Improving your FICO score.

If you need a loan, do your rate shopping within a focused period of time, such as 30 days. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.

Generally, people with high FICO scores consistently:

• Pay bills on time.
• Keep balances low on credit cards and other revolving credit products.
• Apply for and open new credit accounts only as needed.

Also, here are some good credit management practices that can help to raise your FICO score over time.

• Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time will raise your FICO score over the long term.
• Check your own credit reports regularly, before applying for new credit, to be sure they are accurate and up-to-date. As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as myFICO, your own inquiries will not affect your FICO score.

What to know about "rate shopping."

Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

Does the formula treat all credit inquiries the same?

No. Research has indicated that the FICO score is more predictive when it treats loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

How much will credit inquiries affect my score?

The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one's FICO score. For most people, one additional credit inquiry will take less than five points off their FICO score. For perspective, the full range for FICO scores is 300-850®. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.

The Truth About Credit Repair

Does applying for credit affect my FICO score?

Fair Isaac's research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO score can be lower as a result.

Will my FICO score drop if I apply for new credit?

If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

Learn the tips, tricks, and techniques of the professionals

On Saturday, August 8th, we will be holding a

Do It Yourself Credit Repair Workshop

in St. George, Utah at 10 AM. Cost is $59 per person.

You will learn how to:

• Understand how your credit is scored
• Legally dispute all negative items on your report
• Challenge items in collection on your report
• Understand positive ways to improve you credit score
• Get a 3 step action plan that will improve your score in as little as 30 days

This is a great workshop. It is an awesome way for people who need to improve their credit score, but don't have the money to pay high-priced credit repair agencies. Some people attend the workshop to do their own credit repair, and then are able to help others with their credit as well. It's all-inclusive and includes trade secrets about the crazy credit game! The credit bureaus don't want people to know how their credit is rated and scored. But, I have learned how to understand, build, restore, and increase your score.

Call for more information: (435) 628-0254 in St. George or 1-888-795-7739. We can also be reached via: email at beesmartanswers@gmail.com; text to (702) 539-7571; or fax us at (702) 947-2547. PRE-REGISTRATION IS REQUIRED.

I have so many inquiries on my report.

I get asked this question quite often. People assume those inquiries are affecting their score. They may be. I will be running a series of answers on this in the next of couple of weeks.

What is an "inquiry"?

When you apply for credit, you authorize those lenders to ask or "inquire" for a copy of your credit report from a credit bureau. When you later check your credit report, you may notice that their credit inquiries are listed. You may also see listed there inquiries by businesses that you don't know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new credit.

Why Is My Credit So Bad?

Explaining how the credit reporting bureaus work can be downright confusing. And, there's a reason it is so confusing--because it is. Yes, that's right they purposing make it confusing so that consumers don't have any idea how to manipulate their credit score. The FICO score was established as a way to determine the likelihood that a person would pay back a debt. This is a mathematical equation that uses 22 different algorithms to compute your score. On top of that, each CRB (credit reporting bureau) uses a different scoring module. THEN, add to that: your score is completely different when pulled by 1) mortgage lender/bank; 2) auto reseller; or 3) consumer self-reporting. Aaah....sigh.

To simplify it, I like to break it down into 5 different categories:

Top 5 Factors Affecting Your Credit Score

There are five primary factors that account for the magical credit score which determines you acceptance or rejection for most loans or credit cards, and strongly influences the interest rates or total cost for you to borrow the funds.

How Payment History Affects Your Credit Score – 35%

Payment history accounts for about 35 percent of your credit score (this will vary depending on the scoring agency). It makes sense that this would be a top factor, since someone with a long history is of never missing a payment is likely to continue to be a safe person to lend money to.

If you do have negative marks on your credit score, three factors will determine the size of the deduction to your credit score:

1. Time Since The Event – how long ago did you miss a payment? If it was a long time ago, and you have a good payment history since that time, it will not affect your score very much. Whereas a recent missed payment will cost more against your credit scoring.
2. Number of Missed Payments – obviously matters. One missed payment in ten years of good history won’t matter very much, but the more missed payments in your history, the more risky you are seen to be and this will be reflected in a lower debt score.
3. How Bad Was The Blunder? – being late or missing one credit card payment is a small deduction. All the way up to having a bill go to a collection agency to the biggest black mark of all: bankruptcy.

How Much You Currently Owe – 30%

If you think of your credit score as a kind of “worry index” for lenders, you’ll understand why how much of your possible credit you are using would be a concern for lenders.

Think of this aspect of credit score as a percentage. The amount you owe on all possible credit sources (credit cards, auto loans, home loans, your current mortgage and so on) divided by the total of all credit available to you.

To put it into perspective, statistically most Americans use less than 30% of their available credit and only about 12% use more than 80%.

How much you currently owe compared to your total available credit accounts for about 30% of your loan score. Knowing this straightforward measurement, to improve your score, simply pay down any loans and avoid the temptation to get cute and improve your ratio by getting a larger amount of “available credit”. As we’ll see in the next sections, this can actually hurt your credit score more than improve it.

In general people who have a debt scenario near to or at the limit of their credit are much more likely to default and therefore are given a lower credit score. If you are in this situation credit counseling, to develop a debt management plan, may be something worth considering to reverse the trend and lower your debt ratio.

How Long You Have Had Credit – 15%

This metric accounts for about 15% of your credit score, with favorable weight going to those who have had credit for the longest time. The reasoning behind using time as a credit score factor is because in time it is easier to establish patterns of behavior.

Even if someone has never had a credit incident (a late payment for example) but they have only had a credit card or loan for a short period of time, they may not have encountered any of the critical life events that can cause major stress.

Credit statistics show that people with the highest ratings for example, have not missed a payment even when they have lost their job or been ill for extended periods.

Your Last Application for Credit – 10%

The typical American consumer last applied for some sort of new credit 20 months ago. Recent credit applications can indicate a “need” for money and needing money is a negative factor on your credit score.

Your last credit application date accounts for about 10% of your total score. In fact, even having many lenders check your credit score can have a negative impact on your credit score, so make sure you don’t authorize lenders or banks to “pull” your credit score unless you are in fact, seriously shopping for a loan or other credit instrument.

Ordering your own credit score report from one of three bureaus should not count as a negative on your actual credit score.

The Types of Credit You Are Using – 10%

In short there are two major types of credit: revolving and installment.

Installment loans are items like car loans and mortgages. Revolving are credit cards and the like where even if you pay them in full, you still retain the credit to use it again. Generally credit cards are seen as higher quality revolving credit, than department store cards. And mortgages are seen has higher quality than revolving credit, simply because they are more difficult to obtain ( the recent sub-prime loans excluded ).

The type of credit you are using represents about 10% of your score, and a higher score is give to people with a blend of credit from various sources. This is seen as a reflection of trust, due to each credit card or loan being seen as an endorsement from a different company.

Credit Score Conclusions

It is clear when you read through the 5 credit score factors that they are derived from a statistical analysis of many years of loans versus default rate data. This is both good and bad. For the lenders it can be a fairly accurate predictor of the “typical” borrower’s behavior and for the consumer it does provide a clear roadmap for improving their credit score.

The downside to this statistical analysis is, of course, that it doesn’t account for the human factor or treat people as individuals. In the old days, before FICO Scores, the bank manager or loan officer knew their clients and included the client’s “character” as a major factor in making a decision whether to lend or not. Now that the decision is largely automated, it is possible to be unfairly represented, and be forced to pay higher lender fees, by a credit scoring models based on other people’s behaviors.

What is the average American FICO score?

­The credit score that haunts your dreams at night and can awaken you in a cold sweat is based largely on the history of your financial life. The three major credit bureaus (Experian, TransUnion and Equifax) have their own version of the FICO score, based on the mathematical model Fair Isaac refined in the late 1970s. Each of the credit bureaus' scoring systems is slightly different, which can result in different scores for a single person. As a result, lenders generally use the middle score for reference.
Credit scores are based on your payment history, how much outstanding debt you have, the length of your credit history, what type of credit you've received and the frequency with which you fill out new credit applications. The factors that have the most bearing are payment history and outstanding debt, which account for 35 and 30 percent of your score, respectively. By the way, the average American score is 692.

A tip to increase your score

Do not close your old credit card accounts. Old established accounts show your history, and tell about your stability and paying habits. If you have old credit card accounts that you want to stop using, just cut up the cards or keep them in a drawer, but keep the accounts open. Closing your account will actually hurt your score. Eventually, your score will go up again. I don't recommend closing an account if you are in the process or planning to get a loan soon.

Estimate your own Fico Score

I found this estimator at: http://www.bankrate.com/brm/fico/calc.asp It is fairly accurate and can give you an idea of what your score is.

The Fair Credit Reporting Act

Where can I find out more about credit reports, my rights as a consumer, the Fair Credit Reporting Act and the FACT Act?
Please visit www.ftc.gov/credit

What is a credit score?

A credit score is a complex mathematical model that evaluates many types of information in a credit file. A credit score is used by a lender to help determine whether a person qualifies for a particular credit card, loan, or service. Most credit scores estimate the risk a company incurs by lending a person money or providing them with a service –– specifically, the likelihood that the person will make payments on time in the next two to three years. Generally, the higher the score, the less risk the person represents.

Do you know your credit score?

You should know--your financial life may depend on it. If your credit score is lower than 550, you will find it practically impossible to get approval for loans or credit, or to obtain a credit card. You will also be charged higher interest rates than what regular borrowers get. So if you do have a low score, you need to improve it as soon as you can. That means going into debt management, consumer credit counseling, and credit repair. To obtain a free copy of your credit report go to www.annualcreditreport.com. (This does contain your FICO score.) If you would like to know your score, you can obtain it through consumer agencies or various internet sites. You can also get it from your local mortgage broker.

Good credit can equal good loans

Credit repair is a million dollar industry with a lot of scams. Finding a loan with poor credit isn't hard, getting a decent interest rate can be. When you clean up your credit report you end up saving hundreds, if not thousands, of dollars in interest charges. We strongly recommend you learn what you need to do to repair your credit legally so you can qualify for low rate loans and credit cards.
One of the first things you need to do, whether you filed bankruptcy or just need to rebuild your credit, is to set out a plan to rebuild your credit, as well as how you will use your borrowing abilities in the future. Without a good plan of attack on your financing and borrowing usage, you will run the risk of being in financial trouble again within a few years or so. Don't become a repeat statistic. Plan now, for protection later.You have two options when it comes to repairing your credit ...
1) hire someone, preferably an attorney who knows the credit laws;
2) do-it-yourself using a good quality guide and your 3-in-1 credit report; Whichever way you decide to go, here are just a few tips to keep you on track:
Don't fall for scams that tell you to create a new credit file ... that's credit fraud if you do it, and can make you subject to legal repercussions;
Do read the Fair Credit Reporting Act so you have an idea of your rights while you go through the credit repair process;
Get yourself organized and committed to the process, there is no overnight fix;
If you use an online service, you want to know what the fees will be, monthly or "as you go" is best, and you want to be able to cancel at anytime;
Always act in a cooperative and professional manner when dealing with creditors or collection agencies;
Don't make threats, however subtle, if you can't back them up. Deciding whether to hire a credit repair firm, or doing it yourself, depends a lot on your willingness to work, as well as your ability to be organized and follow through on the process. If you really don't want to deal with it yourself, and would rather a professional, we recommend one who is well-versed in the use of the Fair Credit Reporting Act to protect your credit, and who will handle all the detail work for you.

Are You a Revolver?

I'm not talking about a gun, by the way. If you're getting mail that claims you are "pre-qualified" you may be a Revolver. Credit card companies love Revolvers. They make more money on them. So how do you know if you're a Revolver?

Revolvers are people that like to hold balances on their credit cards. Because they don't pay off their balances, they end up being on the credit card companies most profitable client list. Credit card companies love you! They can see what purchases you make every month and send you something that appeals to your senses. Their research actually tells them how much money they can make off of you before they even spend a dime marketing to you.

So in essence, being pre-qualified may also mean, "not very smart with money." If you're reading this and you carry balances on your cards--you've been had. Maybe it's time to get smart and quit paying all of that extra money to the credit card companies.

However, if you're trying to raise your FICO score for loan--call me. I show you how to beat the credit reporting agencies at their own game.

Q: Is it legal to dispute negative items on my credit report?

A: Yes. Disputing negative items on your credit report is your right. Under the Fair Credit Reporting Act (FCRA), consumers have the right to ask for verification from the CRA's (Credit Report Agencies). Legitimate credit report repair is as legal as pleading "not guilty" in a court of law. Your freedom to view your credit report and to dispute negative items is protected by law.

Does paying my bills restore my credit?

You would think that trying to make ammends with your debtors would be the right thing to do. Unfortunately, if you are trying to increase your credit score that could actually hurt you.

Sometimes when you pay an old debt--depending on how old it actually is--you could actually hurt your credit score. Once activity shows on the account (i.e. your payment) it rescitates the item and creates a new "Date of Last Activity." Unfortunately, this will make your credit score worse.

Seek the advice of a professional credit repair consulant if you are not sure whether paying off the debt will hurt or help your score. Of course, it is important to remember that paying your debts in a timely manner may prevent future problems with your credit report.

Credit Repair: How to Help Yourself

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail, and maybe even calls offering credit repair services. They all make the same claims:

“Credit problems? No problem!”

“We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

“We can erase your bad credit — 100% guaranteed.”

“Create a new credit identity — legally.”

The Federal Trade Commission (FTC) says do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the nation’s consumer protection agency say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan.

We have a unique system that sets us apart from other "credit repair" companies.

1) PREMIER CUSTOMER SERVICE. First and foremost, is our customer service. We provide ongoing communication with the client so they know and understand what is happening. We believe education is essential. Credit can be cleaned up, but it won't stay that way if they don't understand the fundamentals of good credit.

2) 21 LEGAL DISPUTES. We do more than just dispute negative claims. This is what most credit repair companies do. They dispute every item over and over. This can end up having a negative impact on the clients score. We have over 21 legal disputes that can help to remove their negative credit.

3) THE DUAL CHALLENGE. We implement what we call a "Dual Challenge." In addition to disputing with the credit reporting bureaus, we also challenge collection agencies. We have a very high success rate with this process. And, when they do not have the proper verification, legally the item must come off of the clients credit.

4) THE CREDIT MAXIMIZER. This is our best ammunition to helping those clients who have cleaned up all of the negative items and still need a boost to their score. We can add good lines of credit to your credit report. We can add up to a $10,000 line of good credit. This provides a phenomenal boost to their credit score. Not to mention that there is no way they could get this kind of credit with their current score. It's a legal method of giving our clients additional help that they can't get anywhere else.

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