Get Free Credit Score – FICO Report

rschjohnson asked:


I understand the higher the better, but im wondering what fico number is considered ‘good enough’ by the mortgage lenders.

Sheila

AC asked:


If I owe a creditor $2,500 and they offer me a settlement of $1,500 and I take it and pay the $1,500. Does that hurt my credit and FICO score because I settled and didn’t pay back the full amount?

Douglas

Christopher Winkler asked:




The FICO score is a number that rates people according to their credit worthiness by the Fair Isaac Corporation, the largest credit scoring company in the world. Fair Isaac Corp. compiles the data that the three nationwide credit reporting companies, Experian, Trans Union, and Equifax list, into a proprietary, numerical formula that ranges from 300 to 850. That number is used by lenders of all types to judge a person’s credit worthiness when deciding to issue new credit to a consumer.

Fair Isaac looks at a number of factors when they determine a FICO score, and the majority of it relates to your payment history and the amount of credit (debt) that you have used. Those two factors make up about 60% of the FICO score, the rest of it is made up of the length of time you have had the credit and the mix of creditors. It breaks down in a percentage like this:

35% is based on your payment history, and how many times you were late. 30% is based on the amount of total credit you have, and the amount of that credit that you are currently using. 15% is based on how long you have had the accounts. 10% is based on how much new credit has been added. 10% is based on the mix of creditors you have.
Here are some basic things you can do to improve your FICO score:

1. Never pay a bill after the due date. Always pay your revolving credit card bills before the due date, because every late payment will hurt your credit score. It’s important to pay them right away and not wait until the day before they are due to pay them. Give them at least a week to get there in the mail, or pay online 2-3 days before the due day.

2. Don’t carry high balances on your credit cards. If you have charged over 75% of the available balance, you are becoming a risk to them, as people usually tap all the available credit before they default. Keep balances between 25-50% of the available credit.

3. Don’t close those older accounts. When you finally pay off a card, you might be tempted to close them; don’t! It will hurt your credit in two ways; #1, it will close that card that had a long history, which is what shows stability, and #2, it lowers your overall credit available, which will raise your debt-to-income ratio, which lowers your FICO score. Don’t close accounts when you pay them off.

4. Department store & other specialty cards actually hurt your credit. Good debt, like mortgages, car loans, and the big four credit cards look good on your credit report. Department Store cards actually hurt your credit; use your Visa or M/C at department stores.

5. Don’t take every offer they send you. When you constantly add new credit, you are actually hurting your FICO score. Not only will the newness of the accounts lower your score, if you take out too much credit, your debt to income ration will go up, lowering your FICO. Don’t apply for another card, shred those offers instead.

Now that you know what your FICO score is, and how it’s determined, use these basic tips to increase your credit score. If you have bad credit, you need extra strength help.

Kimberly

harvey7415 asked:


I actively do balance transfer arbitrage. I have almost $100,000 in credit card debt, all at 0-1% APR. I have almost 40 revolving credit card accounts. No late payments ever. I believe my current credit score is about 620-630. How will doing more arbitrage affect FICO? How will paying off balances improve my FICO?

Jeremy

Joe Stevens asked:




If you have been trying to get a home loan with a traditional mortgage and have been unable to do so, you will want to look at applying for an FHA home loan. The requirements are not as strict and you need less money for a down payment. While these are probably the most important issues for you, there are a set of guidelines that must be followed to qualify. This article will give you the basic requirements. The actual lender may have some additional qualifications that they want to see.

The home that you are purchasing must be for your personal use. Acquiring a loan for an investment property is not allowed. When you are applying for the FHA loan you will be required to produce a social security number that is valid. This type of loan is specifically for homeowners, to help people achieve the dream of living in their own home.

You will be eligible for an FHA loan if you are a legal resident of the United States. There is no stipulation that you have to be a citizen of the United States, just that you are living in the country lawfully. If you are not of legal age to sign a contract such as a mortgage you will be denied the loan.

Not every bank or lending institution can offer FHA loans. You will need to find one that is qualified to do so. Once you have done that you can expect to provide the following information: income verification, your assets, credit history and the liabilities you have. Your FICO score will be attained for the purpose of the loan, but it is not as critical to achieving success.

There are no income limits that would stop you from getting an FHA loan. However, you must show that you are able to pay the monthly mortgage payments. This is why the proof of your income is needed.

While the FHA lender does look at FICO scores they do not have to be a high as a traditional loan requires. The laws recently changed with regard to the score needed. The typical score they would like to see is 620 plus, but considerations can be made if you have had a good past payment history.

If you have had a bankruptcy in your past, then you must wait at least a year before applying for an FHA loan. It is considerably longer if you try for a traditional 30 year fixed loan.

Many first time buyers won’t have a credit history either because they are young or have paid cash for everything. This should not deter you from applying. When you have a good rental history, paid your bills promptly and perhaps had a chance to put some savings aside you have an excellent opportunity to get the loan.

This article has described how easy it is to meet the requirements of an FHA loan. All you need to do now is find the lender that you wish to work with and fill out your application.

Nellie

John P asked:


I have a very good credit and 20% cash down for my home.
I am planning to make an offer for a property which I liked, so during the offer does it help if I give my FICO score and how much cash I am willing to pay for the property? (lets say its 20%) of the property ?

Richard

Chris Rutherford asked:




When you’re trying to fix your bad credit, you cannot afford to make mistakes that would be difficult, if not impossible, to undo and make the credit repair process longer and harder. The following are 5 common mistakes in credit repair and how to avoid them.

1. Ignoring Collection Letters

It’s tempting when you’re hounded by collection calls, but it is a big mistake to ignore collection letters sent to you for past due bills. You should always respond back in writing within 30 days. First, you should send a validation letter, demanding the collection agency to prove they have the right to collect on the debt and the debt is really your responsibility to repay. If you ignore the collection letter, the collection agency may be entitled by law to assume the debt is valid.

2. NOT Disputing with the Credit Bureaus

When you send a validation letter to the collection agency, you should also simultaneously send a dispute letter directly to the credit bureaus (Experian, Trans Union, Equifax) as well. Make them prove that you are responsible for the debts listed. Sending this letter also preserves your rights to take legal action in the future. You should also dispute any errors you find in your credit report, as well as negative items that have expired (after 7 years, or 10 years for bankruptcies).

3. NOT Disputing in Writing

Sometimes people have the misconception that they can more effectively or easily dispute their credit online or over the phone. In fact the best way to dispute your credit report is through written letters sent by certified mail. This provides the essential documentation paper trail to prove that you did send the letters in the required time frame.

4. NOT Storing and Organizing Your Documentation

Good organization of documents and record keeping are essential to prove your case and dispute your bad credit. Keep copies of ALL documents that are sent to you and copies of documents you sent to others. Also keep a log of which documents were sent to whom and when they were sent. Some credit repair software can help you keep track of open disputes and required documentation.

5. NOT Understanding or Exercising Your Rights

Credit laws are intended to protect the consumer’s rights – that’s YOU. You have the right to know what’s in your credit report; in fact, you can get a free copy of your credit report once a year from each of the 3 credit bureaus. You also have the right to dispute any errors and demand removal of information that cannot be verified with proper documentation.

So don’t be afraid to make your creditors prove their case. Often they’ll try to make you defend yourself; instead turn the tables on them and politely but FIRMLY request they prove everything. You might just get your credit repaired quickly by avoiding these common mistakes.

Regina

Maury Lum asked:




This article covers the topic of our personal credit rating and credit history. Credit rating plays a very large role in determining eligibility for securing new credit in addition to the terms and options available. As such, it is important to understand what information the credit reporting agencies use in order to come up our credit rating and credit score so that we can do all that we can to ensure our credit score is as always as high as it can be.

Using credit and carrying debt is a normal part of our day to day lives for many of us. Credit offers an element of convenience as well as the ability to purchase goods today that we may not be able to pay for in full. However, we may be able to pay for an item over time and would not mind paying a premium (i.e. interest rate) for the benefit of enjoyment and use of the item today (e.g. house, car, furniture, electronics, etc.). The use of credit though is important to understand as when used responsibly we will start to build and establish a good credit history and credit rating. Conversely however, if credit is misused and if we become delinquent with our credit, our credit history will show an irresponsible use of credit and therefore will be reflected with a poor (i.e. low) credit rating. The goal over time is to demonstrate that we have had access to a reasonable amount of credit, used that credit responsibly over time, and have also paid back the credit as agreed over time.

During the application process for new credit (e.g. credit card, car loan, mortgage), lenders (i.e. banks) will review your credit report and credit score to check how you have managed your debts in the past. The idea here being that how you have used and managed your credit in the past will be a good indication of how you manage your debts in the future. A credit report contains information such as, previous and current trade lines (i.e. accounts), credit limits, credit balances, payments over time, and if payments have been on-time or late.

If you have not had any credit in your own name before, it is recommended to apply for a form of credit so that you can start to establish a good credit history as having no history can be an obstacle in getting and being approved for new credit. You may need to start small and slow with a low limit as a bank may be apprehensive to start you off with a high available limit when you have not had any credit before. So start small, use the credit each month and then also pay it off in full each month. Over time the institution will likely be comfortable with starting to increase your limit slowly. One other important point to note is that if you have a number of credit cards and find that you are not using some, it is recommended to permanently cancel these. Keep about two to three mainstream credit cards that make the most sense (e.g. accepted the most places, provide the best rewards or insurance coverage, have the lowest interest rate). Canceling extra credit cards helps as potential access to too much credit can work against you when looking for new credit, in addition to the risk of lost, theft, and fraud.

If you think you have had a “blip” in your credit history try not worry about it. What you think may have been a “blip”, may not have been. However, it is recommended to review your credit report each year just to make sure everything is reporting to it correctly. Examples of potential “blips” that can be hurting your credit score may include: late payments, not making the minimum payment required, going over your limit if even by $1.00, an outstanding collection, etc. If you have a “blip” on your credit report it is highly recommended to correct it as soon as possible as until it is rectified it can severely negatively impact both your credit score and your ability to secure new credit. So, if you have a problem in your credit report you will need to consider how much it is worth to you to fight and or ignore the problem vs. simply fixing it right away (e.g. an outstanding collection you do not want to pay). Also, all information, good and bad, is kept as part of our credit report for seven (7) years before it falls off. As such it is best not to have negative information report to our bureau in the first place but if it does, try to minimize it and resolve it as soon as possible.

One final note is to treat all credit carefully and plan any purchase where you will use credit carefully. Any lending institution will not want total outstanding debt and monthly payment obligations to exceed a specified amount, largely based on household income. So before taking on new credit think out into the future on any other credit you may be needing or want to apply for as taking on credit today could mean you may not be able to be approved down the road for another form of credit (e.g. get a car loan today that may create to large of an monthly obligation to also be approved for the mortgage you want in 3-6 months from now).

Meet and consult with an Accredited Mortgage Professional (AMP) regarding your credit report as we can always be a good resource and starting point to provide the information and help needed.

Margaret