How High Should My Credit Score Be?

Here are a couple of general rules for your consideration. Your minimum credit score needs to be at least 650. If your credit score is below 650 then there are ways to fix it. Here’s how it works…

A. You can challenge anything in your credit report. If the merchant can’t provide proof of their claim, then the item must be removed from your credit report. For example, if Department Store X says that you didn’t pay-off your $72 balance on your X card in 1997, and you say that you did, then Department Store X has 30 days to provide the documentation proving that the bill is unpaid. If they can’t prove their claim, then the outstanding debt is removed and you’re moving toward a higher credit score. If Department Store X is right and you do owe them $72, then you now know the problem and you have the opportunity to pay the $72… again you’re moving toward a higher credit score.

B. Get and review copies of your three major credit reports annually-more often if you are nearing pivotal junctures where your credit score is especially important.

C. Between the reports from Federal Trade Commission (“FTC”) and CBS News, it is estimated that somewhere between five and eighty percent of credit reports contain errors. Some errors are actually good for you and some are not so good. In my mid-twenties I checked my credit reports, and I was very happy to learn that not only had I purchased a new car, but I paid it off with a perfect history of payments. It was great for my young credit history-never did find the car.

D. Your credit score contains five components. Here are the five components and their degree of importance by percentage:

  1. Payment History (35%)-Here, the credit bureaus (CBs) are looking at mortgages, credit cards, installment loans, retail accounts, adverse public records like bankruptcy, lawsuits, judgments, liens, garnishments, past due payments… etc. If you have past due payments, the CBs will look at (a) amount past due, (b) amount of time past due, (c) number of accounts pat due.
  2. Amounts Owed (30%)-CBs are reviewing the type of accounts you use and the amount of credit you are utilizing relative to the credit available to you. For example and all else being equal, a person carrying balances equaling 95% of credit available on ten personal credit cards for a total of $50,000 outstanding debt will have a lower credit score than a person carrying 50% balances on three credit cards for a total of $10,000 outstanding debt.
  3. Length of Credit History (15%)-CBs are examining specific account types, how long the accounts have been open and the level and timing of activity within the account. Amazingly, for credit scoring purposes it appears that it is actually better to have credit accounts with outstanding balances (within reason) than to have no accounts open or no credit history. Being debt free can actually lower your credit score. I have a friend who is a very astute, very successful former international banker. He has done business in more than 20 countries and has lived in nine countries. This is a person with exceptional success, wealth, and highly responsible money management practices. He was turned down when he applied for a credit card at the very bank where he worked. Reason: No U.S. credit history.
  4. New Credit History (10%) – In short, the CBs are looking to see if you have been opening or attempting to open lots of new accounts recently. As you might imagine, someone who is thinking about lending you money gets very nervous when they discover you are borrowing money from everyone.
  5. Type of Credit Used (10%)-CBs look at the balance of debt as distributed throughout the various types of debt from credit cards to mortgages and secured to unsecured.

Your credit score is based on all of the items above. It is not a pass-fail circumstance for each of the categories. Your score is produced in the aggregate and that scoring constantly changes. The scoring for one person and their financial profile will be different from another person. The information presented here is for the fat part of the Bell Curve, but it provides solid guidelines.

E. If you are focused on an acquisition (or other type of loan) and your score is below the 650 mark, note that a business partner’s score that is 700 or higher can help to off-set your score. When lenders are considering borrower qualifications, they look at the entire “borrower” whether it is one person or a legion of people.

Test Your Credit Score Knowledge

Test Your Credit Score Knowledge

Credit profile, score, assessment: if you’re thinking of taking out a home loan, these are important terms you’ll need to learn more about.

What is a credit score?

All credit active people have a profile. This is a summary of your history with every credit provider you’ve ever dealt with, and serves as a record of how well you’ve managed your accounts like loan repayments, overdue debts, how often you’ve asked for credit and the kinds of loans or credit you’ve applied for, and the frequency of your applications.

How it works?

Credit reporting providers summarise your profile into something called a credit score. The score is between 0 and 1200, where the higher the number, the more likely you are to be able to repay a loan. Lenders look at your credit profile and score to find out about your credit history and behavior, and assess if you are able to take on a new loan. This information reassures lenders that you’re good at paying money back to those you’ve borrowed from – i.e. you are a ‘low risk’ client.

A good score not only makes you more likely to get approval on your home loan application – but it also means you’ll qualify for a better interest rate. Of course, the other side of the coin is that if you have a poor score, you will be less likely to qualify for any new loans. This protects the lender and those with low scores from taking out additional loans and overextending themselves and getting into more debt. In short, you’ll need to have a good credit score rating for your home loan application to be approved.

It’s therefore a good idea to first find out what your credit score is before applying for a loan, and to give yourself time to improve it before approaching a lender.

How to check your score?

A great place to start your research is ASICs MoneySmart site. You can get a free credit score assessment from a number of online providers, which are listed on the MoneySmart site.

How to improve your score?

Improving your credit score starts with looking at your current financial situation and ways to improve it. Getting into a good credit position before you apply for a loan can help increase the likelihood of you getting approved.

You can improve your score by:

  • lowering your credit card limits
  • consolidating multiple personal loans and/or credit cards
  • limiting your credit enquiries
  • paying your rent and bills on time
  • paying your mortgage and other loans on time
  • paying your credit card off in full each month

To avoid any surprises, be prepared and know your credit score.

Good Credit Repair Companies – What Exactly Do They Offer? How Can You Avoid Bad Offers?

Good Credit Repair Companies – What Exactly Do They Offer? How Can You Avoid Bad Offers?

Having a good credit score of 700+ is ideal for everyone. It’s difficult to take out loans, open up a new line of credit, buy a house or vehicle, and many other things if you have either poor credit or no credit at all. We all go through a difficult time in our lives which often results in messing our credit up. On top of everything, annoying debt collectors keep calling and sending letters – sometimes threatening to sue. In the worst cases, they DO sue. One of the best ways to deal with this kind of mess is to look for good credit repair companies.

If you haven’t done so already, it’s time to obtain copies of your credit reports and carefully look over each and every item. Is there something on there that shouldn’t be? Is there any evidence that you are a victim of any type of fraud? Or, if everything is accurate, what can you do to try to improve the score in the quickest amount of time possible?

When choosing a credit repair company, make sure they are qualified to help you remove any errors. While you can do this on your own, it’s a lot easier to do so with the help of professionals. They will, of course, charge a fee, but it will still save you a lot of time, energy, and frustration in the long run. Plus, you’ll be able to get your credit repaired quicker.

No company is going to make any promises regarding your score, like “200 point jump within 6-months! Guaranteed!” What the good credit repair companies will do is analyze your report and let you know upfront what methods they are going to use to help you, and if your credit situation has any limitations (and there will likely be some).

What Good Credit Repair Companies Do

It is important to understand exactly what a credit repair company is. It is NOT a “credit counseling” agency and almost always involves a fee. Since there are fees, there are, unfortunately, a lot of scams in the industry. It’s in your best interest to conduct research and read reviews on any credit repair organization before agreeing to anything.

The good credit repair companies usually offer different levels of services depending on your personal situation and how much assistance you need. By law, a legitimate company won’t demand payment right away, but will only charge you AFTER services are delivered. You should also be provided with score tracking tools, analysis, tools to help manage and protect your identity, and legal interventions for abusive debt collectors.

Of all the good credit repair companies, Lexington Law is a good place to start. Regardless of which state you live in, there are services available for you. You can sign up online or call a 1-800 number to get a FREE consultation. If you decide to stick with this company, you might come across Lexington Law discounts. Always keep an eye out on ways to save as much money as you can.

Best Credit Repair Services – How Can They Help You Fix Your Credit Reports?

Best Credit Repair Services – How Can They Help You Fix Your Credit Reports?

As long as you are careful with your choice, it’s in your best interest to choose a reliable credit repair service. A good company can help you build your credit back up and increase your score though a variety of ways, such as negotiating with lenders to change or remove negative reporting, take advantage of loopholes in reporting regulations, help you manage your accounts, and so forth. If you are a victim of identity theft or fraud, you’ll definitely want the best credit repair company possible to help you fix all of the damage caused to your report.

There could be a number of errors on your report that you could potentially overlook. Even a minor error can have a negative impact, such as an incorrectly entered date or a misspelling. It’s good to carefully look over your own report first and then work with a credit repair company that will help you review it and offer a solution.

By law, no reputable credit repair firm will accept payment from you until after their services are rendered. Also, beware of any firm that makes specific guarantees, such as helping you raise your score by so many points in a short period of time. This type of “guarantee” is purely a scam.

The Work Done By The Best Credit Repair Services

Since there are three primary credit bureaus: Experian, Equifax, and TransUnion, you need to obtain a copy of your report from all three, since different lenders report to different bureaus. There is also the matter of the recent Equifax hack. If you haven’t yet done so, check and see any of your personal information was compromised. If it was, take an extra look at the Equifax report to see if there is anything on there that shouldn’t be, as it could signal identity fraud.

The best credit repair firm will be knowledgeable about the law, and will use any means legally necessary to help you repair or rebuild your credit. You’ll want experts who have the law on their side to help you get things straight with your reports. Even if you don’t actually see anything wrong on your reports, you never know if you might be overlooking something. This is why it’s good to have expert help.

Even if 100% of the information on your reports – including the negative items – are accurate, it’s still helpful to have professionals to help you get back on the right track again. The best credit repair companies, such as Lexington Law, are definitely worth contacting. They will even give you a free consultation.

Best Credit Repair Programs Guide: Learn to Tell the Difference Between Good and Bad Companies

Best Credit Repair Programs Guide: Learn to Tell the Difference Between Good and Bad Companies

If you’re tired of getting turned down for credit cards and/or loans, it’s probably time to work on repairing your credit report. and you Many people turn to professional services since it can be a difficult process to review the reports, have negative items removed, and to work on repairs. However, not all of these services are worth the time and investment. Some are outright scams. What do the best credit repair programs offer?

Some of the good things to look for include a free consultation, adherence to local laws, longevity, and an association with at least one attorney. The ideal credit repair organization will NOT charge you outright. They will offer you a free consultation and review your report in order to let you know what can and cannot be done. Ask them if they have experience with the type of situation you need resolved, such as huge credit card debt or having an IRS lien removed.

Speaking of attorneys, it’s probably for the best that you stick with a program that has attorneys working for it. Law firms are the best credit repair programs since they already know all of the laws regarding the credit agencies, banks, and lenders. Having them on your side is especially helpful if there are any suspicious items on your credit report and you have concerns about attempted fraud.

What are some of the “red flags” you absolutely must look for? How do you know when to turn away from a “credit repair program”?

Features Best Credit Repair Programs Do Not Have

What to AVOID:

• Any company that tries to demand upfront payment.

• A promise of a “fast / easy fix”. There are no “fast, easy fixes” when it comes to credit repair.

• Any sort of guarantee or promise that a company will “raise your score”

• Companies that have unresolved complaints against them.

• Any suggestion that you “lie” or create a “parallel identity”.

• Make any suggestion or do anything whatsoever that makes you feel uncomfortable.

The fact is that the best credit repair programs never make any promises, aside from the guarantee that they will take a look at your credit reports and give you an analysis of whether there really is any hope for you, and that they will help you in any way they can as long as the methods adhere to both local and federal laws.

Before signing any contract, read all of the disclosures. Do NOT set up an auto-detect payment plan. Familiarize yourself with the “Credit Repair Organizations Act” so that you’ll know what exactly a company is forbidden to do. If the program is legitimate, you will only have to begin payments upon receiving proof that they are doing everything they possibly can (legally) to help you.

Now that you know what the best credit repair programs offer, you can get started with your search. Many people recommend Lexington Law, as the company offers a free personalized consultation and access to your TransUnion report summary. There are also a lot of positive Lexington Law reviews online.