Your credit score is an integral part of your financial life. It is important that you understand what it's all about. Lenders, landlords, insurers, utility companies and even employers look at your credit score. It is derived from what's in your credit reports, and it ranges between 300 and 850.
Yet, according to a survey that was recently conducted, nearly half of all Americans don't know how these scores are derived or even what factors are used to come up with them.
For example, if your credit score is 580 you are probably going to pay nearly three percentage points more in mortgage interest than someone who had a score of 720.
Or another way of looking at it, if you had a $150,000 30- year fixed-rate mortgage and your credit score was good enough to qualify for the best rate, your monthly payments would be about $890. credit repair This is according to Fair Isaac, the company that created the FICO score and who the rate is named afte (Fair Isaac COrporation). If your credit is poor, however, it is very likely that you would have to pay more than $1,200 a month for that same loan.
With so much depending on the credit score, it's important to understand what it is all about and what are the things that affect it.
Unfortunately, people commonly have a lot of misinformation and misunderstandings about their credit score. Here are five of the most common credit score myths and along with it the true facts:
MYTH #1: The major bureaus use different formulas for calculating your credit score.
FACT: The three major credit bureaus - Equifax, TransUnion and Experian -- give the score a different name. Equifax calls their score the "Beacon" credit score, Transunion calls it "Empirica" and Experian gives it the name "Experian/Fair Isaac Risk Model." They all use different names for the credit score, but they all use the same formula to come up with it.
The reason that the credit score you receive from each bureau is different is because the information in your file that they base the score on is different. For example,the records that one bureau is using may go back a longer period of time, or a previous lender may have shared its information with only one of the bureaus and not the other two.
Usually the scores are not too far from each other. Unless there is a big difference between what each bureau says is your credit score, many lenders will just use the one in the middle for the purpose of analyzing your application. So, for this reason alone it is a good idea to correct any errors that exist in each of the three major credit bureaus.
MYTH #2: Paying off your debts is all you need to do to immediately repair your credit score.
FACT: Your credit score is mostly determined by your past performance more than your current amount of debt. It will definitely be very helpful to pay off your credit cards and settle any outstanding loans, but if yours is a history of late or missed payments, it won't remove the damage overnight. It takes time to repair your credit score.
So definitely pay down your debts. But it is equally important to consistently get in the habit of paying your bills on time.
MYTH #3: Closing old accounts will boost my credit score.
FACT: This is a common misconception. It's not closing accounts that affects your credit score, it's opening them. Closing accounts can never help your credit score, and may actually hurt it. Yes, having too many open accounts does hurt your score. But once the accounts have been opened,the damage has already been done. Shutting the account doesn't repair it and it may actually make things worse.
The credit score is affected by the difference between the credit that is available and the credit that is being used. Shutting down accounts reduces the amount of total credit available and when compared with how much credit you can use your actual credit balances are made to seem larger. This hurts your credit score.
The credit score also looks at the length of your credit history. Shutting older accounts removes old history and can make your credit history look younger than it actually is. credit repair This also can hurt your score.
You generally shouldn't close accounts unless a lender specifically asks you to do so as a condition for them giving you a loan. Instead,the best thing you can do is just pay down your existing credit card debt. That's something that definitely would improve your credit score.
MYTH #4: Shopping around for a loan will hurt my credit score.
FACT: When a lender makes an inquiry about your credit, your score could drop up to five points. Some borrowers think that if they shop around by going to a number of different lenders that each time a lender does an inquiry it will generate another reduction in the credit score. This isn't true. For credit score purposes, multiple inquiries for a loan are treated as a single inquiry, as long as they all come within a 45 day period. So it is best to do your rate shopping within this 45 day window.
MYTH #5: Companies can fix my credit score for a fee.
FACT: If the credit bureaus have accurate information, there's nothing that can be done to quickly improve your score if in fact you have a history of not handling your debts well. credit repair The only way to have an effect on your credit score is to show that you can manage your debts in the future.
Also,if there are errors in your file, you can contact the bureau yourself. You don't need to pay someone else to do it. Each of the major credit bureaus has a website which clearly explains what you need to do to correct an error.
So, the best ways to improve your credit score are: pay down the debt,pay your bills on time, correct existing errors on your credit reports in each of the three bureaus and apply for credit infrequently.
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Thursday, July 1, 2010
Credit Repair - What To Do When Your Credit Card Bill is Wrong
If you are struggling to pay your debts every month, the last thing you want to do is pay more than you owe or pay for inferior products. Consumers that find themselves in this boat must follow a formal process to dispute erroneous credit card charges.
There are several reasons you might want to dispute a credit card bill. credit repair If you purchased a defective or substandard item and the seller refuses to correct the situation, someone makes unauthorized purchases in your name, or you simply find mathematical errors on your statement, you should take proper steps to dispute your bill.
Show Good Faith
If you buy an item and it's either defective or not as described, you can withhold payment if the seller will not take actions to repair, replace, or otherwise make you satisfied. If you dispute a charge that wasn't delivered as promised, you must first make a good faith effort to resolve the dispute with the seller. Secondly, you must tell the credit card company in writing your reason for withholding payment.
Requirements
You can refuse to pay only if you used a major credit card (Visa/Mastercard) not one issued by the seller (such as a store card), the purchase was over $50., and the sale took place in your home state or within 100 miles if out-of-state. State law determines whether phone or internet purchases fall into that category.
Document Your Case
If you conclude you are entitled to withhold payment, write a letter to the credit card company telling them about your dispute and the steps you took to seek a resolution. credit repair Then send your documentation to the address specified by the credit card company to handle its disputes.
Resolution
The credit card company must acknowledge receipt of your letter within 30 days, unless the error is already corrected. Within two billing cycles or up to 90 days, the credit card issuer must either correct or state its position on the error. While pending, the disputed amount and related finance charges cannot be deducted from your account. During this time, the disputed amount also cannot be reported as delinquent on your credit report and collections cannot be initiated. However, the disputed amount can remain on your statement and factor into your credit limit. Interest charges can also still accrue on the disputed amount, but must later be dropped if the matter is resolved in your favor.
Still Not Satisfied?
If the card issuer doesn't settle the dispute to your satisfaction, you have ten days from that notification to further respond. You need to send another letter outlining why you still refuse to pay. At this time, the credit card company can report your account as delinquent to the credit bureau, but it must also submit a record of your dispute. credit repair They also must send you record of everyone they reported the delinquency to. When the dispute is resolved, the card issuer must send a revised notice to everyone to whom it reported the delinquency. If the card issuer doesn't comply with any of these procedures, it must credit you the disputed amount, plus interest, up to a total of $50. even if the bill was correct.
The same process applies if you find charges made by someone else on your account or you are charged the wrong amount. You shouldn't have to pay for unfair, inaccurate, or erroneous charges on your credit card bill. But it is up to you to regularly review your statement and credit score so you can promptly report any disputed amounts.
With finances so tight these days, every little bit counts and you deserve to hang on to your hard earned money. Meticulously following these simple steps might just help you keep a little more of it in your pocket.
Web Designer PSD to Wordpress
There are several reasons you might want to dispute a credit card bill. credit repair If you purchased a defective or substandard item and the seller refuses to correct the situation, someone makes unauthorized purchases in your name, or you simply find mathematical errors on your statement, you should take proper steps to dispute your bill.
Show Good Faith
If you buy an item and it's either defective or not as described, you can withhold payment if the seller will not take actions to repair, replace, or otherwise make you satisfied. If you dispute a charge that wasn't delivered as promised, you must first make a good faith effort to resolve the dispute with the seller. Secondly, you must tell the credit card company in writing your reason for withholding payment.
Requirements
You can refuse to pay only if you used a major credit card (Visa/Mastercard) not one issued by the seller (such as a store card), the purchase was over $50., and the sale took place in your home state or within 100 miles if out-of-state. State law determines whether phone or internet purchases fall into that category.
Document Your Case
If you conclude you are entitled to withhold payment, write a letter to the credit card company telling them about your dispute and the steps you took to seek a resolution. credit repair Then send your documentation to the address specified by the credit card company to handle its disputes.
Resolution
The credit card company must acknowledge receipt of your letter within 30 days, unless the error is already corrected. Within two billing cycles or up to 90 days, the credit card issuer must either correct or state its position on the error. While pending, the disputed amount and related finance charges cannot be deducted from your account. During this time, the disputed amount also cannot be reported as delinquent on your credit report and collections cannot be initiated. However, the disputed amount can remain on your statement and factor into your credit limit. Interest charges can also still accrue on the disputed amount, but must later be dropped if the matter is resolved in your favor.
Still Not Satisfied?
If the card issuer doesn't settle the dispute to your satisfaction, you have ten days from that notification to further respond. You need to send another letter outlining why you still refuse to pay. At this time, the credit card company can report your account as delinquent to the credit bureau, but it must also submit a record of your dispute. credit repair They also must send you record of everyone they reported the delinquency to. When the dispute is resolved, the card issuer must send a revised notice to everyone to whom it reported the delinquency. If the card issuer doesn't comply with any of these procedures, it must credit you the disputed amount, plus interest, up to a total of $50. even if the bill was correct.
The same process applies if you find charges made by someone else on your account or you are charged the wrong amount. You shouldn't have to pay for unfair, inaccurate, or erroneous charges on your credit card bill. But it is up to you to regularly review your statement and credit score so you can promptly report any disputed amounts.
With finances so tight these days, every little bit counts and you deserve to hang on to your hard earned money. Meticulously following these simple steps might just help you keep a little more of it in your pocket.
Web Designer PSD to Wordpress
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