FAQ
What is a good credit score? This is a good question, and there is no single correct answer. Many people will say either 700 or 750. Others may say 720, or as high as 800. Here is what I feel will work for most people - If you already don׳’ג‚¬ג„¢t have a credit score over 700, strive to get your score above 700. A 700 score is deemed very good by most financial institutions that offer credit. Once you have it over 700, then strive to get it above 750. I mentioned in another section where I needed a score of 740 in order to get the best rates for my daughter׳’ג‚¬ג„¢s student loans. When it comes to highly specialized loan programs in the mortgage industry, higher credit scores can help qualify for specialized programs and better rates. And when it comes to the insurance industry, one company gives their highest discount for people with scores above 800. An 800 score is extremely difficult to achieve. So, my advice is to strive to get it over 700, and once you have that accomplished, then strive to get it over 750. For me personally, I would not knock myself out to try and get it to 800, because this will rarely mean anything to anyone, other than maybe on occasion a few insurance companies. Anything over 750 is an excellent credit score. Do I have just one credit score? In a word, no. There are three major credit reporting agencies in this country, called Equifax, Trans Union, and Experian. So, if a mortgage company pulled your credit report from all three bureaus, you would have a different score from all three bureaus. These scores that a mortgage company would get would most likely be what are called Credit Bureau Scores, or FICO scores (named after Fair Isaac Company, who created the scoring models.) However, there are many more scores out there than this. There are behavior scores, bankruptcy scores, profitability scores, insurance scores, educational scores, and proprietary scores devised by individual companies. One person in the credit industry told me he knew of over 30 different scores out there. However, for our purposes, we will be speaking of three scores from the three major bureaus, and then each of these bureaus will have a FICO score and an educational score. If you plan on making a major credit decision soon, I advise you to get FICO scores. If you are not planning on any major purchases soon, then educational scores should be fine. More at Getting Your Credit Reports. What is the best way to raise my score? Unless you know a lot about credit and credit scoring, using our service is an excellent first step in raising your credit score. Unless you know what to do, and as importantly what not to do, you will most likely need some assistance. For more information regarding how a credit score is calculated, see Credit Scoring Basics. Where is the best place to get my credit report? If you do not already have a recent credit report, we believe the two best options are either www.annualcreditreport.com or www.myfico.com. More at Getting Your Credit Reports. Why is it important to know and understand my credit report and my credit score? One of the main reasons you need to know and understand what is on your credit report is to make sure there are no errors on your report. One study reported that 79% of all credit reports have errors on them. I have seen figures stating that from 23-40% of credit reports have errors that will negatively impact credit scores. In regards to your credit score itself, most people that you will be asking for credit or insurance from will be using your credit score to determine if you are eligible for credit, and if so, at what rate. When it comes to credit reports and credit scores, what you do not know CAN HURT YOU! What is the best way to make sure my credit report is accurate? First, you will need to be able to read and understand everything on your credit report. Many reports are getting easier to read, but some can still be quite challenging for the lay person that does not work in the finance or credit industries. So, you need to be able to read your credit report, and have someone assist you in reviewing your report. Then, you need to review all three major credit bureau reports at least once a year. There are companies that advertise that they will do this for you. They may be fine and worth the money ׳’ג‚¬ג€ I really can not say. However, I do believe that you are much better off learning about and then taking control of your own credit. Once you understand how to read a credit report and the basic principals involved in generating your credit score, you can then monitor your own credit for the rest of your life. What is the best way to dispute errors in my credit report? First, you have to identify each error that appears on each individual report. Then you need to contact credit bureau(s) that has the error, and tell them to remove the error. This process can be done online, via fax, or through the mail. Personally, I still believe the mail is the best way, because you can send it certified mail, receipt requested, and you can also send in supporting documentation on why the information they have on their report is wrong. Some people recommend contacting the creditor who has possibly reported the information to the bureau correctly. I personally believe that you should contact the creditor only if the bureau investigating your dispute but does not change the error. At that point, you then need to write another letter to the bureau, and then also mail out a separate letter to the creditor. By law, a bureau notified of an error or errors on their report is now supposed to contact the other bureaus in regards to these errors, and share that information. Personally, I still feel that it is best to contact each individual bureau that has an error. Are you a credit repair or credit counseling company? No, we are neither. We are a credit consulting company (sole proprietorship). We work with you on understanding your credit report and your credit score, and give you specific recommendations on how to improve your score. Credit repair companies concentrate on assisting you in removing negative items off your report, and credit counseling companies primarily assist people in negotiating and consolidating their debt into a more manageable payment package. Do you recommend using a credit repair company? Everyone׳’ג‚¬ג„¢s situation is different, and any recommendations I would strictly be on a case by case basis. Here are a few common characteristics of most credit repair companies:
Do you recommend using a credit counseling company? Many credit counseling companies are non-profit. I believe most of these services are reputable, and are truly trying to assist the consumer who is having difficulty meeting their financial obligations. The fees to use their service usually are very reasonable, and they have done a lot of good for a lot of people. However, being enrolled in a credit counseling program often lowers credit scores rather than raising them. This is a fact, and one that people in the mortgage finance industry have known for a long time. I will spare you the specific details of how and why this happens, but it does happen. My feeling in regards to credit counseling is that if you are aware that this program may lower your credit scores, but the service will be necessary for you to get a grip on paying off your creditor, then you may want to use their service. Just know going in that this program, which is often between 36-60 months, is unlikely to help your credit scores. IMPORTANT NOTE FOR PROSPECTIVE FIRST TIME HOMEBUYER OR FHA HOMEBUYER: Being enrolled in a reputable credit counseling program can assist people looking to qualify for an FHA loan. If you have been successfully enrolled in a CCC program for 12 months, and other things look good, such as job and income and other things on your credit, you may be able to qualify for an FHA loan, even if all of your old or bad debts are not completely paid off. To find out more, speak with a reputable loan officer that does FHA financing. Why should I use your company? We are professional, knowledgeable, affordable, and honest. We are genuinely interested in your well being, and will go the extra mile to answer all of your questions, and provide you with excellent, personalized service. There are very few companies out there that cover what I consider the first fundamental order of business when dealing with credit scores and credit reports ׳’ג‚¬ג€ analyzing the credit report and determining what specific steps are necessary to raise your individual credit score. Most companies either work on disputing errors or on consolidating your debts, but few companies are doing a personalized credit analysis with a step by step action plan to improve your credit score. We feel that this is where most people ought to be starting, and then making the decision if they need to contract people for repair or counseling services. Our services are quicker, easier, and cheaper than other services, and once you use our service, you may not need the other more expensive or lengthy services out there. If I have additional questions in the future, may I contact you? Yes. Once you have used our consulting service, if you have future questions, we will answer them for you, at no charge. We do request that future questions be emailed, and we will respond by email.
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