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A February 2013 study from the Federal Trade Commission (FTC) found that:

• five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance.

• one in five consumers had an error on at least one of their three credit reports.

So what exactly is a credit report and how does it differ from my credit score?  A credit report is a person’s documented debtor history. It includes every credit card, student loan, charge card, mortgage or auto loan or lease for which you’ve ever been named as a signer or co-signer. Details include starting amounts owed and current balances; monthly payment history for individual accounts; including any record of delinquency. Credit reports also include information regarding known places of residence and employment; judgments and tax liens assessed by courts; and any public record of bankruptcy.

A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information obtained from credit bureaus.  For purposes of a mortgage application, the three credit scores used by mortgage lenders are the Equifax Beacon; the TransUnion Empirca; and, the Experian FICO.

Under the Fair Credit Reporting Act (FCRA), All consumers are entitled to one free disclosure (i.e. credit report) every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. Consumers who have had their application for credit, insurance or employment denied because of “poor credit” may apply for additional free credit reports.

certain persons may request a free credit report anytime, with no limit. This includes unemployed persons; persons looking for work within the next 60 days; and, individuals receiving government welfare assistance.

For further information, please either visit www.ftc.gov/credit or review A Summary of Your Rights Under the Fair Credit Reporting Act.

How to Fight Credit Report Errors and Inaccuracies

All consumers should review their credit reports on a regular basis to identify any inaccuracies and should report any errors as soon as possible to the credit bureau.  It is very important to clearly indicate the error (i.e. highlight the inaccuracy in yellow); make notes in the margins; and to include any supporting documentation that will substantiate your claim.  Finally, you must submit your request to the credit bureau in writing and  should send your correspondence with delivery confirmation (ideally requiring the name and signature of the person who received your letter).

Abraham Lincoln was quoted as saying: “He who represents himself has a fool for a client”.  Sometimes it’s best to let the experts in a particular field such as credit repair and restoration take on the fight with the credit bureaus for you.  Companies such as Better Qualified have been representing consumers for years with amazing results. 

Better Qualified has developed a program that will help you restore your credit and save money. Unlike other competitors, the Company takes a personal approach to the credit restoration process and work with its clients every step of the way. This consultative method ensures that clients receive the best results. The Company’s clients complete the program knowing how to maintain good credit long after their term with Better Qualified ends.

Better Qualified CEO, Paul Oster was recently featured on ‘Varney and Company’ on Fox Business discussing the importance on good credit and the proposed changes in the credit reporting industry. Fox Business is seen in 50-million homes nationwide.

Better Qualified has been creating quite a stir recently in the credit repair marketplace and has several other videos featured on the website.

Legal Bistro is an online community where consumers with legal needs are able to post their cases anonymously. The service is 100% free for consumers. Lawyers use the site to find new clients. Our motto is When Lawyers Compete, You Win!

 

A new credit scoring model will potentially boost scores for many credit applicants and help establish credit for millions of people who previously had little or no credit history.

The new scoring model will be used in the latest version of the VantageScore, the credit score created by the three major credit bureaus — Experian (EXPGF), Equifax (EFX) and TransUnion.

Currently, debts that go into collections, even if they are paid off, are factored into all credit scores for up to seven years, said John Ulzheimer, president of consumer education for SmartCredit.com. But VantageScore 3.0 will no longer factor these accounts into a consumer’s score if the debt was paid in full or settled, just as long as the balance is zero.

Also, natural disaster victims will now be able to benefit from good credit behaviors — like making payments on time, despite the hardship — but will continue to be protected against negative accounts. Previously, both negative and positive accounts were ignored in the aftermath of natural disasters, making it difficult for victims to improve their credit scores.

With big natural disasters like Hurricane Sandy hitting thousands of consumers in the Northeast last fall and millions of others with paid collection accounts on their credit reports, many people are likely to see their scores improve under this new model, said Ulzheimer.

“Consumers who have a zero-dollar balance on collections and no other negative information on their credit reports should see their VantageScore’s increase significantly,” he said.

But the boost only matters if a lender uses the new VantageScore. While FICO is still the most widely used scoring model, the VantageScore is gaining ground. It’s currently used by seven of the top 10 financial institutions, six of the top 10 credit card issuers and four of the leading auto lenders and mortgage lenders, according to its website.

VantageScore’s new model will also weigh rent and utility payment records, and public records like bankruptcies for people with very limited credit histories. This will allow it to score as many as 30 million people who previously couldn’t get a credit score, and potentially help them qualify for more competitive credit rates, said Ulzheimer.

Other score developers, like FICO, may follow suit.

FICO announced Monday that it will begin looking into ways of factoring in alternative records to calculate scores for those without — or with limited — credit files.

Meanwhile, VantageScore is changing its scoring range to align with FICO’s 300 to 850 range. Earlier versions range from 501 to 990, often causing confusion for consumers and lenders since most are more familiar with FICO’s range.

“This is like changing your speedometer from kilometers per hour to miles per hour, it just makes more sense to American consumers and American lenders,” said Ulzheimer.

Linda Boscia, Business Development Specialist from Better Qualified accepts thanks and a coffee mug from Mika Hon, Club President-Elect, for her presentation on managing and repairing your credit.

DID YOU KNOW… Your credit score can cost or save you thousands of dollars?

As most of you know, you carry three FICO scores, one from each of the three Credit Bureaus: Experian, TransUnion, and Equifax. Each of these scores is based on information the bureau keeps on file about you and, as this information changes so does your score. These scores affect the terms and conditions (interest rate, amount, etc.) lenders will offer you at any given time.  What you might not know is that the credit bureaus are terrible at maintaining, updating, and ensuring the accuracy of your information.  Between 25%-75% of all credit reports contain false and inaccurate information.*

This past Sunday February 10, 2013 60 Minutes did a segment on the credit reporting industry and, what they found might be quite a surprise to you.  There are many experts out there that believe the credit bureaus are violating the Fair and Accurate Credit Reporting Act every day.  These violations can be costing you thousands of dollars every year.  We live in a credit driven world and, your credit scores have become the most important numbers in your life.

How do you know if your credit scores are costing you money every month? Well, you can go to sites such as www.annualcreditreport.com and get a free report but, keep in mind these reports DO NOT give you your FICO score.  The FICO scores are the standard score in the US, used in more than 90% of lending decisions to determine your credit risk. Called “FICO scores” because most credit bureau scores used in the US are produced from software developed by the Fair Isaac Corporation.  Also, have you seen the commercials for FREE credit reports on TV?  I’m sure you realize that nothing is actually FREE but, you probably don’t know that these companies are owned by Experian, TransUnion, or Equifax.  Experian owns www.freecreditreport.com and TransUnion owns www.truecredit.com. These spin off companies are aimed at “helping” you check your credit (once again, they do not supply you with your actual FICO score, and most are lacking ALL of your credit information). What these “money making arms” of the credit agencies are REALLY doing is sucking you into one of their services so, they can sell you one of THEIR premium products!

What can you do about it?  When was the last time you checked your reports?  You have to know what’s on your reports and you have to know what your credit scores are. There are 200 million Americans who have a credit report in the US but, only 44 million people actually checked their reports last year   You can’t assume that everything is o.k.  What to do if you want to dispute or ensure the accuracy of any information on your credit report.  Well, here is the fun part, you have to go to EACH of these agencies and go through the dispute process.  Best said by Steven Kroft of 60 minutes, “The problem is that it’s not really within the power of the average person using this system to fix the mistakes,” says Kroft. “You feel like you’re up against this machine, and there’s no way to break through.” Besides having financial consequences, the whole dispute process takes an emotional toll on people. It’s just really hard sometimes, to get these things fixed, you feel like you’re up against this machine and there’s no way to break through. After awhile, I think some people start to question their own sanity!”

Has this happened to you? If it hasn’t I guarantee you know someone it has happened to.  The smallest mistakes can cost you thousands over the length of your loan, and these mistakes can keep you from getting that home, apartment, car, and these days even that job you have always wanted! These two links are from a recent 60 Minutes, watch and be ready to me amazed!

We can help.  Better Qualified is an accredited business with the NJ BBB with an “A” rating.  Our CEO Mr. Paul Oster is a certified FICO Pro who has been featured on Fox Business News, Foxnews.com, CBS radio, and the Wall Street Journal Report.

http://www.cbsnews.com/video/watch/?id=50140711n

http://www.cbsnews.com/video/watch/?id=50140748n

Here’s a list of things that can get pricey or are unattainable if you have bad credit.

1. Car insurance. Insurance carriers in 47 states check your credit score when arriving at a rate. They’re with the banks in assuming that your credit score will indicate how risky of an investment you are. This means that you may have higher than average rates for years or that you may not be approved for insurance coverage at all by a certain carrier, depending on how low your credit score is.

2. Mortgage loans. If you’re trying to buy a home you will most likely apply for a loan. You can be certain that financial institutions look at your credit score during the process. Bad credit means possibly being denied a loan or can result in being charged higher interest rates. This is because the amount of interest you pay is based on your level of risk and the current market rate. The worse your credit is, the higher your level of risk is and the higher your interest rates will be. This difference can amount to tens of thousands of dollars over the course of a mortgage’s lifetime.

[Related Article: 4 Ways Time Can Help Your Credit Score]

3. Credit cards. If you are approved for a credit card, you can bet on having higher than average interest rates. Credit card interest rates range anywhere from 7 percent to 36 percent. With a good credit score you can expect to land somewhere between 10 percent and 19 percent. With a bad credit score, you can expect to be somewhere around 22 percent and up.

4. Car loans. You’ll likely need a loan when purchasing a vehicle as well. And banks will check your credit score before approving your financing; interest rates on your loan will sway with the results; results could vary by up to 2 percentage points.

5. Cell phone plans. Did you know that some cell phone carriers, like car insurance carriers, check your credit score? They do — another reason why it’s important to pay your bills.

6. Job hunting. Under the Fair Credit Reporting Act it is legal for a future employer to review your credit report with your written approval (they don’t check your score, however). Hiring managers can use this information when making their decision. Some states do have laws that limit the use of credit information in the hiring process.

To make sure that your credit does not interfere with your employment, interest rates, your ability to buy a cell phone or a vehicle, or your car insurance rates — make sure to take control of the situation by obtaining your free credit report from AnnualCreditReport.com, and checking your credit score, which you can do for free once a month using Credit.com’s Credit Report Card.

Here’s a little secret: the reason department stores are giving you that huge discount is because, many of you will pay more in interest than the initial discount. These stores are also counting on the fact that you will now spend more money than originally planned.  Question, “Did you read the fine print as you signed for that account?” I’ll bet the answer is NO! Don’t feel bad; most of us don’t read the fine print.  I bet you missed the part where they explain that shiny new card came with an APR of around 25% and, usually these cards carry a lower credit limit.

Modest purchases on cards with lower credit limits will result in highly leveraged cards and lower credit scores.  The credit bureaus only like you to carry a balance of 30% or less of your over-all credit limits.  Example:  If your total credit limits equal $1000, you should never carry balances above $300.  This is called your Utilization Ratio and, it will account for 30% of your overall credit score.  Keep cards open and active but, always strive to keep your balances below 10% of the credit limits.  Keeping a small balance is actually better for your credit scores than, paying the balances off in full.

Confused yet? It’s crazy, they want us to use credit, but they give us ABSOLUTELY NO IDEA ON HOW IT WORKS! That is what I am here for!  I want to help you by giving you a great avenue to get back on your credit worthy feet.  If you find your credit rating to be low, you can always try improving it by yourself or, by contacting a credit repair agency.  Buyers beware and be aware of companies claiming to help people repair their credit.  Always ensure that the company you choose is an accredit company with the BBB and, that they have a good rating.  There are numerous scams and unscrupulous companies out there.  What you need is a company that will actually help you repair your credit.  In my opinion, one of the best companies is BETTER QUALIFIED.  Better Qualified will repair, help maintain, and protect your credit ratings.  BQ uses a time tested and proven process.  Better Qualified is a NJ BBB accredited company with an “A” rating.  Every program is customized and tailored for the individual client.

Mortgage lending keeps getting tighter.

Case in point, the average FICO score on closed, first-lien loans hit 750 in October, which is up from 741 last August, Ellie Mae said.

Ellie Mae analyzes data on loan applications that pass through its Encompass360 mortgage software. While that data only accounts for 20% of all originations, it gives a snapshot of what types of loans are being accepted and closed, as well as denied.

Furthermore, the credit score on denied applications also rose from a year ago, suggesting credit standards actually tightened during the same period.

The average FICO on denied applications hit 706 in October of 2012, which is up from 700 in October of 2011 and 697 in September of 2011.

The loan-to-value ratio on average closed loans hovered at 78 last month, up from 76 in October of last year.

On denied applications, the average LTV hit 87 in October, up from 82 in August of 2011.

The closing rate, on the other hand, seemed to improve over the same period, hitting 54.5% in October, up from 47.1% in November of 2011.

The idea that lending is now overly restrictive and only available to the highest quality borrowers is certainly not new to the marketplace. In recent public statements, Federal Reserve Board Chairman Ben Bernanke indicated that an overcorrection is now taking place.

kpanchuk@housingwire.com

By Jeanine Skowronski, CardRatings.com

Unless you’re prone to overspending, in which case you should limit the amount of plastic you pack in your wallet, there are advantages to having more than one credit card at your disposal. To take advantage of the many features and benefits of credit cards, it can be worthwhile to carry four distinct types of cards.

For one thing, when used responsibly, multiple lines of credit can help boost your credit scores.

“If you only have one card you’re managing responsibly, that’s not nearly as positive as managing several cards responsibly,” says Maxine Sweet, the vice president of public education for Experian.

Moreover, different categories of credit cards are tailored to meet specific needs. Here are the four types of cards you should slowly add to your payment arsenal in order to earn more rewards, spend less on interest and build solid credit scores.

1. A rewards card (or two) in an area where you already spend money

Debit card rewards are largely defunct, thanks to legislation limiting the amount of money issuers can charge merchants who accept the payment method. Credit card rewards programs, on the other hand, are thriving as companies try to woo back credit-shy consumers.

While the earning potential means it quite literally pays to have a great rewards card in your wallet, you shouldn’t grab every swanky rewards card your credit scores qualify you for. Instead, choose one solid card featuring high rewards on a purchase category you spend a lot of money on anyway. Remember, the idea is to earn rewards on spending, so you shouldn’t spend just to earn rewards.

“The card has to fit your lifestyle,” says Bruce McClary, the director of media relations for ClearPoint Credit Counseling Solutions. Foodies might opt for a card that provides the most cash back at restaurants, while commuters may want to go with a great gas rebate card.

If you travel a lot, it may be a good idea to add a travel rewards card to your collection. These cards can be used to maximize points or miles on airfare and hotel accommodations, while a general rewards card can be used for everyday purchases.

2. A credit card from the same bank that issues your debit card

Rewards cards are great for getting something back on your purchases, but they’re only worth it if you plan to pay off the monthly balances in full.

“There’s going to be a higher cost associated with these cards,” McClary says. This generally includes higher annual percentage rates (APRs) and lofty annual fees.

To ensure you don’t wind up with a big balance at the end of the month, consider paying off purchases as you make them or weekly using a linked debit card account.

“That’s how you’re able to leverage rewards on everyday spending,” says Laura Creamer, a financial education specialist with nonprofit credit counseling organization CredAbility.

You can usually use any debit card to pay off a credit card. However, having both cards from the same issuer can expedite payments and make it easier to track your spending, because you can log into one website to view and adjust both accounts.

3. A low-interest credit card

Despite your best intentions, there may come a time when you wind up with a balance you can’t pay off in full. Your car may need unexpected repairs or your washing machine may stop working. In these instances, it’s great to have a credit card with a low, fixed APR on hand.

“I have a low-interest card that I use on large purchases,” Creamer says. This option will cost you less in interest as you pay down the balance. Low-interest rate cards typically carry an APR from 8% to 10%.

4. Your oldest credit card

Even if it duplicates one or more of the above categories, you should hold on to the student credit card you impulsively opened during Welcome Week at college. Closing cards with long histories can damage your credit scores, as can reducing your available credit.

According to Sweet, closing an account can raise your credit utilization ratio — the amount of credit you use as a percentage of your overall available credit — to levels that damage your scores. A credit utilization ratio greater than 20% to 30% can push down your FICO score, limiting your ability to qualify for the best credit cards and loan terms.

Closing the account can also ultimately affect the age of your credit report, as closed accounts are completely removed from a person’s credit file after 10 years. So hold on to that old card, and remember to break it out every now and then for a small purchase to keep the account active.

“After the economy crashed, (lenders) became much more careful about looking at their portfolios and closing accounts that were costing them money,” Sweet says. Using that old card every so often can avoid maintenance fees, or worse, having the credit line dry up.