fix credit score online

ALDREENA M. FEREBEE asked:


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By Aldreena M. Ferebee

What is a FICO Score?

A credit or FICO score is a numeric representation of a person’s credit profile and it is the name for the most well known credit scoring system. The acronym FICO stands for Fair Isaac Company, a California firm founded in 1956 by Bill Fair and Earl Isaac.

History

The FICO score has been around for many years, then in 1995, the mortgage and lending business started using them for the primary purpose of keeping down the expenses associated with Home Equity loans. These scores are now used by Freddie Mac and Fannie Mae in conjunction with their automated underwriting systems. In 1996 the Federal Government insisted on using a credit score on all credit reports. The scores are based on years of computer modeling aimed at predicting who might be a credit risk. There has never been a published model of how the score is derived. The secrecy of the FICO model reduces the likelihood of manipulation. The FICO score is used by all three credit bureaus (Experian, Trans Union, and Equifax). The credit bureau’s computers evaluates a complete credit profile and assigns a score that is used to estimate credit worthiness.

Purpose

Each bureau uses its own scoring system; each person being evaluated in the system will have 3 separate scores. When a person applies for credit and receives a high score, they are viewed as a better credit risk to lend money to than a person with a lower score. This rating system consist of several factors from your credit file that includes length of credit history, number of open accounts, loans, mortgages, and public records. The factors used are formulated to produce a 3-digit score between 300 and 950. If a person’s credit score is above 680, they are considered a “prime” or low risk in terms of the lender who wants to lend money, or the landlord who wanted to rent or lease to you. If your score is below 680, you are “sub-prime” and fall in the middle category in terms of risk of renting and leasing. It doesn’t mean you shouldn’t get a rental/lease, but you may be required to go a step further and provide a security deposit for the first and last month rent payment before a person moves in. Anything score below a 560 is considered a “shafted’ score and this person is not considered a good credit risk.

Elements of the FICO Score

The FICO model has 5 main elements:

1) Past payment history (about 35% of score) the fewer the late payments the better. Recent late payments will have a much greater impact than a very old Bankruptcy with perfect credit since.

2) Credit use (about 30% of score) Too many credit cards can bring down the score, however, closing these accounts can sometimes do more harm than good if the entire profile is not considered.

3) Length of credit history (15% of score) the longer the account has been open the better the score. Opening new accounts and closing seasoned accounts can bring down a score a great deal.

4) Types of credit used (10% of score) whenever a person uses a finance company account, it may lower the score. Bank or department store accounts are better accounts to be open.

5) Inquiries are (10% of score) multiple inquiries can be a risk if several cards are applied for or other accounts are close to maxed out. Multiple mortgage or car inquiries within a 14 day period are counted as one inquiry.

Other factors that affect your FICO score are:

Number of outstanding balances

Balances owed vs. credit available or high credit

Number of balances opened in the last 6 months

Too many revolving accounts

Too few revolving accounts

Excessive credit inquiries

Delinquencies

Too many accounts opened within the last twelve months

Short credit history

Number of 30, 60, and 90 day late payments

Public records that include; judgments, tax liens or bankruptcies

Length of credit history

Recency of any slow pay history

Balances on revolving credit are near the maximum limits

No recent credit card balances

Repairing your FICO Score

Now that you understand how the FICO credit score works lets look at how to improve your credit score. As you read above the credit bureaus use various components in order to get your credit score, this means that you will have to review these same components of your credit report in order to fix it.

- The first thing you must do to improve your credit score is fix the payment history category. Pay your bills on time, if you pay on time, creditors will not submit a past due report to your credit report. If you can’t pay on time, notify your lender that you need to work something out. Get current on past due accounts

- Keep low balances on your credit cards, stay well below your credit limit – 35% or lower is best. Don’t open new accounts just to lower your used credit ability – having too much credit is a risk too old accounts open if you’ve been a good borrower.

- If you have no credit start building your credit as soon as possible and when shopping for new credit, keep it all within a short time frame no more than 14 days or less. If a borrower has a bad history, they can improve their credit scores by opening a new account and managing it sensibly.

- Having installment debt (where you pay fixed monthly installments to eliminate the debt) is “better” than revolving debt or (open-ended credit card debt). Certain finance company debts (like buying a product with retailer financing) can lower your score. In long run, it will take time and discipline to improve credit scores.

In conclusion, your credit score can only be changed by the way that item is reported directly to the credit bureaus (Experian, TU, and Equifax). Fixing those negative factors in your credit report will raise your score. It is best to make these corrections before you try to purchase a home, because you can never be sure the exact impact a change will have on your score. When all negative factors are fixed, written confirmation from the creditor will be required to show the lender that your credit report is updated and all negative factors fixed and the way to do it follow this formula.

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Danielle

Isabel asked:


Do you want to borrow a loan but are afraid that you would be denied due to your bad credit score? Bad credit score can greatly affect your chances of getting a suitable loan. Many money and bank lenders solely depend upon your credit score rating just to judge you’re credit worthiness to pay off the loan.

Bad credit score is certainly not the end of the world; if you undertake effective measures you can overcome your bad credit history.

Why to undertake credit score repair?

Credit score repair is nothing but raising your credit score from its current position to a higher position. It’s quite possible that your credit report has number of errors in it. For instance you must have made some payment to your creditors but it must have not been recorded in your credit report. Credit score repair is informing credit report agencies of these errors and getting it rectified as quickly as possible. Rectification of errors in your credit report can affect your credit score greatly, thereby leading to improvement in credit report.

Best ways to overcome bad credit score

If you are under the trauma of a bad credit score you can overcome it by paying your bills and meeting your financial responsibilities. Owing a reasonable amount of money and being able to repay will show your money lenders that you take your finance very seriously.

How can you fix your credit score?

• Check your credit report at least once in six months and rectify errors in it immediately

• Do not open unnecessary account. It would be advisable to shut down all the unnecessary accounts

• Do not open multiple accounts at the same time. Remember a zero balance account is also taken into consideration.

• Repair your credit report in case of any errors

• Pay your minimum balances before the due date. This alone will fix your credit report

• Avoid excessive credit

• Look for identity theft

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Leo

Christine asked:


I currently own a condo and want to rent it because I am moving to Hartford fairly soon. The market is horrible right now to try and sell!

I plan to rent a place in CT. Most of the ads I see request a credit check. My credit isn’t horrible but not good due to debt to income (my credit score is pretty low). I don’t have forclosures, repos or deliquencies on accounts. Just a few medical bills that are pending legal action.

What do they look for when they view the credit report?

I took a huge pay cut due unfortunate circumstances. I relocated from Georgia with my son and had to leave my successful career to start over again. I now have an opportunity of a lifetime at the same company I worked for 7 years. So my credit isn’t due to lack of responsibility- just hard times!

Any advice would be great. I just would hate to find a great apartment and then get turned down due to credit issues that could be fixed when my salary increases- which it will by $25,000 and then some.

Patricia

Kal-El asked:


OK here is the deal. I am married and have three credit cards that have gone to collections that I have not paid on in over 1 1/2 years. I also have a montly car payment on a car that is only worth 5k but I still owe 13K. The monthly payment is $420 per month and I am presently two months behind. My credit score is a 520.

At the moment I have two options. Please tell me which one is the best idea.

1) I am approved for a new car (2007) in like new condition with a warranty (low miles 17K). The monthly payment will be $250 per month (saving me $170 per month) for 6 years. I would give back my other car (self reposses) after purchasing the new one. I would then take the extra savings of 170 per month and pay off my old credit card debt. In two years I will have 24 good payments on the new car and no outstanding debt except for the self repo. This should improve my credit greatly.

2) I continue to make the $420 per month payment on the old car and try to pay of the old credit cards that are in collections. This would be extremely hard for me to do, in fact nearly impossible. I am two months behind on this car right now so even if i make one payment today they could still repo it.

Does anyone have any ideas as to how I should handle this situation?
Just to be clear. When I voluntarily give this car back. I do not plan on paying back the difference. My buddy works in collections and said they can’t garnish my wages or really do anything. I’m just going to let it stay on my credit while repairing everything else.

Beth

Ryan asked:


What is a good credit score for an auto loan? Unless you have a 760 or higher FICO score, it might be a good idea to review your credit report and see what you can do to improve your credit score.

Generally speaking, a 760 FICO score will get you the very best rates at the very best loan terms. Anything higher really will not change what an auto lender can offer you since you will likely already qualify for the very best deal. If you have a 720 credit score or so, you should still be able to get a pretty good rate on your auto loan and not have any trouble getting approved.

Where you will start to have trouble is if you fall below a 720, which is the national average credit score. When you fall below this less than perfect credit level, lenders start seeing you as a risk and will start charging higher interest rates in order to offset the risk. Depending on the credit grade the lender is willing to lend to, you may not even qualify for a loan.

Once you fall below a 700 FICO score, you have a greater chance of getting your loan automatically denied before a human even reviews your credit report. At this point your only resort is to seek a bad credit lender, or get to work on fixing your credit score. Luckily, there are a number of quick fixes you can make to improve your credit rating and get the loan you need at the rate you want.



Randy

mindboggling asked:


I am married 24 yrs to a man who doesnt take responsibility for anything. Four yrs ago, I reached my limit. (admittedly a slow learner–thats another post lol). The short version is we put all the debt in my name. He gave me part of his check. I confronted him (I wear the kids old boots and he owns a 4 wheeler & full winter gear for ex). I work overtime, he takes seasonal layoff yearly. He said I was just too dumb to budget properly & took over payments. I gave my check over. When he started to fall behind I talked with him but I didn’t fight thinking he deserved a chance and time to learn. He saw that as betrayal and started hiding things from me. In 4 yrs, we are now headed for divorce and financial ruin. My credit rating is shot. I have 20 years not one missed payment and 4 yrs of hell on the report. I cant even get an apt approved. I didn’t make this mess…what can I do? He cashed our retirement accts & racked up more debt. He walks with good credit…help.

Nellie

yrmax asked:


For almost two years, I paid a company to repair my credit. When I started my FICO score was 625 but I knew it was a matter of time before it became lower because of late payments. Now my FICO score is 500, I stopped paying the consold. company and have been told that I can’t use another one for at least a year.

Who really helps with credit repair?

Rosemary