fico credit scores

Answers To Your Most Asked Credit Questions

How Do Negative Items Affect Me?

Negative items on your credit report could be what separates you from that home loan you hoped for or a decent financing for a vehicle. The good news is that if you happen to have these negative items on your credit report, there are still wats to mitigate their effects and even have them removed! Here is a short overview of how long it can take for each negative item to fall off your report!

How Can I Build My Credit?

Everyone’s credit is unique to them and building your credit may require more attention in one aspect over another. Your Fico score is made of primarily of 5 different pieces of credit data: Payment History, Amount Owed, Credit History, New Credit and Credit Mix. Each of these catagories holds a specific weight to your final score and if you are found wanting in one area, then you could be harming the other 4!

How FICO Scores are calculated

Each catagory of credit will build off of each other, but without proper understanding of each catagory, you are not reaching your full credit potential.

Payment History- Payment history is self explanitor: Each payment you make toward a borrowed amount will be relayed to the bureaus and listed on your report. Each on time and late payment will show individually under the items profile.

Amount Owed- Each account open on your report holds a particular weight dependant on the amount owed and the type of account it is. You need to take into account your credit utilzation rate on your current cards, your current debts owed and how many open accounts with balances do you have.

Credit History- Credit history deals with how long you have had your accounts open and an average age of your open acounts.

New Credit- New credit takes into account how recently you have applied for credit in the past year.

Credit Mix- Your credit mix is made up of the different accounts listed on the report. This is anywhere from credit cards to mortgages!

 

 New To Building Credit? Here are 5 Easy Steps To Get You Started!

Collection Accounts, Late Payments and More: Seven Years

Collection accounts, charge- offs, paid student loan default, late payments can all stay on your credit report for 7 years.

Some negative items that hang on your credit report for seven years can impact your score more than others. Older negative items that are followed by exceptional credit history hold a lot less weight on an overall score. Many lenders will assess your score to see you are a safe risk and will view your credit history to see if you are a responsible borrower.

Credit repair can help minimize or remove the impact of some of these items and can even help determine the legitimacy of the items on your report! The creditor should be able to determine the current balance of the account, the initial agreement between you and your creditors, the right to peruse the debt and payment history. If the creditor is unable to produce this information, the odds of you getting the items removed early are increased exponentially!

 

Hard Inquiries: Two Years 

Hard inquiries usually stay on a credit report for about 2 years. Most people have inquired on their reports because they are extremely hard to avoid as they occur when lenders run your credit score. The best way to minimize how often hard inquiries land on your report is by researching prior to making an inquiry and submitting loans applications with a single company at a time. The good news is that if you are comparing rates between lenders in a short time frame, multiple inquiries will only be counted as a single inquiry!

 

Chapter 7 Bankruptcies: 10 Years

A chapter 7 bankruptcy sits on your credit report for about 10 years. The best way to attempt to have a chapter 7 bankruptcy removed from your credit report before the ten-year mark is to undergo credit repair. The credit repair process is to make sure that the information is accurately recorded and all accounts that follow the bankruptcy are taken care of accordingly.

In the End

Creditors do not always send accurate information to the bureaus and accounts can hold a number of discrepancies that could be harming your score!

 

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How The Pandemic is Affecting Credit Scores

has almost been a full year since we heard the phrase “Two weeks to slow the flatten the curve” and the effects of the current pandemic had reached everyones lives in one way or another. For many Americans, this past year has tested the metal of their financial practices; providing questions without answer to their current credit state.

 

A Fractured System

A study done by the Federal Trade Commission in late 2012, found that 1 in 4 consumers had at least one error listed on their credit report. Now, the  COVID-19 crisis has worsened the situation, raising that number to almost a 50/50 ratio. We all have the right to dispute these discrepancies with the bureaus to attempt to right these wrongs for an accurate credit report. With Covid 19 taking a toll on many businesses, the credit bureaus have taken a heavy hit to their work practices and processes. With an increase in disputes, the 30 day response regulation being lifted along with a limited support team has left the bureaus over inundated. Where receiving responses to disputes would take 35-45 days, now customers are waiting anywhere from 50-70 days  for a response that may not have even led to the investigation of the items.

How Does This Affect Me?

Credit affects many aspect of your life besides making it easier to aaquire financing or a loan. Landlords, cell phone, cable, car insurance and even potential employers will look into your credit when deciphering eleigiblilty and rates. Even minor errors in your report can have a substantial impact on your report and in turn, your livelyhood. These errors can be anything from an incorrect date, to adress errors to even the manner of payment being false. It is beneficial to have access to your reports and to keep a vigilant eye over the items being reported. Sites like Credit Armor allow anyone to access all three bureau reports, provide monitoring, payment alerts, budgeting plans and constant updates to better control their reports!

What Is Being Done To Fix These Issues?

As the pandemic wears on, many creditors and lenders have opened up ways to provide assistance to the average consumer and have provided options to assist in managing accounts. Anything from providing a consumer statement on your report to explain your current situation, payment negotations and financial forgivness tactics all have been implimented to lighten the credit stain.

Over 20 states along witrt Washington D.C. and Puerto Rico have reached out to the CFPB to discuess reconcideration of the relaxed 30 day response regulation. Thought the CEO of the CPFB has stated that the deadline has been made, many states have disputed otherwise. This dispute along with muliple bills situated by Congress could provide relief to these hardships we consumers are currently facing. One bill passed states that athe full social security number must match the number on the creditors claim and the the second deals with disputing decisions, CFPB accountability and credit restoration to victims of identity fraud.

At this time, the best way to adress these issues would be general credit monitoring and alerts to catch these errors as soon as they appear on the report. This is especially important for those who have negotiated special terms  and arrangements with lenders or collectors.

 

 

Are you making mistakes on your Credit Report? Check out our blog; 5 Common Credit Mistakes You Could Be Making

Do you have questions about your credit report? If you would like to speak with one of our attorneys or credit advisors  and complete a free consultation please give us a call at 1-800-994-3070 we would be happy to help.

If you are hoping to dispute and work on your credit report on your own, here is a link that provides you with a few ideas on how to go about DIY Credit Repair.

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A note from the author:The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.

Article by Joe Peters

 

 

 

 

 

 

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5 Ways To Help Manage Your Accounts

Credit Alerts Worth Setting Up Now

In order to maintain great credit scores, keeping track of all the activity on your accounts is key! Smart phones are attempting to make our lives easier with a multitude of applications. All major banking institutions now have online banking or apps to make life easier on their customers. These apps have the ability to “control” what comes and goes out of your bank. Gone are the days of driving to the bank to make a deposit. You can now take a screenshot and deposit through mobile banking. The possibilities are endless! We’ve made a list of several other ways to get the most out of your banking apps, most of which are free! Here are a few other ways to use those apps:

Maintenance Notifications:

Statement Notification: Many times it feels like the month flies by and bills are  due once again. ‘Payment due’ is now one of the most used alerts on mobile apps. When the payment is due, an alert pops up, reminding you ahead of time when to make a payment and what the balance is. You can set it up to notify you as soon as you would like! While auto pay or auto draft is great, it is still important to double check that the payment was taken on time. For many families with many different bills due at a time, this is a great way to reduce the headache of having to remember one more thing on that laundry list of “to-do’s” for the week.

Payment Received: Having this notification can ensure that the payment successfully went through and will notify  you immediately on your mobile device.  One of the worst things that can happen is  falling late on a credit card or payment.  Many times if something happens with a card on file and the payment is not processed, consumers don’t catch it. This will ensure that you know those payments are made on time and for the correct amount. To set these up, you will want to download the credit card or bank app you use and turn the notifications on for all purchases and payments made.

Balance Notification: This is a great notification to have set up, as it is very important piece of the puzzle for your credit score. A great rule of thumb is to keep the balances below 30%. The best thing for your credit score is two revolving accounts and two installments in order to have a healthy credit profile. The lower the balance, the better the score is! So, if you’ve noticed your credit card keeps creeping out of your wallet, you can set up notifications at a certain balance so overspending is combated. It is almost like an accountability partner and is great if you find yourself overspending often!

 

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Preventative Notifications:

  1. Suspicious activity- Your bank or credit card company will now send a text message to you if you would like if  there is suspicious activity on the account. The message may sound similar to this: Please verify activity on ____ card ending in ___ at this Location. You can then confirm or deny this text.  If you reply deny, a text follows up with a message that you will receive a phone call in the morning to go over the details. Easy enough, right?
  2. Card not present-Purchases made online will notify you with an alert. Online shopping has seen a dramatic spike in identity theft. For this reason, a feature such as this is a great to keep in mind.
  3. Gas-Any purchase made at a convenient store or gas station will alert you, if you wish. Unfortunately not every station requires a pin to make purchases.
  4. International Purchases-This is not a new feature but is great to keep in mind. If you are traveling, always notify your institution of the activity. Some will automatically turn the card off on you in order to protect the cardholder.
  5. Over limit-This notification is set up by the cardholder and notifies them any time a purchase is made over a certain price.

For more information about your credit score, please give Credit Law Center a call at 1-800-994-3070.

A note from the author:The opinions you read here come from our editorial team. Our content is accurate to the best of our knowledge when we initially post it.

Article by Breana Washington