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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Financial Focus for 2021

How to Focus Financially in the New Year

By Jessica Larson,

New year, clean slate. Well, maybe it doesn’t seem like it, with the pandemic still very much in play and lots of the same challenges hitching a ride with us into 2021. 


You may not be able to wipe away all your debt as you turn the page on your calendar, or step into a new job opportunity right away on January 1. But you can still clear your thoughts, refocus your goals, adopt a new attitude, and start fresh with new ideas to improve your financial situation as the new year gets underway. Here are some ideas on how to do that.

Determine what’s different

What changed in your situation during 2020, and have you adapted to meet those changes? Here are just some of the factors that affected most people during the year that’s just concluded:

  • Transitions from office work to remote work
  • Loss of income from rental properties, or eviction notices
  • Job losses in the service sector, such as restaurant and hospitality workers, retail associates, and travel industry staffers
  • Strains on hospital staff and other health-care workers
  • Fewer in-person entertainment options (movies, concerts, sporting events)
  • Depletion of savings accounts while trying to stay afloat in difficult circumstances.

Take an inventory of what you’ve gone through, how you’ve met the challenges, and how (with 2020 hindsight) you might change your approach in the coming year.

Review your credit report

The information on your credit report can make life harder or easier. A high score can unlock low interest rates on mortgages and credit cards, saving you lots of money. However unresolved debts, identity theft, or even errors can block you from renting an apartment, getting a mortgage, buying a car, landing a job, or getting a security clearance.

It’s normal for credit scores to go up and down as life circumstances change. Carrying higher balances on your credit cards, making a late payment, new “hard inquiries”… all of those things can lower your score temporarily. However, if you have a debt in collections or an error on your report, ignoring it will only make the problem worse. Start the new year by resolving to dispute it yourself or get professional help to fight back or negotiate a solution you can live with. 

Identify opportunities for growth

The economic climate in 2020 created many hardships, but it also brought new opportunities. Look into what those are and identify where you may be able to help fill a newly created niche.

According to the U.S. Bureau of Labor Statistics, five of the 20 fastest growing industries in the next decade will be in health care and social assistance. The individual and family services sector leads the way, with a projected annual growth of 3.4%.

Other growth areas include:

  • Forestry (3.7%)
  • Support activities for mining (2.8%)
  • Home health services (2.6%)
  • Outpatient care (2.6%)
  • Computer systems design (2.3%)
  • Grantmaking (2.2%)
  • Software publishers (1.9%)
  • Independent authors, writers, and performers (1.9%)

Does your work fit into any of these categories, or can you expand your skill set to fill one of these needs? If you’re traditionally employed, ask your boss for training in a growth area. If you’re self-employed, a contractor, or between jobs, seek out extended education courses and online learning opportunities. Improve your networking and even consider finding a mentor.

Cover your blind side

Just because 2020 is moving (mercifully) into the rearview mirror, more challenges — and unexpected perils — still may lie ahead. You never know what’s around the next corner in life, and it pays to be prepared.

If you faced a loss of income or had to dig into your savings, you’ll have to be extra careful to guard against further financial hits in the year ahead. Make sure your home, auto, and health insurance are good to go. Revisit your policies to find out if you can save money by changing insurers, eliminating overlap, or bundling policies together. 

While you’re at it, protect what’s inside your home, too. If you’re renting, renters insurance can cover the theft of property from your unit, whether it’s a valuable heirloom or childhood comic book collection. If you own your home, consider a home warranty, which can cover the cost of repairs to major systems (HVAC, plumbing, etc.) and appliances like your dishwasher or fridge.

Plan for the future

People typically make new year’s resolutions to cover a single year, but any life changes you make now can last far longer, whether you’re quitting a bad habit or forming a good one.

One habit can involve how you use credit. How does your credit score look? Did you know you can request a free credit report once a year? Learn what’s in it, what it means, and how to improve it. Here are some basic methods:

  • Pay your bills on time.
  • Make utility and cellphone bill payments promptly.
  • Keep credit card balances low.
  • Don’t apply for too much credit.

Now’s also a great time to make sure you’re preparing for retirement with the proper savings options. If your employer offers a 401(k) with matching contributions, that’s worth exploring. You might want to consider IRAs, annuities, and other options, as well. What investments can you make to solidify your long-term financial stability?

Many of the plans you make involve paperwork, so do your research and consult a professional financial planner and/or lawyer. For your family’s sake, make sure your life insurance, health-care directives, will, and estate are in order, with documents signed and filed with the appropriate agencies. 

You may be bringing a good deal of 2020’s finances with you into 2021, but you’ll still be able to make a difference by exploring new approaches to fiscal health and planning ahead — for the year to come and for the longer term.

By assessing your position, looking for ways to improve it, and guarding yourself against future crises, you can make the year ahead (and the years after that) more fruitful and less stressful.