AMT in the News
We Contribute To
Search This Site
All About Credit Scores (Part 3 of 3)
In our final installment of All About Credit Scores, I thought I would compile some of the Frequently Asked Questions that I have heard in the recent past (that I could remember at least!).
“Will paying off a collection account remove it from my credit report?”
No. A paid collection account will remain on your credit report for seven years.
If I have a collection, should I pay off the collection agency or the original creditor?
Always pay the collection agency that is collecting for the original creditor. Many times the original creditor will have sold your account to the collection agency.
How can I get accounts removed from my credit report that were awarded to my ex-spouse in the divorce decree?
A divorce decree does not supersede an original contract with a creditor. You must contact each creditor individually and seek the legal binding release of your obligation.
I have no credit and I can’t get a finance company or credit card company to approve me — how can I start to establish credit?
One of the easiest ways to get credit if you have no credit is to apply for a credit card. If you are turned down by a regular credit card, you can apply for a secured credit card.
How can I get inquiries removed from my credit report that I did not authorize?
You will need to contact the bureaus directly to dispute these inquiries.
Why do Experian, Equifax and Trans Union sometimes have different information?
Creditors voluntarily provide information to the credit bureaus and are not required to report to all three. Some companies do not report to the bureaus at all, so it just depends on your creditors.
Do you have more questions about your credit report, credit scoring or anything else credit-related? Let us know!
All About Credit Scores (Part 2 of 3)
In part 1 of our All About Credit Scores series, we covered a few simple ways to tip the scales in your favor when trying to maintain a good/great credit score. Today we are going to cover the “secrets” behind credit score calculations.
Until recently, the secrets of credit score calculation have been very closely guarded — but we can now pretty closely estimate how your score is put together.
Payment History = 35%
Do you pay your credit on time?
Length of positive credit history
Severity and quantity of delinquencies
Amount Owed = 30%
Quantity of credit accounts — too many credit cards with balances can lower a score.
Length of Credit History = 15%
The longer the history, the better.
How long have your credit accounts been established?
How long has it been since you used certain accounts?
New Credit = 10%
Research shows that opening several credit accounts in a short period of time does not represent greater risk — especially for people who do not have a long established credit history.
Types of Credit In Use = 10%
2 installment loans
3 revolving accounts with balances
Balances on revolving debt below 30% of the high credit
No collection accounts
No public records
No foreclosures
No late payments
While the most important thing in credit scores is your overall score — what makes up that score is helpful to know. For example, if you know that too many credit cards with balances can hurt your score — you may want to take steps to consolidate those cards into one account or pay them off if possible.
Many times, your mortgage professional will have access to something called a “what-if” simulator — which will allow them to easily explore how different actions may impact your credit score. The simulator will allow you to experiment with actions — individually or simultaneously — from making payments to closing accounts, transferring balances and more. It is helpful to predict results and to make informed decisions about what actions on your part could easily increase your credit score.
So if you haven’t heard of the “what-if” simulator and are working on refinancing or buying a home, make sure you bring it up with your loan officer — a boost in credit score could save you thousands of dollars in interest over the life of your loan!
All About Credit Scores (Part 1 of 3)
Your credit score is a numerical representation of your statistical likelihood to repay credit that is extended to you. Scores range from 350 to 850. Your score is a “snapshot” of a specific moment and can change with new actions and the passage of time.
Some things that can help you tip the scales in your favor include:
- Paying all of your bills on time or early. Even a 30 day late on a small credit card can have a significant negative impact on your scores.
- Don’t co-sign for someone else’s loan — their late payments are your late payments!
- Don’t close old revolving accounts no longer in use.
- Don’t open new accounts unless absolutely necessary (inquiries may or may not affect your score depending on the rest of your credit history).
- Report fraud immediately. If you find yourself the victim of fraud, immediately contact the credit bureaus, your credit card companies, banks and the FTC.
- Monitor your credit. Order a copy of your credit report once a year.
- If you are planning to refinance or buy a home, don’t make any purchases or run up the balances on your credit cards prior to the transaction. They will be counted in your debt-to-income ratios.
In part 2, we will unveil the mystery of what makes up a credit score and the secret formulas behind credit score calculations. Special thanks to Advantage Credit for help with the content of this series.
Ten Tips To Help Avoid Identity Theft
I was speaking with someone this week who had been the victim of identity theft — and I was again reminded what a personal and financial toll identity theft can have on its victims. Here are a few simple ways that you can help protect yourself from being a victim of identity theft:
Monitor your credit report (at least) annually.
Recently, Rhonda Porter blogged about how you can have your credit monitored for free as a result of litigation — so it is now easier than ever to monitor your credit report on an ongoing basis and not just once-per-year.
Secure your mail.
Does your mailbox have a lock on it? If not, you may want to get a lock or even set things up so that your mail is delivered to the post office directly. Many times unsecure mailboxes are contributing to the problem.
Electronic keypad signatures.
When you sign your name on the electronic pad at the checkout register, add the date to your signature.
Safeguard your social security number.
Don’t carry your ss card with you (what happens when you lose your wallet?) and make sure that you know exactly what is happening with it when you give it out.
Destroy all bank/financial statements and solicitations.
Don’t just throw your old bank statements in the trash — shred them! ATM receipts? Shred them! Same thing goes for all of those pesky credit card offers — shred them!
Always review your bank/credit card statements.
Make sure that all of the charges listed are actually yours and if not, contact your credit card/bank right away.
Remove bar codes from magazines before throwing them away.
These bar codes tell volumes about you — don’t let them fall into the wrong hands. Remove the bar code labels and shred them. The magazine itself? You can just put that in the trash (recycle trash bin is blue in Arizona!) because it doesn’t have any of your personal information other than the bar code label on the front.
Keep your medical insurance card safe.
Medical ID theft is the newest wave of identity theft.
If you pay your bills by check:
Make sure to put your work phone and address on your checks, not your personal home information.
Will following these steps mean that you can rest easy knowing that you are never going to be a victim of identity theft? Of course not. Even with doing all of these things, you still need to be on the lookout at all times and make sure that you protect who you are — or at least who the banks/reporting agencies/whoever else thinks you are.
-
-
Arizona Mortgage Newsletter
