means that you are not to be trusted, and so no one will want to lend you money or give you credit.
To be more specific – statistical data shows that there is a very good connection between your grade (i.e. your credit score) and the likelihood of you making payments on time in the next two years. The better you behave financially – the higher your score is – the less risk you represent to lenders.
Credit scores are calculated using an algorithm. The one most commonly used is called FICO, with over 90% of all financial institutions using it to process your applications for loans, credit, mortgages, insurance, cell phone, rent and even job applications.
The basic principle of credit scores is: your credit history + your current credit standing are a good predictor of the future.
There are three Credit Reporting Agencies (CRA) that collect consumer information, process and sell it to potential lenders and service providers. The 3 major credit bureaus are Equifax, Experian & TransUnion.
When you apply for credit, loan or any similar service, the first thing a potential creditor does is to pull your credit reports and scores from the three major credit bureaus to process your application.
Because of this the government has enacted the Fair and Accurate Credit Transactions Act (FACT Act) – that regulate the business of handling consumer information and give you certain rights.
One very important such 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 are also entitled to get your credit score upon request, but not for free. Credit score is a product, and as such it cost money.
For more information on credit scores what they mean see what-do-credit-scores-mean.html.
Hope this helps.
Re: Credit reports and free score
Like so many people, you’re confusing between your credit reports and your credit score.
As per the FACT Act, you have the right to receive free copy of your credit reports. It is true that your credit score must be provided to you upon request, but it cost money. Credit scores are a product, and as such you need to pay for them.
http://www.annualcreditreport.com is the ,only place where you can get your free annual credit report from the 3 major credit bureaus. This site is regulated by the Federal Trade Commission (FTC). They will never ask for your credit card details.
As for a free credit score – don’t bother Goggling “free credit score”. You’re wasting your time. Almost all the sites that advertise free credit scores are scam. The maximum you can get is a seven day free trial. You won’t be able to enroll w/o providing them your credit card details, and I guranty you that it’s very hard to cancel. Chances are you will be charged for “ordering” a service you had no intention to pay for.
The only site that provides absolutely free credit score is CreditKarma. They offer free credit that’s based on the Trans union’s Score, which is very close to Fico and very correlated to it. Numerous people use it and are very happy with it. You won’t be required to provide credit card details.
KreditKarma also provides customers with free credit score monitoring service that’s based on your transunion’s credit report, a free Fico simulator and much more.
See free-annual-credit-score.html for more information, and free-fico-credit-score.html for a list of these services.
Not by much, if any at all…
You need to know that if your creditors (the collection agencies in your case) go to court and get a judgment against you – then the debts don’t fall off. Instead, the judgments remain on your credit report until they’re paid or until the day you die (and then your estate must pay them). Creditors almost always get a court judgment if the debt is a substantial amount.
Collection agencies tend to sue just before the statue of limitation, which in many states is six years. Since you say that your collection items are around six years old, they may still go after you and win.
To answer your question, incase that they don’t get judgments or simply don’t file law suits, the individual derogatory items will age off your report after 7.5 years, while the chapter 7 bankruptcy will age off 10 years from the date filed.
However, as for the expected credit score increase, I wouldn’t get my hope too high. Fico scores are based mostly on recent activity – 90% of your score is determined by the previous 2 years activity.
So the older an item, the less impact on your Fico score. By the time something drops off your report, it has very little effect on your score and you may not even notice a difference.
If your score is not so good as you state, it means that there are more recent problems, such as more recent delinquent accounts, high utilization ratio or simply lack of positive credit information.
To re-establish credit and improve your score, you need at least 24 months of consistent, timely payment history. If you do not have an open, active line of credit, get a credit card, even if you have to get a secured card. Use the card for regular purchases, wait for the statement, and pay the balance in full every month. This will build your credit and avoid interest.
It’s pretty common
An unopened copy of your credit report is exactly what it sounds – A copy of your credit report that has been MAILED to you and is still UNOPENED.
To answer all of your questions:
It is becoming more and more common for employers to check the credit reports of job applicants. Especially with money management, financial business or law related jobs.However, it’s not up to the potential employee to furnish a copy of his/hers credit report. Potential employers who wish to view your file need to pull it themselves from the credit bureaus. In fact, police departments pull credit reports all the time for investigations and have flat contracts to do so.
The copy that employers see is less informative than the one you’ve pulled, as it contains only the required information that can be used to job application.
Under the FACT ACT employers need your consent in writing in order for them to be able to access your information file at the credit bureaus.
Hope this helps.
ALL mortgage companies use all 3 bureaus
Dealers or small store credit card issuer may use just one or two of the 3 major credit bureaus to save on subscription fees, but with home loans – no lender can afford not to check your 3 reports. You won’t find a mortgage company that uses only one or even just two bureaus.
Normally, a mortgage officer will use your middle score (which in your case not so good).
However, what you need to understand is that the Fico scores that you have are NOT the Fico scores that the mortgage officer sees, so you have no idea what are your “Real” scores.
Fico scores have 3 versions: “Standard” (the ones you have), “Auto Enhanced” (that car dealers use) and “Factual” that is used by mortgage companies.
As a consumer you have no access to the Factual score, which by the way tends to be a little lower than the standard version that you have (See understanding-fico-scores.html for more information).
Simply apply and hope for the best.
