One of the most common questions we get is people concerned with their credit scores, and how they can go about improving them. Here is a question that was sent in recently.
“Hello, up until recently my husband and I have both had perfect credit. My husband lost his job and we have had to downsize our lives to stay afloat. Where we live (Nevada) the housing market is very upside down and we need to short sale our home. The mortgage company told us that in order to qualify for the short sale we must be at least 60 days behind on payments. When the sale went through we it was reported that we were 90 days late and our credit score took a big hit. What can we do to get our credit back to good?”
This is unfortunately becoming more and more common in our current economy. And I hate to be the bearer of bad news, but the 90 day late payment is not the only negative mark you credit score is going to face. Your short sale will also be reported on your credit report for the next 10 years. And you must legally provide that information when you apply for a new mortgage. The short sale will be a major hit on your credit score, but there is some good news. Short sales and foreclosures are becoming so common that many lenders are looking at the circumstances behind the short sales/foreclosures before they make any final judgments on whether you are loan worthy or not. This will help when you are going to be applying for a new home, it will not help when applying for credit from lenders such as credit cards, or anything that uses automated tools to match your credit score with the minimum needed to provide credit.
These are a the steps I would take to help you get your credit back on track. Enroll in our credit monitoring service and look carefully at your credit reports for any errors that may be on your accounts. If you find any errors have them removed as quickly as you can. Next would be to take a look at your revolving credit accounts. These are you credit cards, try to get your balances below 30% or lower if you can. The quicker you can do this the quicker your score will start to bounce back.
Your installment loans you will not have to worry about paying down the balances quickly, you will just want to make sure you pay them on time, and avoid any late payments if at all possible.
With this plan you will show that you were forced to make a very hard financial decision of selling your home at short sale because of extreme circumstances that you and your husband faced. While you had to short sale your home, you were able to keep up on all your installment loans, and you were able to pay down your credit cards to a very low balances. This will show that you are still very diligent in your credit responsibility and that you should be considered for a new mortgage as soon as you are in a position to afford the payments.
I know right now it seems like your financial world is turned upside down, but taking a probative approach to your credit you will soon start to see your credit scores climbing back every month!
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In yesterdays post, we quickly talked about a soft inquiry, I was asked if I could do a quick recap of what is the difference between a hard inquiry and a soft inquiry on your credit reports. Here you go!
For those of you out there who just skim an article looking for the quickest answer, here you go! Just remember this. Hard bad, soft good. For the rest of us who want a little more info lets dig into the exciting world of credit inquiry’s! (ok I know it’s not that exciting).
We will start with the evil ones, the hard inquiry. A hard inquiry is when a potential lender pulls your credit report. This can be anything from a credit card company, a mortgage company, pay day loan, buying a car, insurance quote, to applying for an apartment. A hard inquiry will hurt your credit score. Just having one will not harm you score very much, and your score will quickly rebound from it. Where you score can take a beating is if you are constantly applying for credit. Have numerous hard inquiry’s spread over a period of time will decrease your score, sometimes significantly. The rational behind this is that if someone is looking at your credit, you must be shopping around for credit. And if your looking for credit, there is a good chance you will get credit, and this will throw off the balances that you have in place, and your scores will have to be readjusted according to your new balances. And if constantly getting hard inquiry’s it shows the credit scoring companies that you could be building up a lot of debt, and could be potentially carrying large balances that will again change your credit to debit ratio.
There is some good news credit scoring takes into account that you will want to shop for the best rate possible when considering a large purchase such as a car, mortgage, or large ticket item. You will still be dinged for a hard inquiry, but you are allowed to shop around for a short period of time, usually around two weeks. In this period you can get more hard inquiry’s and they will not have same effect on your score if you had been spreading those out over weeks or months.
You still with me? Ok so this usually comes the most common question, does checking my credit report, or enrolling in a credit monitoring hurt my credit score? This is where soft inquiry come in. When you pull your credit or sign up with a credit monitoring service you get what is called a soft inquiry. And these will not hurt you credit score. You are allowed to pull your credit as often as you like and have no penalty for doing so. You are the only who will ever see your soft inquiry lenders do not have access to this data. This is one of the benefits of a credit monitoring service is the ability to check your credit score as often as you would like. That way you know where your score is before shopping for credit, knowing your score will give you a good idea if you will be approved for credit or not. With that information you will then know if its worth the risk of a hard inquiry on your credit score.
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I have been in the credit monitoring business for over 10 years now! And there have been many questions that I did not know the answer too, but most of them with a little research I could find out and then give my interpenetration of it. I feel with credit related questions there are the black and white answers, for example “will enrolling in a credit monitoring service hurt my credit score?”. The answer is 100% no, it will not have any effect on your credit score, its a soft inquiry and they will not harm you.
To more of grey area answers where nobody truly knows the answers. An example would be “Holding 30% debt on your credit cards is the fastest way to build credit”. Well 30% is not a magic number, you do not have to pull out your calculator and figure 30% down to the penny. And to be honest I have even advised that 30% is a good number to build up your credit quickly, but there is as much evidence to show that 10% or 20% will build it just as fast. You see, what the credit bureaus are looking for is to show you can make month payments on time, every month for a period of time.
I would say that in my years of doing this, that its about a 50/50 split on where the answers may fall. Like most things in life we are using our best experiences and data available to use to make our answers. With that said here is a seemingly very simple question for which I have no answer to.
I question came in asking what is the average amount of times per year is your credit checked? Well I tossed that question into Google and thought I would be overwhelmed with answers. It turns out I found none! Not even at Wikipedia which usually has a very diverse set of answers. You just have to be sure to take them all with a grain of salt as its human edited, and as such any “experts” can state whatever they want.
So I thought well I guess I can try to gather some data on my own to take a best guess answer at it. Asking people in the office how many times they thought their credit was pulled brought up a huge range of answers. It seems as an average many people get a hard inquiry more times a year than they thought.
An good example of this is a younger person who has only been in the work force for a few years. Over the last year they moved into a new apartment, and with that came around 5 checks to their credit. They then bought a new car, shopping for the best deal they went to 3 different dealerships, and that is 3 new inquiry. After they bought the new car, they need insurance, shopping around again for the best rate racked up 3 more inquiry’s. This seem to be about the average here in our office. We did have many outliers though, some people had no inquiry’s at all over the last year, and others had many more!
So what does this all mean? Well not much, except for the fact that this just shows how many times per year we willing give out our financial information to a 3rd party, and that if you add that up over the years it becomes a pretty scary number of places that our personal data is stored, and could be compromised by a security breach, and shows how having a credit monitoring service in place can really help your protect your credit!
ShareI know we have said this over and over again, but it is so important to know what your credit score is, and if it is low, to raise it to a good or great level. Credit monitoring will help you see your progress as you being to raise your scores. Keeping tabs on your credit is vital, and many of us just do not have the time to keep monitoring our credit scores. This is where credit monitoring services shine!
We will provide you with all three of your credit scores.
We will track changes on all three of your credit reports, these can be changes you requested, or possible identity theft.
Having access to your three credit reports will allow you to find errors on your reports.
It can help you save money and time. By knowing what your credit scores are you will know exactly where you stand in the eyes of lenders. This will enable you to get the best deal possible, or decide to hold off until your credit score raises to the next bracket, which will save you money on anything you finance. And by being enrolled in our credit monitoring service you will constantly be updated on your credit score, that way you will know in advance if something is negatively effecting it, and you will be able to be proactive about fixing it to get your credit score back! This will indeed save time and make your life so much more simple.
Like most things in life, ignoring a problem such as a low credit score will not make it get any better. Credit monitoring will give you the tools you need to dig in and get your credit back on track!
ShareYou have managed to achieve a great credit score, something over 725 now what do you do with it? You have no plans to buy any large ticket items, your happy with your credit cards, your car is going to last you for 10 more years, and you recently bought your house. Things are looking great, but don’t rest to easy, you can use that great credit score to your advantage.
This is particular important to those of us who have been using the credit monitoring service to raise your credit score. Now that you have a fantastic score, its time to put it to use. You can use your score to get lower interest rates on purchases you have already made.
Say that you bought your car one or two years ago, and you had good credit at the time, or more importantly if you did not have good credit. Now that you have great credit you can call who ever holds your loan and ask them to lower you interest rate to reflect your new credit score. Many times they will tell you this can not be done, but don’t take no for an answer. Tell them that if they are not willing to work with you than you will just go elsewhere to refinance the loan. They will know that with your credit score that you will be able to do this easily and many times they will offer you a better rate on your current loan.
You can also use your credit score to your advantage when buying a new car. The dealership will make money on your financing, and often times they are locked into a certain rate which they just match your credit score too, and that is what you get. Many times this is not as good as a rate as you would get elsewhere if you secured your own financing. Use this to your advantage when negotiating. Print our your credit scores from your credit monitoring home page and bring them with you. How can you use this to get a better deal? Well the dealership will know that you will be able to get a better deal if you finance away from them, and they know that if you do this they will be losing out on some easy money. Use this fact to get them to take more off the bottom line of the car to make up for the difference you would get if you had a lower interest rate if you went elsewhere.
Some other easy places to save money every month with a great credit score is insurance. If your credit score has rising since you first signed up for your insurance then you can use that to lower your rates. Your credit score is a factor when it comes to insurance, and insurance companies will base your rates off of what your score was when you first enrolled. Call them up and ask them to lower your rates as your credit scores have raised and more often than not they will reduce your premium.
You should also negotiate with any credit cards that you have. If your rate is above 12% then it would be worth your time to call and ask for a significant rate reduction. With a credit score above 725 you should be looking at an interest rate of 6%-12%. Again at first they may be hesitant to lower your rates, but just know that you have the power in your hands, and that if worst case scenario they will not work with you move your business to a credit card that will give you the rates you deserve!
Keeping track of your credit scores with credit monitoring can really help you to save money, and to get your the best possible deals!
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Well of course we think so, but we are the providers of the service, so let me take a more nonobjective look at it. Some of the pro’s. It will help your prevent ID theft, it will let you monitor your credit reports, it will keep tabs on your credit scores. And then the cons the biggest con is the cost per month. Many critics claim that it may not be worth the monthly fee, I disagree.
First lets look at the obvious pros. Unlimited access to your credit report. Ok yeah not to exciting really, but its important. When you first sign up for credit monitoring you will want to go over your reports with a fine tooth comb to ensure all the information that is on the reports is up to date, and more importantly accurate. If there is any information that is inaccurate you can quickly address it, and make sure it gets removed. After that you will not need to look at your reports very often, as the service will monitor all your reports and if there are any changes made to your reports you will be notified by email.
Next pro is access to your credit scores, and not just one credit score like many other credit monitoring services offer, you will have access to all three scores. This is very important because this is how lenders see you, and your credit scores will determine what interest rate you will get on loans. Knowing your credit scores, and knowing what is effecting them in a negative way will help you to resolve and fix those credit errors, and help to improve your credit score. Going from a good to a great credit score can save you thousands of dollars over the term of a car loan, or even more on a mortgage.
And then one of the best reasons to sign up is to help your stay safe from identity thieves. This is by far the most critically argued benefits by critics of credit monitoring. These experts claim that credit monitoring services can not prevent ID theft. And since these services can not prevent ID theft, then they are not worth the cost per month. I agree, a credit monitoring service can not prevent ID theft on its own, but that’s not what it is meant to do. Its meant to be used as a tool to help you prevent ID theft, and then to protect you in the event that your ID is stolen.
I like to think of credit monitoring like I think of an alarm system on your home. It will not prevent you from being a victim of theft, but will will certainly alert you of a theft, and help you to take care of it in the quickest manner possible. If for example you are on vacation and a thief came to your home, if they heard the alarm, or if the cops show up very quickly you have a chance to catch the thieves, or lessen the amount they get away with. If you did not have the alarm system, the thieves could clean you out, and you would not know anything about it until you were home, at by that time it may be to late.
A credit monitoring service works the same way. There is no way to prevent you from becoming a victim of ID theft, but it will notify you as soon as it starts to happen, and that can prevent any damage from being done. ID theft works by the victim not knowing that they are a victim until months or years later, this will not happen if you sign up for a credit monitoring service. For this reason alone, plus all the other benefits, I think it is will worth the monthly cost.
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Thanksgiving is next week, and for many of us the last thing we want to think about is our credit scores. And to be honest I do not blame you, credit scores are just not that exciting, and most times you only think of them when you need them, like when you are looking to buy a large ticket item, or shopping for credit.
With the holidays approaching, many of us are looking forward to large meals, time with friends and family, and all the activities that come with the holiday season. And all this fun does come at an expense, I just read that the average person will gain 1.5 lbs the week of thanksgiving! And just like our food intake we often over indulge during the holidays financially. So if we think about our credit like we think about our weight, most of us will be packing on a few extra pounds. That in it self is not really all that bad, its what we do the weeks and months after that matters!
Just like with packing on a few pounds after the big turkey day meal, we have to work hard in the next few weeks after to get back to where we were before we had the great meal. Same with your credit, it is important to work hard in the upcoming weeks to get your credit to back to where it was before the holdiays.
The most important tip we can give is to make sure you pay your bills on time! This can get tricky as we get so busy from now until after the Christmas holidays. Forgetting to pay some of your bills is easy to do, but do not let that happen. Missing a payment can have a huge impact on your hard earned credit score. That simple mistake could take you months to fully recover from!
Try not to spend more than you can pay off in a timely fashion. Carrying a large balance on your credit cards will also hurt your credit scores.
And the last big tip is to be very diligent with your financial data. Around the holiday season there is often a large rise in ID theft. Many of us are so busy during this period that our normal defenses can slip a bit, and it can be easier for would be thieves to get a hold of our personal information.
With access to your credit monitoring account you will have all the tools you need to monitor your credit scores, and to see what is effecting them in a negative way. Think of it like your bathroom scale, just step on it a few times during the holidays, and make sure you are not gaining to much weight! (Lowering your credit scores). Then use our tips in tricks in our blog to find the best way to get your credit score back in check.
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For many stendents its close to mid terms. I thought it would be a good idea to quiz our readers on credit monitoring, credit reports and credit scores. Get your number 2 pencils out, take a seat, and no peeking off your neighbors!
1) How many credit bureaus are there?
2) What is considered a “good” credit score? Anything over:
3) What impacts your credit score the most?
4) Are creditors required by law to report your account information to the credit bureaus?
5) Does enrolling in a credit monitoring service hurt your credit score?
6) Canceling old credit cards will improve my score.
7) Can a potential employer use your credit score as a hiring factor?
Unsolicited credit card offers effect your credit score.
9) Your age, gender, and income effect your credit score.
Answers:
1) Answer is c) 3
Experian, Equifax, and Transunion. These 3 credit bureaus provide the United States will the credit data that is shown on your credit reports. It is important to check all 3 credit reports as they can show different information. Not all your creditors will choose to report to all 3 bureaus.
2) Answer is c) 700
Most lenders will consider anything over 700 to be a good credit score, this will give you access to very good credit rates. 700 and above is a great goal for all of us to maintain.
3) Answer is a) Payment History
Paying your debts on time will have the most impact on your credit score, positively and negatively. If you constantly pay your debts on or before the payment due date, your credit score will rise. Consequently if you pay past the due date your credit score will fall. The other factors will effect your scores, but your payment history has the largest impact.
4) Answer is b) No.
There is no law on the books that requires your creditors to report your accounts or payment history to the credit bureaus.
5) Answer is b) No.
Signing up for a credit monitoring service will not hurt your credit score. There are 2 types of credit inquiry’s hard and soft. A hard inquiry is what you get when you apply for credit, and yes this will hurt your credit score. A soft inquiry is when you pull your credit score these will not hurt your credit score. Learn more about hard and soft inquiry’s.
6) Answer b) False
When you close down a credit card, your available credit will decrease, and this in turn will lower your credit score. One of the factors used in calculating your credit score is your available credit limit. When you close an open account that amount decreases and this will effect your credit score.
7) Answer a) Yes
Yes potential employers can use your credit score as a factor in order to make a decision on whether to hire you or not to hire you. Keep up to date on this issue on our blog, we here at Best Credit Reports are against this, and will keep you up to date on lobbying efforts to get this removed as a factor in which you can be hired on.
Answer b) No
Those annoying unsolicited credit card offers we all get will not effect your credit score. The way they work is the company who wants you to sign up for the credit card will buy a list of names from the credit bureaus. Generally they will buy lists with a certain set of credit scores. And if you happen to fall within the range the credit card company is looking for, you will get mail!
9) b) No
Your age, gender and income have no effect on your credit scores!
To learn your credit scores to day, enroll in our free trial of credit monitoring.
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I was at the store today, and just two days after Halloween, Christmas is up and running! What happened to Thanksgiving? Did I sleep through it, or did the Halloween Zombies run off with it? Regardless, the shopping season starts sooner and sooner every year.
Here are some tips to keep your credit safe during the hectic holiday season.
1. Gifts that are bought on your credit cards, that are not paid off during the grace period will end up costing you a lot! I know the holidays are tough, and we want to please everyone, but if you can avoid buying your holiday gifts on credit. Its a bit late this season, but if you can you can try to save a little bit every month for your holiday spending money. It may be hard to do this in March as the holidays seem so far away, but if you save a little bit every month during the year you will have a nice holiday next egg, and will not have to break out your credit cards.
2. If you find that you have to use your credit cards during this holiday season, know that you may get a hit to your credit score as your balances increases (Check out this article on credit scores) you will approach your maximum credit limit. As you approach your credit limit your score will decrease as a result. Keep this in mind that if in the spring you plan to make a major purchase, as you will not get the best loan rate until you get your holiday balances back in to around 30% of your credit limit.
3. The lure of a discount if you sign up for a store credit account. Sure the 20% discount sounds really nice, but in reality its very naughty. I know all of you out there have at one point when shopping the perky clerk will say “Would you like to save 20% on your purchase today?” I have any instantly my mind does the math and it sounds great! So whats the harm? The catch is that you will need to sign up for another credit card. Again many of you might be saying whats the harm if I never use the card? Well first off you will get a hard inquiry on your credit report, which will have a negative effect on your credit score. Second you may or may not be approved for that new credit card. And if you are approved most of the time these cards have a small limit. Again, whats the harm? Well with such a small limit it will be very easy to max out the card, and see number 2, showing an account with maxed out credit will have a negative effect on your credit! And if those are not enough reasons to stay away from that 20% discount, take the annual APR of that credit card into account, you will soon be spending more in interest than you saved with the discount.
You can keep track of all three of your credit scores, and protect your credit when you enroll in our award winning credit monitoring!
ShareAre they the same? If not what the difference?
First off, now your credit report and credit scores are different. Your credit report is information about your credit life, it has accounts, balances, limits, inquiry, and personal information such as where you live. Your credit score is all these factors put into a score, it shows exactly how risky you would be to give credit. It is also very important to note that you have three credit scores, once from each of the three major credit reporting companies, Transunion, Equifax and Experian.
What about FICO? FICO is score generated by the Fair Issac Corporation. It used to be the most widely used credit score until recent years. The Credit Bureaus who own the data that was used to generate FICO scores have come up with their own credit scores, which are now widely used by many lenders. The scores we provide are generated be the three credit bureaus and are not FICO scores. You will receive all three of your credit scores when you enroll in our credit monitoring program.
Ok so then what is the deal with a free credit report from annualcreditreport.com? Every American is entitled to a free credit report every year, and it is done through the Annual Credit Report.com website, which is a great resource if you want to check your credit report. The problem is, you will not have access to your credit score, and without that, well, what good is it? We want to see our report card, not the work we have done right? Well there is some benefit, if you choose not to enroll in a credit monitoring program, then you will be able to scan your report for errors. The problem is you only have access to this once per year, so if someone has stolen your identity, then well, hopefully it was right before you checked it out! If not you will have quite a bit of clean up work to do.
I hope that clears it up for some of you out there! I know its all a bit confusing, but to keep it simple just remember, that your credit report is your file, all your history of anything credit related. The more credit you have over the years the larger this file will be.
Your credit score, it goes up and down all the time, and this is your report card, it will tell you on the day you check it where you stand in the eyes of potential lenders. Do not be discouraged if your score is lower than you are happy with. By following this blog, and reading the articles on here, we will give you advice on how to boost your score, and get it to exactly where you want it to be!
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