Thread: Credit Score?
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Old 01-24-2013, 12:45 PM
TuffTurfLawnCare TuffTurfLawnCare is offline
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Join Date: Jan 2013
Location: Pittsburgh (South Hills)
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Quote:
Originally Posted by ryan41 View Post
Hi - Thank you for the info. Could you send me a private message? I would like to know how i go about repairing the damage? All my equipment that i have now is all paid off including my truck. I am just growing more and in order to get more accounts i need another mower.
I can't send a PM yet, so I will post some info here, hopefully it doesn't break the rules.

Long story short, in my early 20s I destroyed my credit. I then ignored it for a few years and paid cash for everything. Things changed and life happened. I needed credit, needed a house, car etc. I had a friend pull my credit reports (works for mortgage company), the low was 498. This was 2.5yrs ago. At this time, I decided to learn as much as I could about credit reporting and scoring. In one year my scores were back up to mid 600's, enough to get a mortgage. They are now hovering around 700.

I got all of my reports, for free as mandated by the federal gov (they do not include scores, just the report) at https://www.annualcreditreport.com/cra/index.jsp. Print copies of your reports.

Once you get the reports, go through them and focus on all the negative reportings. These are what you need to work on. Make sure all of the items listed on your report are actually yours. You'd be surprised how often random stuff is reported and put on the wrong reports and will kill your score.

Go to the credit bureau web sites and file disputes on all negative reporting with a reason of "unknown account/account not mine" or similar. Wait 30 days for the results to come back. The ones that comeback as verified, will need to be handled by contacting the creditor. There are a few ways to handle this. From simply writing a letter asking for a good will (GW) deletion of a missed payment, to using the Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA) as leverage to have these items removed. You can even file a direct dispute with the creditors as well. Collection agencies must be dealt with a bit differently.

If you have a collection agency (CA) on your report, it will kill your score. Dispute these listing via the credit reporting agencies (CRA's) but DO NOT CONTACT THEM NOR CALL THEM. If they call you DO NOT acknowledge the debt or claim ownership of, promise to pay nor make payment to them. The first thing you need to do is send them a Debt Validation (DV) letter Certified Mail, Return Reciept Requested (CMRRR) and wait for them to respond. By law (FDCPA) the CA must VALIDATE the debt, and show that they are legally obligated to collect the debt. If they can not legally validate the debt, must delete the listing from your report. If they violate ANY provisions in the FDCPA, you can sue them in local court, with out an attorney and if found guilty they are to pay YOU $1000 per violation in addition to court costs. The mention of this is usually enough to get them to delete the listing if your claims are based on fact.

This is just the short list. I strongly reccomend you go to http://ficoforums.myfico.com/ and start learning. There is way more info there than I can write here. Some very smart people there that know the ins and outs. Also, be very weary of who you buy your scores or reports from. Myfico.com is the ONLY website that give you the REAL scores that most banks use. They only provide the scores from TransUnion and Equifax as a real score from Experian can ONLY be obtained from a lender or A credit union in PA (PSECU). And the scores the given are one version of the real score. Even the scores given at the CRA websites are not teh real scores given to lenders. Some lenders use a new version of a scoring algorithm. i.e. TransUnion has a few scoring models out, TU98 TU04 and TU08.

The big 3 CRA's are TransUnion, Equifax, and Experian. Innovis is another one but not used nearly as often. They all generate FICO (Fair Isacc Corp) scores. FICO is who first determined a method of rating scores, the CRA's adopted this as the industry standard but tweaking it just a bit. If you are going to try and do alot of work on your reports, sign up for credit monitoring through a good site, again www.myfico.com is place to go. I had them monitor my Equifax report for 2 years while I was rebuilding mine. I also signed up for monitoring through USAA as they have unlimited pulls of all 3 reports, every day if you want. (the scores they give are not "real", though.)

Pulling daily reports on yourself, WILL NOT harm your score. When you pull your reports through a website or service like this, it considered a "Soft Pull". these DO NOT factor into your score. Not even once, none, nadda. You can see who "soft pulled" your report and you may be surprised how often it is pulled by insurance companies, wireless services, creditors, and others. When you actually apply for credit, you are authorizing a "Hard Pull". A "hard pull" will be reported on your credit report, and may or may not have an effect on your score. If you have mediocre scores with a few inquires already, it wont effect you as much, maybe a point. If you have no inquires and a 750+ score it will prob drop you a few points.

The scoring algorithms are dynamic. What may drop my score 20 points may not have any effect on yours with a lower score. This is referred to as "Bucketing". Which "bucket" you are in will effect what and much your score will change due to a given event on your report. This is why there is so much confusion on what hurts your score and what doesn't. An identical change will effect two people differently based their entire credit profile.

As for some score guidelines, there are some that are generally accepted. Revolving credit usage will almost always have an effect on your scores no matter what bucket you are in. This is a huge factor in scoring. This amount is reported as a percentage of credit used against credit available (utilization % or Util). If you have used more than 20% it will begin to drop your scores a noticeable amount. This is why the old adage of "unused credit is bad for your report" is wrong. The credit limit of cards is used to figure your util, having that card with a high limit that never gets used will help keep your util % low even if you never use it.

Another reason to keep that old card is that the Average Age Of Accounts (AAoF) is also taken into account in your scores. A long credit history is also important, not just a good history. Creditors want to see stability.

Revolving credit is considered any credit with open ended terms such as credit cards, store cards, or personal service loans, etc. Credit that you can use as you need and use again as you pay it off. It has been argued that major cards (Visa, Master Card, Discover etc) are more heavily weighted than store cards when calculating your score.

In order to build credit or repair credit, you must HAVE credit or obtain credit. When you have low scores you will have to resort to getting a card that will have an annual fee, high interest, low limits and may or may not need to be secured with a deposit. You must USE credit to have good credit. You don't need to pay interest or carry a balance but a payment history needs to be established.

Know which cards/lenders to go to with respect to your score. i.e. If you have a 600 score don't apply for a product (loan, card, etc) from Chase, Capital One Venture, Amex, Discover (except the student card if you have no credit as opposed to bad credit). On the flip side, if you have a 700 or higher, don't waste time with First Premiere, Orchard Bank, Capital One Platinum, etc. However First Premiere and Orchard will give you a new card if you have bad credit (under 600). They will charge an annual fee and ungodly high interest rate. Which they should, since you are high risk.

Some cards are temp cards, like the Orchard and First Premiere. However some will grow with you as your credit gets better. I had a Cap One platinum card that started with a 300 limit. 6 months later it doubled to 600. Then $1000. then 1200 within 18 months. They then called me to offer a product change. It went from a high interest platinum card to a cash rewards card with no annual fee (AF) and lower interest, plus cash back. That card currently has an $8000 limit and lives in my other halfs purse.

Doing nothing and paying cash will NOT build your scores up. Instead your credit will sit dormant, and perhaps go up a few points a year. Your credit report/score is a living breathing extension of you. It needs to be maintained and cared for and in return you well get better and better offers and be able to use other peoples money for free. I just got a blank check auto loan from my credit union (PSECU) for use on any new or used car with a 1.5% APRas opposed to the 12 to 19% with bad credit. That could be the difference in monthly payment between a 1/2 ton and a 3/4 ton truck. Or a pick up truck and a dump truck that you need. Right now I need a mower. I could pay cash, or I could use Shefileds money for free by taking advantage of their of 0% for 48 months and keep my cash in a high yield saving account or other investment where it will make me more money. (See how taking on debt can MAKE you money?)

Time is also a factor. As mentioned above with the AAoF and also if you have any negatives reported. Over time, that missed payment will weigh less and less on your scores until falls off (usually after 7 years). Also time counts on the length of total history, first account reported.

As long as this post is, there is still more to it than this. This is just a primer that should be enough to open anyones eyes a bit, and hopefully lead to more education about this topic and the possibilities of new, and rewards from credit. But of course credit needs to used correctly and responsibly. Used correctly, you can come out ahead by using credit. With a business, you could take your family on a FREE vacation every year (depending your amount of business) just by using your credit. The Amex Starwoods card gets your points for every dollar spent that can be redeemed for free stays a local hotel or free stays at a carribean resort and the air line tickets to get there. The Amex corp card offers points that can be used for airline miles, and other rewards.

Credit is wonderful servant, but a horrible master. Use it wisely and reap the rewards.

Sorry for any typos. If there is anything I specifically left out feel free to ask and I will respond as best I can. I am not a professional, I make no money from this, nor am I associated with any company or website dealing with the credit industry. I did my homework and learned as much as I could. I disperse this info to best of my knowledge for free in the hopes it will help someone. As this is free info, it is worth what you paid for it. It is in no way to be used as a bible or law. It is for reference only.

Last edited by TuffTurfLawnCare; 01-24-2013 at 12:55 PM.
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