What Is A Credit Score And Tips On Raising It

What is a credit score?

A credit score is a numerical rating based on relevant factors measuring a borrower’s willingness to repay a loan. Your credit score is calculated from the information in your credit profile which is a record of your credit activities over time. This score predicts your credit performance. The higher the score, the better credit risk you are.

The FICO score is the most frequently used credit scoring system that has been developed. You may obtain your score from any or all three reporting agencies or by Clicking Here. It is better to monitor all three to make sure your credit score is accurate. Equifax (800) 685-1111 Experian (888) 397-3742) Trans Union (800) 916-8800

Since a credit score is from credit history, there must be at least a 6 month history to get an accurate score. You must have at least on account that has been open for at least 6 months and has activity in those six months.

Credit history is very important to be eligible to apply for a mortgage loan. If your score is low, there are ways that it can be raised, but not in a short amount of time. It is important to create credit habits that will make sure your credit score stays high at the time that you need it. What are some of the factors that are considered in your credit score?

The credit score is only interested in a borrower’s willingness to pay back the loan. It predicts the likelihood that the loan will get repaid based on the accumulation of the borrower’s past performance and current standing. Such information as savings, income or demographic data like nationality, race, religion, marital status, and gender are specifically left out of the credit profile. It is not meant to measure the borrower’s ability to repay the loan. For that, the lender looks at your debt-to-income ratio .

Your credit report does track both positive and negative activity in your history, such as when you make your payments, your current balances, your length of history and the type of credit you have. The number of inquiries and any legal action taken against you for non payment such as bankruptcy or a lawsuit. Late payments will reduce your credit score, but current history of timely payments will raise it.

Different weights are assigned to the various factors considered. For instance, FICO assigns thirty-five percent of your score to your payment history, thirty percent to your debt level, fifteen percent to the length of time span of your credit history, also fifteen percent to the type of loans such as installment versus revolving, and five percent to your credit score requests, which measure your level of pursuit after new credit.

Since this information is considered in most applications for credit, loans, mortgages and even insurance or employment, it is important that you maintain a high credit score and ensure an accurate credit report. To Get yours Now Click Here

How can I raise my credit score? Raising your credit score is a task that must be accomplished over time. The credit score is an assessment of credit history factors. Therefore, it is generally impossible to change your score during the short period of time you are applying for a loan. As such, it is important to be aware of the positive and negative variables that affect your rating so that you can improve your credit score before you need to use it as a tool to obtain a loan. You can improve your credit score a little each year (by as much as 50 points) by careful management of your credit obligations. Develop habits that promote good credit history (make payments on time, pay down cards leaving available balances, etc) Monitor all three credit reporting bureaus (to ensure accurate reports ) Obtain credit reports annually and request corrections in writing. Click Here to get yours. Negative Habits Don’t request a series of credit checks in a short period of time lenders presume unstable credit conditions. Don’t take on more credit than you can consistently manage. Don’t max out your credit cards Don’t spend beyond your ability to pay Don’t quit building credit because of a setback such as a bankruptcy, go to work re-establishing credit (even a small consumer loan allows you to rebuild a good payment history) Many lenders are more concerned with what you have done since a derogatory incident than what happened before, say, a bankruptcy. Don’t leave errors undisputed; request corrections in writing

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Getting Collection Agencies To Settle For Less

Trying to collect payment on debts sent to collection can quickly become counterproductive because of the costs involved. Once the costs start adding up, collection agencies who initially insisted on full payment, quickly become more open to negotiation – especially since the alternative is to simply write off the debt When this happens, you may be in a position to bargain for a lower payoff on your debt.

Collection agencies are often satisfied to settle your debt for whatever you can offer them. The reason being, they usually only get to keep a percentage of what’s collected. To maximize their overall return, they need to collect as much as they can, as fast as they can. Since their motivation is to get matters settled as quickly as possible, negotiating a lump sum payment, rather than installments, will go over much better.

With these facts in mind, see if the collection agency would be willing to accept a lesser amount to settle your debt – offer about 40% of your original debt initially. While this is just a starting point and the collection agency will always try to get more, showing a willingness to negotiate should get you to a number somewhere in the middle. Your bargaining power is greatest when in negotiation, so include removal of the related negative data from your credit report in your negotiations, maybe offering a slightly higher payoff in exchange.

Whether it be a lump sum or a series of payments, only offer what you can actually afford. You need this matter to be put to rest as much as the collection agency, and you don’t need to further exacerbate your financial problems. Also, keep the source of your funds confidential. Collectors push for higher payoffs if they believe you have friends or family willing to help you out.

Once you’ve reached an agreement, get everything in writing. Be sure to include the stipulation about removing the negative data from your credit report and that your entire debt be retired in exchange for the settled upon amount. Use either a cashier’s check or money order to issue payment (they won’t take your check!). If your only alternative is to use cash, be sure to get a receipt. Plan to retain all related documents at least four years.

Knowing how collection agencies are motivated can put you in the driver’s seat when trying to settle your debts. That knowledge and a little initiative can help you negotiate a debt settlement that’s better than you expected. Effectively leveraging your bargaining power at the right time can benefit both your wallet and your credit score.

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Can Repossessions Be Removed?

It can be financially devastating to have a vehicle or other item repossessed, not to mention embarrassing! The repercussion of repossessed items can mean different things to different people. Repossession of a vehicle usually means loss of freedom to the owner. Repossession (foreclosure) of a home can mean the loss of family memories. Beyond these emotions, a repossession will trigger the downward spiral of your credit score!

As you watch your car being towed away, you might feel as though your world has come crashing down! However, as bad as it may seem, it’s not the end of the world! Really! The best thing to help yourself is to immediately begin to rebuild your credit. To do this you should first request copies of your credit reports from the three major credit reporting agencies. These three credit reporting agencies are Experian, TransUnion, and Equifax. Once every twelve months, these credit reporting agences are legally bound to provide you with a copy of your credit report, upon your request.

Once you receive your credit reports, you should sit down with them and review them thoroughly. When repossessions are entered on your credit report, the entry will include a list of all fees associated with the repossession, such as towing and storage. Check these amounts against your receipts. These amounts must be listed accurately. If they are not listed accurately, you may be able to dispute the item as a negative entry.

If you find any discrepancies on one or more of your credit reports, you should write a dispute letter to the relevant credit reporting bureaus explaining the errors and requesting removal of the repossession entry. You should include a copy of your credit report with the errors highlighted as well as the receipts which correspond with the errors on the credit report. Also, be sure to retain copies of all letters you send.

Once the credit reporting agency has received your dispute letter, it has 30 days to contact and verify the repossession with your creditor. If the creditor cannot or does not verify the repossession amounts within the alloted time frame, the credit reporting agency is legally required to remove the entry from your credit report. You should receive a letter from the credit reporting agencies which indicates what action was or was not taken with regard to your account and why. If you are unsuccessful in removing the repossession entry, it will continue to be listed on your credit report for seven years.

If disputing the repossession entry with the credit reporting agencies does not work, you might try contacting your creditor to negotiate the removal or improvement of the repossession entry. To do this, you would want to call or write your creditor and request removal of the repossession entry in exchange for partial payment or payment in full. If an agreement is reached, be sure to obtain the agreement in writing along with both of your signatures.

Although repossession can be devastating, it is something you can recover from. Times are tough and you are not alone in this plight. Just remember that there are better days ahead!

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Consumer Debt Collection – Know Your Rights

One day a collections letter appears. Then another, more aggressive collections letter appears. All of this followed by phone calls, some warning you about bad credit reports and potential legal action.

Creditors will hire collection agencies to retrieve debt. Often these third-party companies will work for commission. Because of this, collectors are more likely to go after the money more vigorously. It is important to know your rights.

Collection agencies do have the right to report your debt to credit bureaus. Paying off the debt will not result in it being removed from your credit reports, it will be marked off as “paid.” They also can request a debtors credit report to analyze the person’s financial situation, or to get an updated address and phone number. And, although collection agencies do not like to send many accounts back, sometimes they will refer their account back to the creditor and recommend filing a law suit.

There are codes and procedures by which collection agencies must abide. Letters should appear in ambiguous envelops that do not reveal the intent of the letter. With phone calls, a collector can’t disclose the reason for the call. One example would be if a collector reaches an answering machine. they cannot explain why they are calling, all they can do is leave their name and a number where they can be contacted.

Although collection agencies are allowed to contact a debtor’s job, they absolutely cannot try to get a debtor fired from their job. They absolutely cannot make any kind of information concerning the debt public, except when dealing with credit bureaus. Although many people think that a collection agency could legitimately seize a debtor’s bank account, paycheck and assets, the company cannot unless their has been a legal proceeding ordering them to do so. Collection agencies absolutely cannot threaten a debtor with violence.

Although some collections agencies may attempt to practice illegal tactics to get money, there are also a large number of reputable ones. With financial issues like debt, it is always important to know your rights.

Mallory McGuinness-Hickey works for debt collection agency Rapid Recovery Solution and does free lance writing on the side.

What Are Credit Card Judgments?

A credit card judgment is a court order which confirms that a debt is owed and the steps which will be taken to recover the debt. Typical “steps” to recover a credit card debt include the garnishment of wages, seizing of assets, or even placing liens against real property.

A judgment of this type normally follows months of repeated attempts to collect the debt. It is best to do everything possible to keep this from happening and this article will give you ideas to consider if you feel you may be facing a credit card judgment.

Falling behind on your credit card payments will bring endless letters and phone calls your way from the credit card provider requesting that you make arrangements to bring your account current. The credit card provider will ask that you pay the amount due in full or make arrangements for monthly payments. If you do not bring your credit card account up-to-date within a specified amount of time, your credit card account may be charged-off.

If you make no effort to work with the credit card provider, your account may be sold to a collection agency who will most likely purchase your debt for cents on the dollar, normally for as little as 8 cents to 12 cents per dollar of debt purchased. The collection agency will attempt to collect the debt from you by yet again requesting either a lump sum or monthly payments. Your credit score will be damaged yet again if the credit card provider sells your debt to a collection agency.

Filing legal actions is something which collection agencies would prefer not to do. Legal actions are costly and time-consuming. Additionally, the amount of your debt is quite likely a small amount to the collection agency since it only paid cents on the dollar for the debt purchased. The collection agency will attempt to collect the debt from you and, if it cannot, it may very well sell the debt to another collection agency. This means, of course, that the process will begin all over again.

If this second collection agency cannot reach an agreement with you, it may go ahead and file a legal action against you for the collection of the debt. At this point, a credit card judgment may be in your future. It is your right to plead your case to the judge and, if you can show that the debt is not yours or if you can show that there are extenuating circumstances, the judgment may be altered by the judge.

If you are unable to prove that the debt is not yours or that you are a victim of extenuating circumstances, the judge will issue a judgment which will set out how the debt may be recovered. Depending on state law, this may include taking money from your bank account, garnishing your wages, seizing assets, or even filing liens against real property.

You should consider working with the credit card provider and collection agencies to get the debt paid. This will lessen the damage to your credit score. If you can come to an agreement with the credit card provider or collection agency, you will be able to dodge a credit card judgment.

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