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5 Common Credit Blunders

September 15, 2015 by  
Filed under Blogs, Credit Repair, Credit Score

…And how to fix them.

mistake

Nobody is perfect but, when your credit score is at stake, you need to pay extra attention because one mistake can destroy your credit score and derail any chance you had of buying a house, car, or getting a student loan.

Let’s take a look at the 5 most common credit blunders consumers make and how to fix them.

1. Forgetting to Make a Payment

Paying your bills on time is one of the most important factors used to calculate your credit score. A recent late payment can lower your credit score up to190 points and stay on your credit report for up to 7 years. This is why it is so important to make your payments on-time.

If you aren’t sure whether you can afford to pay something on time every month, don’t buy it. And if you are a bit disorganized and forgetful – set up auto bill pay with your bank or creditor.

2. Medical Bill Issues

Did you assume that your insurance company paid all your medical bills? Never assume anything. Check with your doctor to make sure that all of your medical bills had been paid. Call your insurance company to make sure that they pay your bills on time. Insurance companies don’t care about your credit score and if they take too long to pay your bills, the debt may go into collections before it is paid.

Stay on top of your insurance company to make sure that they pay your medical bills in full and on time. And keep an open line of communication between your doctor so that they can let you know if there are any unpaid bills before they send them to collections.

3. Co-Signing On A Loan

Being a co-signer (or #2) on a loan means that you are 100% liable for the full and complete balance of the debt. There have been so many stories of consumers getting burned by friends, relatives, loved ones – all because of co-signing on a loan. We have people calling us who still don’t understand why an account is reporting on their credit report which is not theirs, it belong to their brother or cousin, they only co-signed on the loan.

Let’s make one thing perfectly clear. When you co-sign on a loan, whether it’s a car, furniture, or credit card – – you are saying that if the borrower cannot pay the debt, you will be responsible for 100% of the loan. Not 50% of it, ALL OF IT. You are liable for 100% of the loan if the borrower defaults. And any late payments on the account will be reported to your credit history as though you paid the account late.

Do not co-sign for anyone unless you are both willing and able to take over their debt and ruin your credit score. Plus, there is always the unfortunate issues which arise when having financial ties with friends and loved ones. Theres no faster way to ruin a relationship or friendship than by co-signing on a loan.

How do you avoid this issue? Easy, JUST SAY NO!

4. Maxing Out a Credit Card

Maxing out your credit card could lower your scores by as much as 150 points. Credit cards are not your money, it is the bank’s money. Every time you use a credit card you are borrowing that money from a bank with the promise to pay them back. Maxing out your credit cards makes you look like you do not have enough cash for your everyday expenses – and that scares future lenders, thus your scores decrease.

Keeping the balance of the credit card at or below 20% of the credit limit shows lenders that you are using the credit cards for convenience and this increases your credit scores. One more fun fact, FICO did a study a few years ago on consumers with 800 scores and above, their average utilization rates were 1%. This means that if their credit limits were $100,000 – the average balance was $1,000. Keep your credit card balances as low as you can and your scores will increase.

5. Closing Old Accounts

What do you do when you pay off a credit card and never want to use it again? Close it, right? WRONG! About 15% of your credit score is calculated from the average age of your open/active credit history. This includes both open installment and revolving accounts. Closing your old credit card accounts may shorten your average length of credit history and lower your credit score by as much as 75 points.

If you’re dead set on closing an account, start with the youngest ones first, this way your average age of open accounts will still remain high and your credit score will not be damaged.

Protect your credit scores and think twice before doing anything which may damage your credit.

And if you need help on repair your credit, we’re here for you 24 hours a day, 7 days a week.

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

The History Of Credit Scoring

September 10, 2015 by  
Filed under Blogs, Credit Score

history of credit

Credit scoring first started in the late 1950’s to support lending decisions in large department stores. The concept was revolutionary and by the end of the 1970s, most of the nation’s largest commercial banks, finance companies, and credit card issuers used credit-scoring. However, credit scoring was widely adopted when Fannie Mae and Freddie Mac fully endorsed the use of the FICO score for home mortgage lending.

Credit scoring is now an automated process. but it hasn’t always been that way. Before the advent of computers, a person’s credit score was manually calculated by a bookkeeper. Such judgmental decision making is time consuming, costly, and subject to irregularity because different bookkeepers may weigh factors differently.

In 1956, William Fair and Earl Isaac, identified this problem and started the Fair Isaac Corporation (FICO). Their mission was to use computers and mathematics to generate credit scores from credit report data. The mathematics was to look at historic data (consumers’ past payments) and predict future behavior in the form of a number. The FICO score was launched. Fair Isaac is now a large corporation traded on the New York Stock Exchange (NYSE: FI).

From the 1950’s through the 1990’s (some fifty years), consumers could not even have access to their credit scores. Luckily the free thinkers of California changed that for everyone. In 2001, the State of California ruled that residents were allowed to know everything the credit bureaus were reporting, including their credit score. Fair Isaac and the Credit Bureaus decided they might as well make the data public to all consumers in the U.S, instead of trying to block it from everyone but Californians.

At first, FICO was hesitant, but soon they realized they would be floating in money by selling credit scores. They immediately launched MyFico.com, and hired the opinionated Suze Orman as their spokesperson to spread the word.

In 2001, the credit bureaus wanted a piece of credit scoring pie, so FICO decided to sell each credit bureau their own version of the FICO model. That’s right…customized FICOs! Each credit reporting agency had its own FICO:

credit bureau scores

This was fine but, the credit bureaus did not like paying money to FICO, so they created their own credit scoring models. Experian created the Plus score, TransUnion created the TransRisk score, and Equifax created the ScorePower score. Then, the 3 credit reporting agencies decided to collaborate and started planning their own credit scoring model. The Vantage Score was announced by the three bureaus on March 14, 2006.

Since then, the Vantage score has been updated a few times and FICO has added a few more variations to their scoring models (see 49 FICO scores).

Through all the confusion and constant change there is one constant. Since 1997, CreditFirm.Net has been at the forefront of helping consumers increase and improve their credit scores.

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

What Your Car Says About Your Credit

September 8, 2015 by  
Filed under Blogs

auto credit

It’s an interesting fact that there is a correlation between the type of car a person drives and their credit score. It’s also interesting to note that the car brands with the fewest buyers (Mitsubishi and Suzuki) also tend to have the buyers with the lowest credit scores.

What’s the actual breakdown of credit score to car?

Here is the full list of average scores paired with the cars they buy:
(Source: Experian)

Mitsubishi Buyers: Average Credit Score of 694
Suzuki Buyers: Average Credit Score of 704
Dodge Buyers: Average Credit Score of 718
Kia Buyers: Average Credit Score of 721
Toyota Buyers: Average Credit Score of 723
Jaguar Buyers: Average Credit Score of 810
Infiniti Buyers: Average Credit Score of 810
Audi Buyers: Average Credit Score of 810
Porsche Buyers: Average Credit Score of 810
Acura Buyers: Average Credit Score of 813
Lexus Buyers: Average Credit Score of 816
Volvo Buyers: Average Credit Score of 818

So what’s the difference between a Mitsubishi driver and a Lexus driver? About 122 points, according to the statistics.

This is a perfect example of how credit is a reflection of so much more than just payment performance.

Regardless of the car you drive, the assumptions that are made based on a credit rating can make or break you — both personally and in business. This is an important key to remember as you build your business and your credit.

What does your credit score say about you?

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

Bad Credit Ruins Lives

September 3, 2015 by  
Filed under Blogs, Credit Repair

bad credit

Bad credit ruins lives. The difference between living life and struggling to survive is based completely on your credit score. Let’s take a look at a car loan as a simple example.

A $20,000 car loan with good credit will cost approximately $322 monthly. This is based on a 5% interest rate for 72 months.

The exact same $20,000 car loan with bad credit will cost approximately $541 monthly. This is based on a 21% interest rate for 60 months (bad credit means a higher rate and shorter term).

This is the same car, but one is costing $219 more EVERY month.
The person with good credit will pay $23,184 for their car.
The person with bad credit will pay $32,460 for the same car.
That’s a $9,276 difference!

This example is not extreme, it is based on common interest rates you will actually see on a $20,000 auto loan.

Rent and home expenses are another area where consumers with bad credit get taken advantage of.

A $100,000 mortgage costs a consumer with good credit $577 monthly and $207,720 over 30 years.
The same home will cost someone with bad credit $841 monthly and $302,760 over 30 years.

The person with good credit will pays $264 less every month and saves $95,040 over the lifetime of the loan.

This means that the person with bad credit will pay $95,040 more in interest for a $100,000 loan, all because of their bad credit.

Most people know that credit has an adverse effect on their life. But, the truth is, bad credit controls their lives. Outrageous amounts of interest are being charged each and every month to people who can least afford to pay it.

That debt and those higher payments handcuffs most families, forcing them to live paycheck-to-paycheck.

Bad credit ruins lives. This is why we exist. We help people reach their financial goals and improve their quality of life by increasing the credit scores.

Are you ready to get started?

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

What is the Statute of Limitations?

September 1, 2015 by  
Filed under Blogs, Credit Repair

SoL

Almost all creditors, reporting on your credit report have a statute of limitations for how long they can attempt to collect on a debt. The statute of limitations is the legal time frame that the debt can be pursued through the legal system.

The statute of limitations is typically based on either your state of residence or the state in which the debt was obtained, as well as the type of debt. Contractual, oral, credit card, and installment debt all have different statutes of limitations.

For Example; Here is a state list of the statute of limitations for credit card debt.

These statutes are important for a few reasons. Firstly, there are some disputes based on the debtor not being able to collect on the debt due to the statute of limitations expiring.

Secondly, this is why your clients probably don’t, in most cases, want to make any kind of payment to a collection company. The time they can collect would then extend from the time your client made their last payment to that collection company or creditor. This is why some collection companies make it so easy for consumers to pay with payments.

WARNING!
According to the Federal Trade Commission, making ANY payment or signing a promissory note to a debtor can reset or restart the statute of limitations, even after it’s expired.

This is why it is so crucial that you have a team of certified credit professionals like CreditFirm.Net working on your credit.

Are you ready for a better credit score?

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

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