Kristina asked:
I get different answers from everyone and no one seems to know what is really better for your credit score. Any help would be greatly appreciated!
BARNETTE
William Brooks asked:
You are shocked when your loan is denied, or maybe you were approved, but the interest rate is much higher than you anticipated. How can that be you say? My credit score is good, I know I checked. Maybe it’s not as good as you think. It all depends on there you got it and what kind of credit score it is.
The fact is there are several different credit scoring methods. Credit scores calculated from the same credit reports can differ substantially from credit scoring method to credit scoring method. So how can you ever know what your credit score really is? Well, luckily, 75% percent of lenders use FICO scores exclusively and you can purchase FICO scores yourself–you just have to know where to go. (www.myfico.com)
FICO credit scoring is a numeric method of scoring your credit worthiness developed by Fair Isaac and Company. Your credit score is a number between 300 and 850 that tells creditors how likely you are to pay your bills. The higher the number, the better it looks to potential lenders and creditors.
The three major credit bureaus each have their own version of the FICO score: Equifax uses the Beacon system, TransUnion uses the Empirica system, and Experian uses the Experian/Fair Isaac system. Despite each credit bureaus’ use of their own versions, all systems are based the original Fair Isaac FICO scoring method, so each credit score calculated with these systems are generally called FICO scores. However, although most lenders do use FICO scoring, some lenders may have their own scoring methods.
There is only one place where you can get your FICO score from all three bureaus and that is at www.myfico.com. If you order your credit score from anywhere else, again be aware that these scores are “FAKOs” (or “fake”) and can differ considerably from your FICO credit scores.
Adding to the confusion is the credit bureaus themselves. Recently, Experian revealed that the national average credit score of its consumers is 678. This is very misleading to the average consumer. When you buy your credit report and score directly from Experians website, you are getting what they call the “PLUS Score,” which is NOT a FICO score, and is NOT used by lenders anywhere. (Equifax is the exception–you can buy your FICO score directly from them at their website; however, the only place to get all three scores together is at www.myfico.com.) The 678 PLUS Score reported by Experian is actually the average of consumers’ PLUS Scores, not their FICO Scores.
Clearly, the PLUS Score (and all Non-FICO scores) are useless. Not only that, but such hype misleads consumers into purchasing their PLUS Score thinking that they are getting the same credit score that their lender will use. Non-FICO scores are worthless not matter what the credit bureaus or any website selling non-FICO scores claim. Even a few points difference in your credit score can mean confronting the reality of the loss of thousands of dollars out of youSr pocket–a loss that you probably didn’t plan for. The next time you want the most accurate credit score available, do yourself a favor and get the industry standard: the FICO credit score.
KAISER
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Ian Webber asked:
You Can Control Your Credit Scores
In a moment I will share some easy and practical ways to boost your credit scores. But before getting into these powerful credit repair techniques let’s review a few facts. You might be surprised.
Phony Credit Score Alert
There are many reasons to check your credit scores; occasional monitoring, credit repair preparation, or in advance of making loan application. Most people that decide to check their credit scores on the web end up at one of the three credit bureau websites. The three major credit bureaus are Experian, Equifax, and TransUnion, and they all offer credit scores. Oddly enough, these credit bureau scores are not the same scores lenders use.
Think about this for a second. Say that you will be applying for a loan in the near future and want to see where you stand. You go online and buy your scores from Experian and they look great. So, off you go to get your loan, happy and confident. And the lender runs your credit and tells you that your scores are too low. In fact he shows you your scores and they are completely different from the scores you purchased from Experian. Get the picture. Crazy, huh? What’s up with this?
FICO is the Score that Counts
Lenders use a credit scoring formula developed by Fair Isaac Corp called the FICO score. The three major credit bureaus provide these FICO scores to lenders, either directly, or through credit resellers. But if you or I purchase our scores from the credit bureaus we get something altogether different; we get the credit bureau’s proprietary scores, which can be radically different from the FICO scores lenders see.
The reason is money. The credit bureaus make millions by selling these numbers which consumers erroneously believe are the real deal. This is a sadly deceptive business, and completely indefensible. There is only one place where you can get genuine FICO scores, MyFICO.com, the Fair Isaac website. No one else sells the genuine scores to consumers. Enough said. Let’s do a little credit repair.
The Power of Balance Reduction
Recent FICO score modifications have put an increased emphasis on credit card balances. The importance of this cannot be overstated. Way too many people have been blindsided by precipitous drops in their scores due to high card balances. As crazy as it seems you can now have an immaculate payment history and have a crappy credit score. That’s right, even a full decade of perfect credit will not offset the terrible effect of a maxed out balance. Here’s the deal.
FICO measures the relationship between your balance and your limit. Specifically there are five trigger points to be aware of: 20, 40, 60, 80, and 100 percent usage. The lower the better, and if you go over the 100 percent mark you can expect a drop of 100 points in your score. Ouch. Anyway, the good news is that when you pay your balances down, your score will go up. If you want real score improvement, get your balances under the 20 percent mark and watch the credit repair magic happen. You’ll love it.
Authorized User Accounts
Have your mom call one of her credit card companies and ask them to add you to her account as an authorized user. She should tell them that she wants you to have a card in case of emergencies. About 60 days later the account will show up on your credit report and the entire credit history of the card will be included in the calculation of your credit score. You do not have to use the card; in fact you can give it back to your mom when you get it.
This little credit repair trick can really boost your credit scores quickly. Just make sure that the history on the card is excellent. There would be no point in adding yourself to a bad card. And, as a little caveat, don’t even think about purchasing an authorized card status online. The latest release of the FICO formula includes a block on purchased card memberships, so it would be a waste of money.
Consult a Credit Repair Expert
If you want more powerful credit repair tips that can really pump up your scores pick up the phone and call a professional. A credit repair professional will evaluate your three credit reports and customize a plan just for you. Credit score optimization can pay amazing dividends and is worth every bit of effort you put into getting it done right. Make the call today.
Copyright © 2008 Ian Webber. All Content. All Rights Reserved.
MCKINNON
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Dewey Kearney asked:
OK. So you’ve ordered your credit report and seen your credit score. Now you see the cold, hard truth – it’s downright ugly and you wonder if you can really salvage your credit and ever get a decent interest rate on a home or car loan – forget about credit cards!
Take heart! With a few steps and a plan of attack you can improve your credit score and start on the path to recovery. Corporate trainer and credit counselor Bruce McClary of Richmond, VA offers 5 ways to boost your credit score.
Get It Right
Accuracy is the first thing to look at and is the fastest way to boost your credit score. Find and fix any mistakes that could be pulling your score down. Credit scores are based on the information contained in your credit reports. If you are one of those who haven’t seen your credit report in several years, make sure you order a copy of all three reports because each will be different.
Pay Your Bills On Time
Paying your bills on time helps you build and maintain a healthy payment history. Paying your bills on time is the largest factor in determining your credit score (at 35%). This is the best way to rebuild damaged credit. If you want noticeable results try paying your bills on time for 12 months. It will make a difference. If you don’t have a track record that goes back years and years but only a few months then you can get your score back within that 12-month period. If your history goes back further it could take longer but this is the biggest factor.
You can expect information about past-due payments to stay on your report for up to seven years. Your score can still improve as long as you make regular on-time payments.
Get Back – You Are Too Close To The Edge
If you think you are doing everything right, the next thing is to look at the amount of your outstanding credit card debt and your debt-to-credit ratio. If you reduce these debts it can make a significant difference, especially if you are near your credit limit on any of these cards.
You never want to be maxed out and the ideal limit is 35% to 40%. Keeping your debt spread out is better for your score than having all your eggs in one basket.
Next, focus on the amount of outstanding debt – this is 30% of your score. Put together the outstanding debt and payment history account for 65% of your credit score. Pay off your debt rather than move it around. A lot of people like to play the balance transfer balance game. Closing an account and transferring that amount means that you’re increasing your debt ratio.
Here’s a tip: Take the smallest balance and try to pay it off first, while making minimum payments on the others.Then when that balance is paid off take the next smallest one and double up on it, etc. etc. This gives you reachable goals, and psychologically it’s encouraging because you see yourself actually paying OFF the debts.
Commit For The Long Run
15% of your score is determined by how long you have had the credit relationship. This may sound silly, but don’t close any accounts if you plan to shop for a mortgage or other type of loan where you will need a good score. Opening new cards and closing old ones will negatively impact your credit score in the short run.
You want to have a couple of credit cards to develop a credit history, but adding more credit card debt can be dangerous. It’s better to limit your credit cards to two, keep the balances low and pay them off quickly. Be careful using them and equally important is having a savings account to fall back on.
Look Before You Leap
When you apply for a loan or a credit card, lenders pull your credit. These inquiries put a temporary dent in your credit score. The best way is to start your loan search by shopping and comparing rates rather than applying for a loan and deciding later.
Also it is best to do all your shopping within a month’s time. This can be very important. Mortgage and auto loans are counted as one inquiry if they fall within a 45-day period in the FICO scoring.
Inquiries have the least impact on overall score. Inquiries, types of credit and the number of loans play into the final figuring of your score.
Additional note though: If your credit score is significantly bad – 585 or below – don’t apply for multiple car loans or mortgage loans “shopping the rate.”Each credit pull will temporarily take your score lower, and lenders dealing with low credit scores typically charge around the same interest rate so shopping all around town and having your credit pulled is really not going to help you in the long run.
Having a bad credit score does not have to ruin your life. Make a plan to pay off your debts and stick with it! Within 12 to 18 months you’ll be surprised at how much you can significantly increase your credit score with good payment history and lowering your overall debt vs. income ratio!
RHOADS
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biggholt81 asked:
I don’t know my credit score, I am just now getting a checking account, and I have only used cash prior, so what score does everybody start out at?
BREWSTER
College Credit Builder asked:
Credit cards offering rewards programs for pet related expenses are a great way to save money in the present economy. With the price of gas continuing to rise, consumers can ease some of their recurring monthly expenses by joining a credit card rewards program. Pet rewards credit cards are increasing in popularity. A credit card like the Bank of America Pet Rewards Visa, for example, offers a 500 point bonus after your first purchase and participants can redeem points for rewards with a point balance as small as 750 points. Points are redeemable for a variety of pet expenses, including pet food discounts and coupons, veterinary expenses, pet store vouchers and other discounts at regional and national pet stores. Points can also be applied as shelter donations throughout the country. In a declining economy, helpless pets are often the first to suffer, so local shelters can use as much assistance as possible.
On www.collegecreditbuilder.com/petcards.htm , you can click and apply to a pet rewards credit card. You can even upload a picture of your beloved dog, cat or other pet and see their cute little face pictured on the face of the credit card.
Your dog, you cat and any other pet is a very important part of your family. They give some much and ask for so little in return. Now, they can do something to help the family save money. Pet rewards credit cards are increasing in popularity. Immediate rewards are a plus since so many other credit card rewards programs require years of spending before any real benefits can be redeemed.
www.muttplace.com
ALLARD
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