Posts

Student Loans and Credit Scores

Student loans seem to be on almost everyone’s credit reports . They can positively impact your credit scores if you are consistent with your payments and aware of what is happening with your loan. As with any bill or loan you take out, it is extremely important to your credit score as well because it can also have a negative impact too. We will discuss some of the positive ways that your loan can impact your credit, as well as a few ways it can do severe damage if you are not careful.

The Positives

1. Payment History

A student loan, when paid correctly, can be a great trade-line for your credit report. If you make the minimum payments, this shows great repayment on your part that you can reliable and make on time payments. This part of the credit report makes 35% of the FICO grading scale. The difference with a student loan as opposed to your other monthly bills such as your car insurance is that they do not report monthly (only when you miss the payment or fall into collection) whereas your loan will report positively when you have positive payments. This is great for your credit!

For some consumers, building credit is hard to do if you do not have an auto loan or any credit cards, but your student loan can help start to establish that payment history.

2. Building A Credit Mix

For a while, there was a myth out that having “diverse” accounts helped your scores and provided for a healthy mix of credit. Only about 20% of your FICO score is made up of new credit and types of credit used. Typically, having two revolving accounts and two loans (home, auto,or personal) are sufficient enough in trying to build on your scores. Your student loan will also help you start to fill out a portion of that percentage of your credit mix while you continue to make positive payments.

 

free credit repair consultation

The Negatives

 

1. Late Payments on Loans

A good way to completely tank your credit scores quick, fast and in a hurry is to get a late payment. As much as on time payments can help your credit score, they can also harm them, sometimes up to 100 points.

These bad or derogatory remarks can stay on your credit report for up to seven years. If continue to miss your payments and they continue to roll over, your scores will just keep dropping and dropping. The other piece to this puzzle that is not good, is how long it can take for you to rebuild once you have fallen behind. Be aware of what is happening with your bills and other finances and communicate with your institution if you start to fall behind.

2. Defaulting 

If your accounts are sent to collections, this can also really impact your credit scores. Often times, creditors will not lend you any money unless you “correct” it and make it right with the lender of the money. If you go and apply for a home loan and they see collection status, it can be extremely hard for them to justify lending to you with a lot of derogatory marks on the report.

You may hope to open credit cards and start to establish credit but the creditor denies you due to the defaults on your credit report. All in all, if you are seeing collections/charge offs or have been denied financing, you may want to reach out to a credit repair company today.

What Resources Are There?

Having student loans and pursuing a degree is important in this day and age. We see so many student loans every day on credit reports that are doing great things for people and their credit report. Make sure you stay up to date on the payments and work as well on establishing credit.

For more information on student loans and second chance checking, please visit this site. You will find a lot of programs to help you out in regards to student loans if you have not been able to find any resources yet that work.

Credit Cards for College Students

What Really Impacts Your Credit Score?

I have clients from all over the country asking me how much particular items on their credit report are affecting their credit and if the item is removed, then will their credit score rise. It is difficult to provide a precise answer because there are many underlying factors that can make or break your credit! Follow Credit Law Center as we delve into the 5 major factors that impact your credit score!

 

#1 Payment History

 

Payment history holds the most weight over your credit score is calculated. Your payment history roughly translates to 35% of your FICO score and could be one of the reasons you aren’t seeing those numbers rise. It is extremely important to establish healthy and beneficial trade lines and to make sure that your debts are monitored and paid in a timely fashion.  Therefore, it is more difficult for beginners to start establishing healthy credit because they have not had the time to acquire a positive credit history.

It goes to show that if you have upheld your credit obligations in the past then you will reap the rewards in the future!

 

#2 Missed Payments

It happens to the best of us, something comes up and we miss a payment! Even a 30-day late payment can hurt your score and if you make frequent late payments then expect your score to start to drop.

Credit scoring models look at:

-Are there late payment appears on your credit report?

– How late are those payments?

-How recent were those late payments?

– How many late payments appear on the report?

 

Automated payments are one of the best ways to ensure that you don’t make a late payment. Most credit card issuers will offer scheduled payments and the option to either pay in full or pay the minimum payment and will allow you to choose whichever fits your financial needs.

 

I use automatic payments on my CareCredit account, and it lifts a lot of stress knowing that I don’t need to remember to log into my account every month to set up a withdrawal. It is smart to check your transaction history to make sure that the payment was made successfully!

#3 Credit Utilization

Credit utilization is almost as important as your payment history in terms of credit health and importance. Your credit utilization rate makes up roughly another 30% of your FICO score!

The lower your credit utilization rate, the lower risk you are to lenders. Say you have a $6000 limit on your credit card, and you are using $2000 worth of credit. You are using a little more than 30% of your credit cap and are seen as a lower risk borrower.

Paying off your statements in full is the best way to keep your credit utilization at a healthy percent and can really bump up your credit score!

 

#4 Length of Credit History

 

Length of credit history and payment history go hand in hand when it comes to establishing your credit score. Length of credit history only takes up about 15% of your credit score but can be a wonderful way to passively grow or stabilize your report!

Fico will consider:

  • Your oldest account held
  • Average account age
  • Usage of accounts

Becoming an authorizes user is a wonderful way to start building credit history if you are just beginning to start building credit. If you have established credit then keeping those older accounts open and in use will be beneficial if done responsibly.

 

# 5 New credit

Studies show that people who apply for a lot of credit in a short period of time are riskier borrowers. In other words, they’re more likely to pay a credit obligation 90 days late in the following 24 months.

Some people apply for many credit cards at once to boost their score quickly. This can have negative implications for your credit score as it makes you seem desperate for credit and you will be seen as a high-risk borrower.

When a financial institution pulls your credit score, a record known as an “inquiry” is added to your credit report. Most inquiries stay on your report for 24 months. Certain inquiries, known as “hard” inquiries, have the potential to damage your credit score for 12 months.

 

Your credit score determines many factors in your life and the more that you understand it, the more fruitful your endeavors will be!

Inquire for free credit review & consultation.

Contact:  1-800-994-3070

Check out Credit Law Center Reviews:

Google ReviewsFacebook Reviews

This entry was posted in Credit Repair Blogs and tagged creditcredit law centercredit repairEquifaxkansas cityKansas City Credit RepairTransunion. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

Too Many Inquiries

Getting Ready For A New Car!

Time For A New Car?

Several years ago when I was broken down on the side of the interstate in my 92 Jeep Cherokee I thought to myself “My next car is going to be brand new so I don’t have to deal with this gain!”  I knew that I would need to finance as I was just a twenty something with a low end painting job, but I was hopeful that I would be approved. I was quite ambitious for a boy with little to no credit reported or open trade lines.

Fast forward to later that evening; I sat in the Nissan dealership for hours, hoping one lender would overlook my credit score and provide me with anything! Spoiler: No lender would even consider me and my abysmal credit score. At that moment I knew that I would have to go about this a different way if I ever wanted to even be considered for financing and began my research over how exactly credit worked.

 

Understanding Your Credit

First off, I had to get a hold of my credit report and see just exactly what was going on. My credit adviser directed me to Free Credit Hub where I was able to sign up for credit monitoring and finally see what was dragging my credit! I was greeted with a cacophony of different numbers, phrases and names that filled the pages and made my stomach drop. My adviser walked me through each  line on the report and explained that there were multiple categories that made up the report. Those categories were:

1. Payment History-  35% of your credit score is based on your past bills and how they were paid.

2. Amounts Owed- 30% of your credit score is based on the available credit card limit you’re using and the amount you owe across your accounts.

3. Length of credit history – 15% of your credit score is determined by the credit history you have built. This is based on the average age of your accounts  along with a few other factors. The longer the history, the better the results!

4. Credit mix – 10% of your score is from the mix of revolving credit (credit cards) and installment credit (car loans, mortgages, etc.) you have.

5. New credit – 10% of your credit score comes from new credit accounts that you have established.

 

Time To Build!

Alright, now that I know what exactly makes up my credit, it is time to start building it up! I took 3 easy steps to start building positive credit and the foundation for a strong credit score.

  1. Lowering My Card Utilization– When I got my first credit card I was told to never use more than 50% of the allowed credit and I would be fine. If we look at our credit utilization like a grade card, a 50% utilization rate is a solid F. 30% is about a C rating and the lower you go the better your rating. Keeping your utilization under 10% is an A rating and is sure to build your credit the fastest.
  2. Becoming An Authorized User– Becoming an authorized user is by far one of the easiest ways to build credit and is kind of like passive income. If you are listed as an authorized user on a trusted family members card, their history is listed on your report as well and you don’t even have to use the card! Be sure you work with someone you trust because the negative history will be placed on your report as well.
  3. Pay Your Bills On Time-  Paying off those balances on time is extremely important when building credit as it provides positive credit history and establishes a exceptional trade line. Late payments are one of the largest discrepancies on most Americans credit report!

 

Your Car Loan Will Help Build Credit.

After about 6 months of building up my credit, I was able to acquire financing toward a new vehicle. You don’t need to have perfect credit to acquire a car loan, but it will affect your financing options and future payments. The wonderful thing about this loan is that it establishes another line of installment credit to your account. As long as you are making your payments on time, this installment credit will soon become a wonderful trade line that builds a long credit history. In the end it is all bout finding the right lender for you and managing a positive ascending credit score. If done correctly, you will be on the road that that fabled 800 credit score!

 

 

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.

credit scores

Understanding Your Credit Rating

Good, Better, Best and Bad

The internet and cell phones have now made it easier than ever to check your credit score as often as you’d like. Millennials are starting to check their credit scores more frequently than any other generation. This could be due to the fact that credit has become vital in many aspects of life. Whether you want to buy a house, car, or take out a loan, you can expect that your credit report will be scrutinized. Do you know what you are looking at when it comes to those numbers?

A Numbers Game

Your credit score is ever changing. While you may not suspect that things are moving and shifting, they are. Often times people think of their scores as either really bad or good enough. When you are browsing the internet and you start to check your credit scores, please take note that you are looking at a consumer score.

What is a consumer score? This is the scores you have access to online that may show higher than what a lender or bank would pull for you. These are called vantage scores and are not your true FICO score. These scores show higher so that you will start shopping around for products, or continue to spend. Your score may be significantly lower when you apply for a home loan. Once you understand this, the frustration or mind game you feel that happens when your scores are so different won’t be so frustrating. You should pay closest attention to what a bank or lender tells you your score is. So, what are all these numbers really saying?

  • Very Good : 740-799
  • Good : 670-739
  • Fair : 580-669
  • Poor : 300-579

Having scores higher than 799 is possible to obtain but can be hard. A 670 and up is considered exceptional. The better the score, the better the interest rates, among other things. If you are below a 700, there is definitely some room for improvement!

Increasing Credit Scores

If you have a low FICO score, you can bet that is due to a combination of factors rather than just one culprit. A credit score is made up of many different factors. If you are thinking your credit is low due to just inquiries, you are probably incorrect. The chart below demonstrates the factors that come into play with your FICO.

Facts on Fico

Positive Payment History

The largest section of the pie chart is your payment history. If you have been behind on bills, have late payments or cannot keep up current credit cards, your score will be dramatically impacted.

One late payment can potentially drop your score 100 points.

If the creditor sends your card into collection or charge off, we can take a look at your report and discuss what the next options are for your credit report or how you can try to make up for those late pays in other ways  to increase the scores. There is a method to the madness when it comes to your credit scores, you just have to know how to play the game.

 

free credit repair consultation

Credit Scores and Savings

If you take a look at the numbers above and fall into the category of poor or fair credit, you may notice how much you are having to pay on your auto or home loan. When your credit score is low, you’ll notice how much higher your interest is on your payments. While it is great that you may be able to get approved for a car loan or auto loan with a lower score, you would be better off waiting until you can improve your credit scores. We want to help you save!

Financially speaking, if you can wait and try to get your scores back up  you can be saving yourself a significant amount of money each month for your family.

Quick Ways To Improve
  • Become an authorized user on family member or spouse’s card
  • Look into a credit builder loan
  • Apply for a secured credit card
  • Invest in credit repair to get derogatory items removed

Your credit will be around for the rest of your days. While you may have made financial mistakes in the past, you can improve and learn from them. If you have found yourself in a huge hole, and have debt collectors and collection companies calling you daily, please get in touch with a company that can help you. At Credit Law Center we educate our clients on everything they may need to know, to continue to better their credit scores as well as represent them so that the calls can stop. We know the importance of great credit and what doors it can open when you reach that “very good” zone.

Open new doors today for your family, and invest in your financial future.

 

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.

Students Loans and Credit Scores

Student loans seem to be on almost everyone’s credit reports. They can positively impact your credit scores if you are consistent with your payments and aware of what is happening with your loan. As with any bill or loan you take out, it is extremely important to your credit score as well because it can also have a negative impact too. We will discuss some of the positive ways that your loan can impact your credit, as well as a few ways it can do severe damage if you are not careful.

The Positives

1. Payment History

A student loan, when paid correctly, can be a great trade-line for your credit report. If you make the minimum payments, this shows great repayment on your part that you can reliable and make on time payments. This part of the credit report makes 35% of the FICO grading scale. The difference with a student loan as opposed to your other monthly bills such as your car insurance is that they do not report monthly (only when you miss the payment or fall into collection) whereas your loan will report positively when you have positive payments. This is great for your credit!

For some consumers, building credit is hard to do if you do not have an auto loan or any credit cards, but your student loan can help start to establish that payment history.

2. Building A Credit Mix

For a while, there was a myth out that having “diverse” accounts helped your scores and provided for a healthy mix of credit. Only about 20% of your FICO score is made up of new credit and types of credit used. Typically, having two revolving accounts and two loans (home, auto,or personal) are sufficient enough in trying to build on your scores. Your student loan will also help you start to fill out a portion of that percentage of your credit mix while you continue to make positive payments.

 

free credit repair consultation

The Negatives

 

1. Late Payments on Loans

A good way to completely tank your credit scores quick, fast and in a hurry is to get a late payment. As much as on time payments can help your credit score, they can also harm them, sometimes up to 100 points.

These bad or derogatory remarks can stay on your credit report for up to seven years. If continue to miss your payments and they continue to roll over, your scores will just keep dropping and dropping. The other piece to this puzzle that is not good, is how long it can take for you to rebuild once you have fallen behind. Be aware of what is happening with your bills and other finances and communicate with your institution if you start to fall behind.

2. Defaulting 

If your accounts are sent to collections, this can also really impact your credit scores. Often times, creditors will not lend you any money unless you “correct” it and make it right with the lender of the money. If you go and apply for a home loan and they see collection status, it can be extremely hard for them to justify lending to you with a lot of derogatory marks on the report.

You may hope to open credit cards and start to establish credit but the creditor denies you due to the defaults on your credit report. All in all, if you are seeing collections/charge offs or have been denied financing, you may want to reach out to a credit repair company today.

What Resources Are There?

Having student loans and pursuing a degree is important in this day and age. We see so many student loans every day on credit reports that are doing great things for people and their credit report. Make sure you stay up to date on the payments and work as well on establishing credit.

For more information on student loans and second chance checking, please visit this site. You will find a lot of programs to help you out in regards to student loans if you have not been able to find any resources yet that work.