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11 Credit Score Principles You Should Know

July 21, 2016 by  
Filed under Blogs, Credit Score

credit scores

 

Credit scores can seem like a very complicated topic for most people but, it doesn’t have to be. Deep down there are a few core fundamental principles that will help you better understand your credit, lets go through them.

1. Credit Report
Your credit report is a history of how well you repay debt. It includes your payment history on debt such as mortgages, auto loans, credit cards, personal loans, student loans, as well as collection accounts from third party debt collectors, inquiries and public record information such as any bankruptcies, Tax Liens, or Judgments. You credit report also contains your personal informations such as your names and aliases, addresses, date of birth, phone numbers, and employers.

2. Credit Bureaus
Your credit history is maintained by companies often referred to as credit bureaus or credit reporting agencies. These companies gather and collect information about you and your payment history from creditors, debtors, and third party data furnishers. The 3 largest credit bureaus are Experian, Equifax, and TransUnion.

3. Credit Score
Credit scores are calculated by aggregating the information from your credit reports and running that info through a mathematical formula designed to score your report into a simple 3 digit number.

4. Different Credit Scores
Not only are there different scores for each of the 3 credit bureaus, there are several different credit scoring models which are used to get credit scores themselves. For Example, the most commonly used credit scoring model is the FICO score but, most people don’t know that there are 49 different scoring models of the FICO score. There are also a plethora of other models used to generate scores like the TransRisk Score, Vantage Score, Plus Score, ScorePower Score, etc…. Each of these scoring models uses a different scoring range and mathematical formula to aggregate a score. This is why credit scores differ from place to place.

5. Credit Score Factors
According to FICO (Fair Isaac Company), the developers of the lending industry’s most widely used credit score, the FICO score, there are 5 main factors which are used to calculate your credit score. Those factors, in order of importance are; payment history, credit utilization, account age, mix of credit and inquiries.

6. Free Credit Reports
You may obtain a free copy of your credit reports once a year from the government mandated website www.annualcreditreport.com.
You may also obtain a free credit report from some free credit monitoring services like;
www.creditkarma.com (FREE TransUnion and Equifax Credit Reports)
www.quizzle.com (FREE TransUnion Credit Report)
www.freecreditreport.com (FREE Experian Credit Report)

7. Free Credit Scores
There is no law currently requiring the credit bureaus to provide you with a free credit score but, there are a few websites out there providing consumers with a free credit score. Please note that none of these scores are FICO scores and they will likely differ from your actual FICO score.
www.creditkarma.com (FREE TransUnion and Equifax VantageScore 3.0 scores)
www.quizzle.com (FREE TransUnion VantageScore 3.0 score)
www.creditsesame.com (FREE TransUnion VantageScore 3.0 score)
www.credit.com (FREE Experian VantageScore 3.0 score)

8. Checking Your Own Credit Wont Hurt Your Scores
There are 2 different types on inquiries which report on your credit report, hard inquiries and soft inquiries. When you apply for credit (mortgage, auto loan, credit card, etc…) a hard inquiry reports on your credit report and lowers your score. Checking your credit through any of the sites we listed above incurs a soft inquiry, which means that it is just you checking up on your own credit. Soft inquiries do not lower your credit scores so check your own credit through soft inquiries as often as you like.

9. Negative Information Can Report For…
According to the Fair Credit Reporting Act (FCRA), derogatory information can report for up to 7 years from the date of the first key delinquency, with a few exceptions. Chapter 7 Bankruptcy may report for up to 10 years and a Federal Tax Lien may report indefinitely or 7 years from the date it is paid. This means that if you opened an account is 2010 and became delinquent in 2015, the account may continue to report derogatory info until 2022, 7 years from the date that the account became delinquent (2015), not from the date the account was opened (2010).

10. A Low Credit Score Can Ruin Your Life
A low score means that you will be stuck paying higher interest rates on everything form a mortgage, to an auto loan, to a credit card, even your insurance rates are influenced by your credit scores. It has even become common practice for employers to check credit reports to determine whether an applicant is financial responsible. Consumers with bad credit are deemed higher risk and more likely to commit fraud or steal.

11. The Good News
Bad credit isn’t permanent. CreditFirm.Net has helped thousands of consumers just like you remove negative information from their credit reports and improve their credit scores. Since 1997, we have helped our clients purchase homes, get low interest auto loans, and save millions of dollars by improving their credit scores. Will you be our next success story?

 

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

Common Questions About Credit

November 13, 2014 by  
Filed under Blogs, Credit Report, Credit Score

by: .

common questions about fixing credit

What is a credit report?

A credit report is a record of how well you manage and repay your debt. For example, when you pay your auto loan every month, your creditor will report the payment as well as your payment history, to credit reporting agencies(Experian, Equifax, and TransUnion). The credit reporting agencies, then combine the information reported to them about you from several different creditors and create a credit report.

What is a credit score?

A credit score is a number which is calculated from the information in your credit report. The most commonly used credit score is the FICO score which has a range of 300 to 850, the higher the score, the better. There are several factors used to calculate your credit scores, the most important being;
Payment History
Amounts Owed
Length of Credit History
Mix of Credit
New Credit

Learn more about these factors and use them correctly to help you improve your credit scores.

Where can I get a free credit report?

The FCRA (Fair Credit Reporting Act) entitles you to a free copy of your credit report from each of the three credit bureaus every year. There are 3 ways of getting your free credit report.
1. Online: www.annualcreditreport.com
2. Phone: call 1-877-322-8228
3. Mail: Fill out the credit report request form here, and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Where can I get a free credit score?

Federal law does NOT require the credit bureaus to provide you with a free credit score. This means that you’re on your own when looking for your credit score. But, there are a few places online which will give you access to free credit scores.
– Free Experian Credit Score: www.creditsesame.com
– Free Equifax Credit Score: www.quizzle.com
– Free TransUnion Credit Score: www.creditkarma.com

Need more help?

Over the last 17 years, we have helped thousands of individuals repair their credit reports and increase their credit scores. Will you be our next success story?

 

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

More Consumers Approaching Perfect Scores

May 11, 2012 by  
Filed under Blogs, Credit Score

by: Credit.com

Improve credit score

Improve your FICO score

The number of consumers in the top credit score range has reached its highest level since fall 2008, a report by FICO Labs shows, which could indicate more Americans are working to better their personal finances, including improving their credit reports. (If you want to know more about how a credit score works, check out: What’s a Credit Score?)

More than 18 percent of consumers now have FICO scores between 800 and 850—the first time the ratio of consumers has grown to this figure since October 2008, FICO Labs reports.

However, the number of consumers with scores between 700 and 799 hasn’t improved in the same manner. The report states 15.5 percent of U.S. residents have scores in this range, which is the lowest the figure has been since FICO Labs began recording the statistic in 2005.

Additionally, the report found that nearly one-third of the country’s consumers have FICO scores between 550 and 699—the most amount of people with a score in this range since 2006.

According to FICO, this data likely denotes there are still a considerable amount of Americans in poor or average financial standing.

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Despite many Americans in evident need of a credit tune-up, Rachel Bell of FICO Labs stated the report indicates a considerable change in consumers’ attitudes toward their personal finances.

“Many consumers have moved into the top tier of the FICO Score range by redoubling their efforts to maintain an excellent credit profile,” said Bell. “Other people have fallen into lower tiers, most likely due to the financial stress that many households have been feeling. Despite this shift, we continue to observe more than half of FICO Scores in the U.S. are between 700 – 850, which means Americans have managed their credit well despite the economic downturn.”

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One facet of the report that stands out, according to Bell, is the percentage of consumers with FICO scores in the 300-549 range—nearly 15 percent. This is the lowest the figure has been since 2006. The reason for the reduced figure, Bell notes, is due to many lenders writing off a substantial amount of bad debt.

“Some consumers who had multiple bad debts and delinquencies a few years ago are now able to move on, and their credit scores are starting to move into the 550-699 range,” Bell added.

Source: Credit.com (http://goo.gl/t5Z2d)

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