If You Care About FICO Scores, Don't do Loan Modification

With all the talk about the "Making Home Affordable" program, and with all the layoffs and pay cuts that Americans are facing today, it's tempting to ask for a loan modification even if you are able, somehow, to meet your mortgage payment.

Before you decide to make that move, decide whether you're going to need high credit scores in the near future.

Under reporting guidelines set forth by the credit bureaus and the Consumer Data Industry Association, your loan modification will be reported as a "Partial Payment Plan." Under the FICO scoring method, that designation will lower your credit scores, even if you have never missed a payment.

Consumer advocates argue that this designation is an unfair penalty imposed on consumers. The lender has not reduced the principal balance, nor has it reduced the interest rate permanently. Loan modification is merely a temporary interest rate reduction - no different from a promotional or temporary rate offered by a credit card issuer.

For now, however, the reporting designation will stand.

Because loan modification is a relatively new solution to excess debt, FICO doesn't have sufficient information to determine whether it should or should not reduce scores. Right now they simply don't know if a person who seeks loan modification is a higher credit risk than anyone else.

Those in favor of the designation insist that loan modification is nothing more than a band aid. They say consumers are merely postponing the inevitable and that those loans will be in default within 6 months.

Either side could be correct, but only time and information gathering will reveal the truth.

Thus, if you feel that you'll need high scores within the next couple of years, it would be best to struggle along with your current payment. It is difficult to see those around you getting a financial break while you keep on paying, but remember that they are simply paying with a different currency - their FICO scores.

Another option for homeowners who find themselves upside down in a mortgage but who want to keep their homes is to seek a short refinance. A short refinance is a refinance with the same lender, but with a portion of the principal balance forgiven.

This option will, of course, damage your credit scores even more
because it will be reported as a settlement or a charge off. But if you love your home and want to keep it, the trade off for lowered credit scores could be worth it.

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Consumer-friendly Credit Card Reforms

Credit card companies have come under fire for unfair practices that almost force unwary consumers into default or bankruptcy.

The Feds have taken notice, and new rules are in the offing. The bad news is that the new rules are slated to take effect in July 2010. The good news is that in response to consumer outcry, that date may well be moved up.

What's going to change?

Credit card companies will no longer be able to raise interest rates on balances you already owe, unless your payment is 30 days late. And, they'll be required to give you notice that they're going to raise those rates instead of handing it to you as a surprise on your monthly statement.

They'll also be required to mail those statements in plenty of time for you to receive them and mail back your payment before the due date.

After the rules take effect, when you send a payment that's more than the minimum, your credit card issuer will be required to apply that excess to the balance carrying the highest rate of interest. At present, they apply it to the lowest.

The current practice of "double-billing," which goes virtually unnoticed by most consumers because it isn't calculated out on the statement, will come to an end. This is the tactic in which the card issuer calculates the interest based on the average daily balance for both the current and the previous billing cycle. Thus, you might have made a $1,000 payment last month, but that $1,000 of debt will still be factored in to the interest on your current statement.

We'll be watching for notice that the new rules have gone into effect. In the meantime, consumers need to keep a close watch on their credit card statements and any "junk mail" coming from their card issuers.

These mailings could give notice of changes in your terms that will have a profound effect on your credit score, as well as your access to credit.

Some card issuers, in an effort to lend less, are cutting card limits down to the amount currently owed. Consumers who have an automatic billing to their accounts are suddenly seeing bills that reflect an over-limit fee when they thought they had a safe cushion.

Do set up internet access to your accounts - and do check your credit limit before setting out to make a major purchase with your card.



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Use Cash-Back Credit Cards Wisely to Protect Credit Scores

Unwise use of cash-back credit cards can destroy your credit scores, so be careful.

The temptation is there - when you get a new card that offers to give you twice the reward if you hurry up and use that card in the first couple of months, you might want to get out there and spend money. After all, there are things you need for your home that you'll probably buy over the next few months, so why not do it now - while you can get 4% cash-back?

The obvious reason is that no matter when you use the card, you'll eventually have to pay for your purchases, and if you can't write a check to cover them when the statement arrives, you'll have to pay interest. That alone could offset any rewards you might receive.

If your new cash-back card is a "general purpose" card that rewards you for every purchase, you might also be tempted to charge all of your monthly expenses on the card, even if you intend to pay it off at the end of the month.

That could be a good plan - but only if the credit line on that new card is large enough to let you charge your expenses without getting anywhere close to the credit limit on the card.

Remember, even if you have six cards with zero balances, charging to the maximum on any one card will drastically harm your credit scores. Even when you pay that balance each month, your credit report shows the high balance on your statement, and it can bring high credit scores down to mediocre scores.

If you have no plans to purchase a car or a house in the next couple of years, you might not care. But if you do anticipate a major credit purchase, you'll save more money by maintaining a high credit score than you could ever get back in a credit card reward.

Just ¼% more in interest on a $250,000 home would add about $52 per month to your house payment. And not just for a month - for the life of the loan.

Something else to remember about cash-back and rewards credit cards - you need to redeem them just as often as you're allowed. The card issuer could change the terms under which they pay their rewards, and if you fail to use your card for an extended period of time, you might see them disappear.

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Hidden Credit Scores that Affect Your Life

Before you ever receive that solicitation letter from a credit card company urging you to request their card, they've been checking you out.

Naturally, they check your standard credit scores. They do want new customers who are most likely to pay their bills each month. But they don't stop there. Sometimes even people who are currently paying their bills turn to bankruptcy as a way to stop.

Thus, they'll check your bankruptcy scores. Equifax offers a score called the bankruptcy navigator index, or BNI. This score, and others like it, predict the likelihood that you'll file bankruptcy in the future.

But knowing you're a safe risk isn't enough information to put you on the mailing list. They want to know if they're likely to get a good return on investment by mailing to you.

More scores help them make the decision to add you to the mailing list, or cross you off their list of potential customers.

Sending direct mail isn't cheap, so those lenders want to know the likelihood that you'll make it worthwhile for them. They want to see a high probability that you'll say yes to the offer. The credit score they use to decide if you'll go on the mailing list is called a "response model."

But that's not enough to know, either. You could have solid gold credit, and you might enjoy owning a whole pocketful of credit cards. But if issuing you a card won't result in revenue for the credit card issuer, they aren't really interested in doing business with you.

You could be one of those customers labeled a "deadbeat." No, not because you fail to pay, but because you always pay. Customers who pay every bill in full without ever incurring interest charges, late payment charges, or over-limit charges just aren't very profitable for the lender. All any of them will get from your credit card use is the fee the retailer pays for the privilege of taking cards. And - they'll still have to spend money mailing you a monthly statement. They'll use a revenue score for this one.

Finally, after you've mailed in the application, they'll apply another score. This is a back-end credit report and it determines the credit limit and interest rate they'll offer when they mail back your card.

This final score, by the way, is the reason why you might respond to an offer for a $50,000 credit line at 4.9%, but when the card arrives it has a $5,000 credit limit at 14.9%.

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Money and Marriage: How You Use Credit Cards

Disagreements over credit card use has caused more than one marital disagreement - and money issues in general have caused many more than one divorce. The best course of action is to come to agreement before the fight starts.

The first thing couples should agree upon is how much debt they can handle. One spouse may be comfortable owing many thousands, while the other panics at the thought of a $200 credit card balance.

Talk about it. Look at your combined income and your other debt - such as car or house payments, and then decide if you want to have yet another monthly debt. Consider your monthly expenses for food, utilities, gasoline, etc. and see how much "extra" you have left over to pay on a credit card bill. Of that extra, how much do you want to spend on extras such as entertainment or an evening on the town?

Remember, if you use your credit card for a large purchase and have a debt to pay, making only the minimum payment will keep you paying for many years. So talk about how many months (years?) you want to spend paying for that new stereo system before you decide to put it on your credit card.

If you are in a position to deduct expenses such as gasoline and restaurant meals, it could be a good bookkeeping tool to use one credit card exclusively for those purchases and pay the statement in full each month. But then you need to resist the temptation to let those charges build up when you'd rather use the money for a mini-vacation or a new wardrobe.

If you are good money managers, you can use your rewards credit cards for all monthly expenses - groceries, gasoline, clothing, restaurant meals, etc. and get the benefit of rewards points. But the benefit of those points will disappear if you fail to pay the statement(s) in full each month.

Those rewards points can become another source of disagreement. If one of you looks forward to cashing them in on a new toy and the other assumes that you'll use them to pay down debt, you have a problem. Before you have points to cash, discuss what you're going to do with them.

One other thing to remember - ego should not play a part in deciding who pays the bills. The person who is most organized and most apt to get payments sent on time should be in charge. You should both go over the bills and discuss your spending, but when no one person is in charge of payment, the result could be late fees - and a drop in your credit scores.

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The Job Search is Much Tougher for Consumers with Poor Credit Scores

Being jobless for many months can destroy your credit scores. Even if you manage to juggle accounts and keep paying the bills on time, using the credit cards to make up the shortfall between unemployment benefits and monthly expenses is damaging.

Worse, as too many consumers have learned, when you start using your credit cards, card issuers start lowering credit lines and raising interest rates. That's a practice that has caused many of the jobless to simply stop paying the credit card bills. Thus, their credit scores have fallen to the basement.

Most are anxious to find employment and get back on track with bill payment, but that fallen credit score gets in the way.

As of a 2004 survey by the Society for Human Resource Management, 40% of employers were checking credit before hiring. Now, with applicants flooding the job market, that number is likely higher. Many are reviewing credit histories prior to a first interview with a job candidate. Others are checking after hiring, and then terminating employees based on their credit scores.

Employers cite it as a good business practice - one that will prevent them from hiring people who are irresponsible or who make bad decisions. Some also state that the practice could cut down on employee theft. And of course, with so many applicants to choose from, using credit scores is an easy way to thin down the numbers.

Advocates for the jobless contend that checking credit scores is a form of "safe" discrimination - and that a good credit score is often completely irrelevant. Missed payments or a medical debt have no bearing on a person's skills and ability as, for instance, a plumber or an auto mechanic.

States are slowly recognizing the problem and a few are taking steps to prevent this practice. In Washington, for instance, a job candidate's credit history must be relevant to the job he or she is seeking. Lawmakers in Hawaii have approved a similar measure, but take it a step farther by allowing employers to review credit histories only after making a job offer.

Lawmakers in Ohio and Michigan are considering measures that would prohibit employers from using credit history in hiring decisions.

Federal law requires employers to get permission from potential employees before running a credit check. Further, if they decide to deny employment based on the credit report, they're required to notify the applicant. This rule is intended to give the potential employee an opportunity to explain the reason or to spot errors on the report.

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How Credit Card Balances Affect Credit Scores

Getting confused about how to use your credit cards for the best effect on your credit scores?

You know you need credit card accounts - you've been cautioned not to close any accounts, especially your oldest accounts.

You've heard that you shouldn't carry a balance of more than 30% of your available credit in a given month. You know that if you do charge more, you should go on line and make a payment before your monthly credit card statement is generated.

But, do you need some kind of balance on those cards each month?

It turns out that yes, you do. But you don't need to carry that balance and pay interest on it. The best strategy for using a credit card to raise your credit scores is to use it each month for some small purchase - and then pay the balance in full when your statement arrives.

This demonstrates that you're using credit wisely and paying your bills on time. That factor is one that has frustrated more than one cash purchaser when they've tried to get a mortgage loan.

Many cannot understand how they can have poor credit scores when they don't owe a dime. But not owing a dime doesn't prove a thing to creditors. They want to see that you can owe, and then pay as agreed.

Thus, seeing a small balance and a notation that indicates "pays as agreed" looks better and will improve your scores more than seeing no balance. 35% of your FICO score is based on your payment history - how you handle debt.

Your credit card debt is reported to the credit bureaus when your statement is generated each month, so the dollar figure that you owe on that day is the number that's reported.

That's why it's so important to pay large balances before the statement is generated. The way credit reports are set up, no one can see that you charge $4,000 in business expense each month, and then pay it in full. All they see is the $4,000 balance. If the credit limit on your card is $4,200 - it looks like you've borrowed to the maximum.

30% of your FICO score is based on the amount you owe vs. the amount of credit available to you - so keeping debt under 30% of available credit is a huge boost to your scores.

If you think you may want to use credit in the near future, start using your credit cards as a tool to boost your credit scores. Sometimes just a point or two can make a difference in the interest you'll pay.

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Do You Qualify for Home Loan Modifictation?

Depending upon your lender and the programs they're involved in, a drop in your income or a rise in your house payment might qualify you for a mortgage loan modification.

If you're struggling to meet your mortgage payment every month, consider calling your lender to see if they can offer help. You may be able to get a refinance with more favorable terms, or you may be eligible for a straight modification.

If your loan is backed by Fannie Mae - and many are - you could qualify for the Homeowner Affordability and Stability Plan. In fact, Fannie Mae and three 3rd party vendors are right now looking at the loans in their portfolio to see who is eligible.

If you are, you'll get a letter from them, so watch your mail.

You do risk being overlooked if the reason for your struggle is a drop in income - because they'll base their research on the financial information in their files. They'll see it and know it if your payment has doubled - but unless you tell them, they won't know your income has dropped. They're looking for mortgage payments that exceed 31% of a consumer's income.

Thus, you need to call. But first consider the consequences. If you expect your income to rise again within a couple of months, this could be an unwise move, because your current income will become public knowledge and it could affect your ability to borrow from other sources. It could also affect the interest rate and credit limit on credit cards you now carry. You know, if they think your funds are low, they'll act to grab all they can before you quit paying!

So think it over before you act.

Some time within the next couple of months, homeowners whose loans are backed by Fannie Mae can expect to get a letter regarding their eligibility.

Once approved, homeowners will be subject to a 3-month "probationary period" during which they must keep their payments up to date. Only then will the loan modification be finalized.

The program is set to run for 5 years, after which time the terms will revert to the terms (and payment) the loan carried at the time of the modification. However, participants are required to sign a 4506 T form - authorizing the lender to access their IRS returns. If those returns show a dramatic increase in income, terms will revert to pre-modification status.

Loan Mods will have a negative impact on your credit scores. Deviating from the original terms of your mortgage and skipping payments will be reported to the the three major credit bureaus. Give it some thought before you resort to modifying your loan.

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Using Dealer Financing to Buy a Used Car? Be Careful!

There's a reason why the phrase "used car salesman" conjures up certain images - and that reason doesn't completely revolve around engines and transmissions.

Car salesmen are masters at getting people financed to purchase - one way or another. The trouble is, the way might not be a benefit to you, even while they claim it is.

So, be prepared. Before you even consider visiting a car lot, get your credit report and check your scores. If they need some improvement, take the necessary steps, because the better your credit scores, the better interest rate you'll get on that car.

Don't wait for the dealer to check. For one thing, if the score tells you there's going to be a delay, that inquiry will harm it further. Secondly, not all dealers will tell you the truth about your score. Remember, the higher the interest you'll pay, the bigger their income.

OK, now you know your score and you've decided it's high enough for you to go forward.
Write down these questions and make sure they're all answered to your satisfaction before you sign anything. Remember, if it isn't in writing, and signed, it doesn't mean a thing.

How much does this car cost - including taxes, license, dealer prep - everything?
How much am I getting for a trade-in value?
How much down payment must I have?
How much will I be financing after trade in and down payment?
Are there other fees, such as credit insurance?
What Annual percentage rate will I be paying?
How many payments will there be?
What's the exact amount of those payments?
What's the total cost of credit? Include interest, fees, etc.

And last but most definitely not least: Is this the final deal? When I drive off your lot, are we finished?

That last question seems odd, but it's an important one, because this is the spot where unethical dealers pull the "bait and switch."

They'll send you home with a car, give you 2 or 3 days to fall in love with it, and then call with the bad news: The lender refused the deal. But it's OK - don't panic. Your salesperson has made a heroic effort and found another lender who will approve the loan.

Of course, the interest will be slightly higher, and you'll have to pay a small fee, but hey! You've got your car!

Don't fall for this. Unless the dealer can show you who the lender is, and unless you can see documentation that they've approved the loan - tell them you'll be back after the financing is approved and the transaction is final. They can call you when it's ready.

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Responsible Consumers with Bad Credit Scores?

Because credit scores have been dropping for even the most responsible consumers, rumor has it that the change comes from changes in the FICO scoring model. The change actually comes from actions on the part of credit card issuers.

Lenders are steadily increasing the number of folks who are getting credit lines decreased and accounts closed - even though they have paid every statement on time and have not had a negative report from any other source. It only makes sense for creditors to minimize their risk and exposure to unsecured debt.

By now it's a well known fact that a late payment on one account can trigger a rise in interest or a credit line decrease on other accounts. But for many consumers that's not the excuse. In fact, the only excuse is "We wanted to."

A survey by the Federal Reserve Board showed that about half of domestic banks had reduced credit limits for new or existing cardholders, and the trend is apt to continue.

Meanwhile, the lowered credit limit lowers a consumer's overall credit score and can thus trigger similar reductions by other credit issuers - further reducing scores. This appears to be a snowball rolling downhill in which lenders, not consumers, are creating a riskier borrower.

Credit card issuers defend their actions by showing that the consumers hardest hit are the least profitable for them. These are borrowers with a low credit utilization ratio, carrying low balances, with a long credit history and few if any late or missed payments. To banks, unused cards and high credit limits signify risk without profitability, so they clip credit lines to reflect actual usage.

Some consumers are reporting credit limits cut to below their existing balances - with no prior notice. This triggers an over-limit fee and a blot on the card holder's credit report - along with the wrath of the card holder.

While some finance experts are calling for FICO to amend the scoring system to reflect changes made by card issuers, FICO is holding fast with 30% of the score riding on a consumer's debt-to-credit limit.

They defend their position by saying that consumers in this low-risk group are adjusting and bringing scores back quickly by curtailing use of credit cards and paying off balances.

This is just another example of the double messages being sent to American consumers. While the White House says "Spend more and stimulate the economy" FICO, credit card issuers, and financial advisors are saying "Spend less and protect yourself." Know your limits is key and not going over your head should make sense to almost everyone.

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When Changing Credit Cards Will and Won't Hurt Your Credit Scores

Every financial expert on line and in the newspapers will tell you not to close credit card accounts. If you do, you'll reduce your available credit and ruin your debt ratios - causing your credit scores to plummet.

You also know that the longer you've held a credit card - or any credit account - the better it is for your credit scores.

But what if you have to close an account because your card has been lost or stolen - or because some business or government entity has had a security breach?

Aside from being a bother, this won't affect you at all.

When an account is closed due to a security breach of any kind, your credit card issuer will simultaneously close your account and open a new one containing all of your history, information, interest rates, and credit limits.

After that the card issuer will report the change to the credit bureaus either as a change in account numbers, or as closing one account and opening an identical account. No hard inquiry will be made, because none of the information will have changed.

Transferring your history is important from your standpoint, because the longer you've held an account, the better effect it has on your credit scores.

Here's a change to consider carefully: Upgrading a current card.

Think twice about this, because requesting an upgrade to a current card could negatively affect your score.

First, it will trigger a hard inquiry. Then, if you're approved, the card issuer will close your current account and open an entirely new one - thereby erasing your years of payment history with that card issuer.

If your upgraded credit line is large enough, that could counteract the hard inquiry and the loss of card ownership history.

But for this reason, it may be wise to investigate other credit cards and choose one from a different issuer. Remember, however, a turned down application shows as a hard inquiry on your report - without the offsetting benefit of more credit. So before asking for a credit card upgrade or making application for a new card, check your own credit scores to make sure you'll qualify.

When the upgrade is credit card issuer generated and offered a "gift" to you, it is the result of their own soft inquiry, and won't affect your scores.

About the author: http://www.creditscorecowboy.com/ is your source for identity theft protection, multiple free credit report offers, and a blog with a wealthe of information about what determines one's creditworthiness. This site is operated by lending professionals that know how important good credit scores are.

Teach Your Kids About Sound Money Management via Good Credit Scores

All good education begins at home, and that definitely includes education in money management. If your kids learn well, they'll reach adulthood with the ability to buy a home and begin building financial equity throughout their lives. You may have to help them get that first line of credit, because they'll have no financial history to show lenders, but from there they'll have beautiful credit scores and clear sailing.

It's a shame that schools don't include this subject, because it would save a lot of headaches and heartache if they did. However, it is up to you. And if you've had credit problems in the past, perhaps teaching your children will help you build some sound money management practices yourself.

Begin when the kids are old enough to start asking for money – be it a quarter to put in a candy machine, or a new toy. Give them a small allowance each week, and show them how to budget. Let them learn first hand that if they put it all in a candy machine, one quarter at a time, they'll never have enough for that special toy.

No one can spend the same dollar twice, so they need to learn to make choices about where their money goes.

Next, teach them about bank accounts. Begin with a savings account and let them make the deposits and watch the balance grow. Then teach them about checking accounts and the necessity to keep careful records. Be sure to explain how their little nest egg will help them later, when a good credit score becomes important.

Show them how foolish mistakes can make their money melt away. Overdrafts and late charges are such a disappointing way to spend money – you get nothing at all for your dollars. And now, when banks and credit card companies can charge as much as $40 for being one day late with a payment, or $1 over your balance on a check you write, those fees can really add up.

By high school kids should be learning about credit reports and credit scores. And they should be learning about the importance of knowing your credit score. So get your free credit report today and see what it says. If your credit score needs to be improved, start working on it now, so that you can also teach your kids what they'll need to do if they should slip.

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/. CreditScoreCowboy.com is the one of the most unique on-line resources for free credit score reports, Identity theft protection software, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit.

More Credit Score Myths

Most of us don’t understand or know what makes up our credit score. Your credit score is the most important piece of information in your financial life. Landlords, lenders, insurance companies, electric companies and potential employers all have your credit score under the microscope.

With that being said, you should probably check your credit scores on a regular basis. Check it for errors, potential identity theft and improve your scores over time. The secret to a better credit score is to pay your bills on time and keep your available lines of credit as low as possible.

Do not fall for any of these common credit score myths:

Myth 1. Checking my own credit will lower my score. You can check your own credit report as many times as you want. These are considered soft pulls and do not have any impact on your score.

Myth 2. Shopping lenders will lower my score. No doubt each lender you make application with will have to check your credit to accurately make a decision. The credit bureaus realize and understand that most people are going to get multiple quotes when buying big ticket items like homes and automobiles. As a result all of these type inquiries made within a 14 day period are counted as one inquiry.

Myth 3. There’s only one credit score. There are three credit bureaus. Experian, Equifax, and Transunion. Each bureau generates a score therefore you will have three credit scores. Each score will vary so its good to know all three scores.

Myth 4. Age, income, sex and race will affect your score. None of this information has any impact on your credit scores. Your age and employer may be listed on your credit report, however it has no impact on the score itself.

Myth 5. A simple dispute letter will remove bad credit. Sorry, but this one cracks me up. If it’s a legitimate account, being reported accurately it will not be removed regardless of how many letters you submit disputing it. If you do see errors on your credit report you should by all means dispute it. The credit bureaus have 30 days to reply and are quick to remove inaccurate data.

Myth 6. Marriage will merge both reports. Credit information never gets mixed. Accounts are either opened individually or jointly. Don’t think marrying someone with good credit is going to raise your credit score.

We recommend checking your credit quarterly. Refer to myth number one, a soft pull will not lower your score. It is to your benefit to keep an eye on your credit, protect it and constantly improve it.

http://www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software your free credit report and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

How will a judgment affect my credit score?

Judgments may have a worse effect on your credit score than collections. Since judgments may be reported much longer than collections, depending on which state you reside in, they may wreak havoc on your credit score for many years. Judgments appear in the “public records” section of your credit report, which is different than the section that contains collections. Also, in much the same way as a collection, once a judgment is reported on your credit report, it will still show as “paid” even after you pay it off. Many states also allow judgments to accrue interest, so don’t assume that the amount shown on your credit report is the actual total amount due. It’s never a good idea to ignore judgments for this very reason. Some states allow for double digit interest and additional fees to accrue, so the balance of a judgment could easily double or triple in a few years time. Don’t let judgments go a very long time without addressing them.

Judgments are typically the result of creditors pursuing legal action against consumers who failed to pay various debts. Some credit card companies may pursue legal action once an account goes to collection, but usually only if the amount is worth them hiring an attorney and filing a lawsuit. Once a lawsuit is filed, the debtor must be legally served and a court date is set once this occurs. And if the debtor can’t be located, the creditor may file papers to circumvent the serving process. In either case, the creditor will most likely be awarded a default judgment if they do not show up to court.

Many judgments can be settled for less than the full amount by either negotiating with the creditor for a release of judgment or seeking the help of an attorney that specializes in credit litigation. Many attorneys may offer to work with a creditor who has obtained a judgment for a small fee of a few hundred dollars or even less. Once a settlement is reached, make sure to get a release of judgment to prove that it’s been paid or settled and send this to the credit bureaus so your credit score can improve.

Since credit scores are determined by an algorithm, it’s impossible to know exactly what effect a judgment will have on the credit score. But one thing is for sure: a judgment does not help your credit score. If you suspect a creditor may have been awarded a judgment against you, obtain a free credit report today and make arrangements to either pay or settle the judgment as soon as possible.

http://www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software your free credit report and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

Swiper No Swiping!!!!

If you’ve got children or know someone who does you have more than likely heard these words on Noggin’s Dora the Explorer show. Dora and sidekick “Boots” are usually on some sort of journey when along comes Swiper the fox. His goal is to swipe their stuff before they say “Swiper no swiping” three times in a row. Sometimes they thwart him off and other times he steals their stuff because he sneaks up on them with little or no warning at all.

This kind of sounds like identity theft. Only it’s not as easy as saying Swiper no swiping three times in a row. Scum bag identity thieves sneak up on their prey with absolutely no warning at all. They dig through your trash, raid your mail box, hack through your wireless internet at home or office even intercept your debit or credit information from unsecured e-commerce.

What can you do to protect your credit score and credit report? Even more importantly your bank account!! Don’t think for a minute that it can’t happen because it does and is happening day in and out. Some say its desperation as a result of the dwindling economy. I say its just good old fashion criminals whether they be petty or highly organized. Either way here are a few safety checks to safeguard your credit.

1. Never mail credit card bills directly from your home mail box. It is too easy for someone to raid your mail box and all of a sudden your credit card number is stolen. Always mail these bills from the post office or join the rest of the internet age and pay your bills on line.

2. Shred everything that has your personal information on it. After spending four years at a major university I knew a few people who survived final exams by dumpster diving. Maybe these are the same folks doing it now and stealing identities. Buy a shredder!

3. Install a firewall. Don’t you lock your car and home every time you leave it? Be sure to take the appropriate measures to lock up your personal information as well. Firewalls will limit the number of potential trespassers trying to hack in and steal your personal information. Your bank account passwords, credit card logins are sure to be safe when protected by firewalls.

4. Do not save passwords for your bank account and credit cards on your computer. I know it’s convenient but it can really cost you. Write all of your passwords down in a secure location. NOT ON YOUR COMPUTER! Leaving this information on your computer leaves you vulnerable to identity theft and fraud.

5. Never let anyone have total access to your personal computer. The temptation for an employee or coworker to steal valuable information just shouldn’t be an option. Change your passwords regularly. Use scrambled letters, numbers and symbols like #$Lkn4@. Who’s gonna crack that?

Over 10 million people each year report being a victim of identity theft. More than half didn’t know it until they applied for credit. Had they monitored their credit most of these cases could have been avoided. In the end you want Swiper the fox to say “Ah man!”

http://www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software, free credit reports and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

Credit Score Repair Scams

Being in the mortgage business for the past 15 years I get worn out and beat down by fly by night credit repair companies that promise the world. I’ve heard everything from “We can improve your buyer’s credit scores by over 100 points in less than 30 days” to “Our credit repair company removes bankruptcies in no time at all.”

With our nation’s economy in the toilet, people’s debt loads are on the rise. Many people are having problems just making minimum payments. Some aren’t even doing that. As a result the demand for credit repair has increased. Along with it we are seeing a rise in credit repair scams.

Pretty tough not to be seduced by an ad promising to wipe out your collections, charge offs, even foreclosures! BEWARE!!! If it’s too good to be true, it probably is. Wouldn’t it be nice to just max out every credit card in your wallet, never make a payment and then have a credit repair company just wipe it out as if it never happened. I’m sorry folks. If the debt is legitimate, YOU OWE IT!

On the other hand, 1 in every 4 credit reports contains errors. Errors such as data entry can cripple your credit score. Think about someone with a similar name who’s crummy pay habits are being reported as you. Then there’s the unthinkable yet fastest growing crime in American of identity theft.

Now you’ve got a realistic claim against a creditor. What should you do? You could call a credit repair company who, for a fee will obtain your credit report, identity the errors and write dispute letters for you. Or you could do it yourself for free. The Fair Credit Reporting act says that anyone can dispute mistakes on their credit report for free.

There are many sites out there that offer free credit reports. Pick one, get your credit scores and see if you’ve got errors on your credit report. Since everyone these days are looking at your credit scores you could end up resolving an unknown problem and saving thousands of dollars on your next big purchase.

Don’t let yourself get caught up in a shady credit repair outfight that’s promising to improve your credit scores. No one has the right to remove accurate information from a credit report. They can’t do anything that you can’t do for yourself. Save that money and use it to pay down your debt.

http://www.creditscorecowboy.com/ is your source for free credit scores, free credit report, identity theft protection and a BLOG with a wealth of information on how to fix your credit for free.

Danger Signs of Bad Credit Repair Companies

If you are considering legitimate credit repair and restoration then good for you. The first step in improving your credit score is to get a grip on your finances and handling up on your debts. Remember that no one can remove accurate credit reporting. If that’s your car that was repo’d its not going away any time soon. On the other hand, if that car was someone else’s then you’ll have no problem getting it deleted from your credit report.

You may be thinking about hiring a credit repair company to help you tackle some of your credit glitches. That’s perfectly ok if you find a good one and there are good ones out there. However there are some pretty bad companies out there that promise ridiculous results.

Beware of credit repair companies that ask you to pay in advance or ask for a retainer for services that haven’t been rendered. The Credit Repair Organizations Act state that credit repair companies cannot charge you fees until after they’ve completed the services that they promised. If you are asked to pay up front then they’ve directly violated this law.

You should also be very wary of companies that promise everything under the sun. No one can remove accurate records of bankruptcies, judgments, tax liens or bad credit from your report. Nearly all negative information stays on your credit report for seven years. If you know in your heart that it’s your debt, why would you think anyone could magically make it disappear?

Another sign of a chop shop credit repair company is one that advises you to dispute everything on your credit report both good and bad. They will jam the credit bureaus with letters after letters disputing it all. The trick here is that if creditors don’t reply within 30 days then they must permanently delete the item. The truth is that most credit, particularly accurate credit, is verifiable. You will hardly ever see credit scores increase due to this method of madness. If the account is removed and it was legitimate then it will only be a matter of time before it shows up again.

You could go to jail if you partner up with a credit repair company that offers to help you get a new identity. They will coach you on how to get an EIN or employer identification number as well as apply for credit with a bogus or new address. This is a felony and we don’t advise anyone take part in this malicious scam.

Illegitimate credit repair companies prey on consumers in desperate situations. There are many people out there that want to change their credit history regardless of the consequences. Don’t believe the hype, no one can deliver a quick fix for credit repair. You can improve your own credit scores by getting your free credit report, consolidating debts and fixing erroneous credit items yourself. You do not need to pay someone else to do this. Save the money and apply it to your outstanding debt.

http://www.creditscorecowboy.com/ is an excellent source for your free credit report and free credit scores. Our blog contains a wealth of information written by professionals that know about credit.

Mortgage Rates at 4.5%

The United States Treasury Department is said to be formulating a plan to lower the 30 year mortgage rate by one1 full percentage point making the current rate 4.5% according to http://www.cnbc.com/. The idea is to stimulate home sales and incentivize people to refinance their existing mortgages.

Mortgage Rates are currently at their lowest points in three years. And for the first time ever the 30 year rate is slightly less than the 15 year rate. The volatility in the stock and bond markets have made old school predictions a thing of the past. ARMS (adjustable mortgage rates) are on some days higher than the 30 year fixed. Who on earth would want an ARM?

The governments bail out plan couldn’t have come at a better time. Even before all the hype about the multi billion dollar buy out, the Housing and Economic Recovery Act was passed this past July to stimulate real estate markets. Here are few provisions favorable to homebuyers and home owners:

1. The legislation includes a provision that limits the $250K/$500K capital gains exclusion in instances where a person converts a second home to a principal residence.


2. Buyers can qualify for the $7500 tax credit even if they’ve owned a home before. However they could not have owned a home in the previous three years.


3. For 2008, Homeowners who do not itemize deductions can still deduct property taxes from their federal income tax. The deduction is limited to $500 for single filers and $1000 for joint filers.


4. If you qualify for the $7500 tax credit and only have $6000 in tax liability you will receive a refund for $1500. It is a credit, not a deduction. This credit reduces your tax liability, not your taxable income.

Keep in mind that there are limitations. This tax credit is phased out at income levels of $75,000 for single filers and $150,000 for married ones. Homebuyers must also pay back the credit interest free over the next 15 years.

This shock to mortgage rates in addition to the $7500 tax credit should be enough to convert people from tenants to home owners. Mortgage guidelines are pretty much still the same. You will need a decent credit score along with some money for down payment and a job. The purchases of mortgage backed securities have for the meantime learned their lesson. Quality over quantity is currently driving the secondary mortgage market.

If you are still a renter, find out what kind of home loan you qualify for. At 4.5% interest its more than likely cheaper to buy than to rent. In the long run you’ll have equity and at some point, no monthly payment at all.

http://www.creditscorecowboy.com/ is your source for free credit report and free credit scores, credit monitoring, identity theft software and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

Roger Staubach once said.....

“Confidence doesn’t come out of nowhere. It’s a result of something….hours and days and weeks and years of constant work and dedication.”

The same can be said about your credit score. The journey to having good credit is a lifelong commitment. Building a good credit history is essential to anyone that wants to purchase a home, rent an apartment, start a business, even get that new job.

If you will simply pay attention to your expenses and spending, the path to building good credit is a snap. First of all, know what is on your credit and check it periodically. Make sure that everything is accurate. If you find errors, dispute them immediately with all three credit bureaus.

Experian-1-888-397-3742

http://www.experian.com/

TransUnion-1-800-916-8800

http://www.transunion.com/

Equifax-1-800-685-1111

http://www.equifax.com/

Avoid going over the limit on your credit cards. Its funny how just about every credit card company will let you go slightly over the limit. They rake in massive penalties and fees every time this happens. Sometimes they’ll even raise your interest rate. That doesn’t seem to fair but it is a reality. We previously mentioned the importance of paying attention to your expenses. Being mindful of your credit card balances is crucial to building good credit.

DO NOT CANCEL OR CLOSE YOUR CREDIT CARDS. As a professional mortgage broker for the past 15 years I have seen too many people denied a home loan due to lack of credit history. These days mortgage lenders want to see at least 24 months of active credit history. A recent study showed that most people with credit scores above 800 had credit history and open accounts for more than 15 years. If you don’t trust yourself with all this credit just cut up the cards but keep the accounts open.

It takes time to build up your credit score. Good credit doesn’t just pop up out of no where. It truly is the result of something….good planning, discipline and making sound financial decisions.

http://www.creditscorecowboy.com/ is your source for free credit report and free credit scores, credit monitoring, identity theft software and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

The Loch Ness Monster and an 850 credit score

Most of us are familiar with the alleged creature purportedly inhabiting Loch Ness in Scotland. “Nessie” was brought to the world’s attention back in 1933 however the scientific community regards the Loch Ness Monster as a modern day myth. In fact you are just as likely to see Nessie as you are an 850 credit score. Credit scores haven’t been around quite as long as the Loch Ness Monster. Back in the 1950’s insurance companies, retailers, banks and other lending businesses used data base information from thousands of customers to create these scores.

Over the past 10 years my company has closed and funded over 4,000 home loans. That’s at least 4,000 credit reports and not one with an 850 credit score. Supposedly 1 in every 100 credit reports has a perfect score. We’ve simply never seen it. That could be due in part to the fact that we primarily deal with first time home buyers. From what I’ve gathered from Equifax, TransUnion, and Experian, if you want a perfect credit score you will more than likely need the following:

* No bankruptcies, collections, judgments, or foreclosures, EVER!!
* At least 1 mortgage loan with no late payments.
* 4 or more credit cards with balances of no more than 35% of the credit limit.
* Minimal Inquiries
* Twenty plus years of credit use with multiple accounts.

As you can see the quest for a perfect credit score may seem pretty far from reach. Keep in mind that our past 4,000 clients all got great home loans and did not have a perfect credit score. In fact, there isn’t much difference in a 750 score than an 850 score. You don’t get any brownie points on your home loan application for having a score above 750.

Keep doing what you do, pay your bills on time and don’t let your debt get out of control. Remember to check your credit report periodically for errors and dispute those errors immediately with all three bureaus. And for best results always get all three credit scores with your credit report.

http://www.creditscorecowboy.com/ is your source for free credit scores and a free credit report, credit monitoring, identity theft software and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

Are You On The Credit Bureau's Blacklist?

Let’s say you are what most people would consider a good person. You help out in the community, volunteer to help others and even show up on the front row for church every Sunday. You recently applied for a home loan and to your surprise were denied. How could this be? You’re a good guy or gal, and deserve this loan, right? Could you be on the credit bureaus blacklist?

Since there is no such thing as a “blacklist” within the credit scoring system the answer is no. You are not on a blacklist. Your credit score and credit history are based on nothing more than factual data that lenders have provided about your pay habits.

Your credit report and credit scores have absolutely nothing to do with your age, marital status, race, sex, nationality or religious beliefs. Your occupation and length of time on the job also have nothing to do with how your credit score is calculated. Only information present on your actual credit report make up your credit score.

Pretend for a moment that you are an underwriter working through a mortgage loan application. What would be of the most importance to you? Ironically, underwriters look at the same thing that the credit bureaus do in figuring your credit score.

1. Payment history is a biggie. This tells the tale of whether or not you can handle what you currently have on your plate. If you are consistently 30 days late on your car payment, why would you think you are worthy of a home loan?

2. Credit history is also important. The age of your accounts reveals your experience with credit. Multiple accounts like credit cards, student loans, car payments with several years of history, especially with perfect payment status will surely pass the test for an approval.

3. Your debt load makes a difference in how you handle available credit. If all or even a few of your credit cards are maxed out a red flag pops up. People in control of their finances typically use credit cards sparingly or always pay them off in full each month.

4. Recent inquiries can wreak havoc if you’ve had too many. Multiple credit card applications make it look like you are in desperate need of more credit, or just credit in general. Its ok to have a few inquires with multiple mortgage companies within a 14 day window. The bureaus only look at these as one inquiry since most people will shop around for the best home loan.

It always makes sense to obtain a copy of your credit report either before you make a mortgage application or if you are declined credit as a result of a low credit score. There are several arguments for this statement. One is identifying potential errors and fixing them before your lender pulls their copy. Another is having the upper hand when applying for a mortgage. If you have a great credit score use it as leverage and tell the lender up front. Request terms based on it and make that lender wait to pull your actual credit report until you have received multiple offers.

Getting a copy of your free credit report is easy. To view your personal credit information that lenders are currently basing their credit decisions on you can choose from several options right here for free. We are currently offering a 30-day free trial for Identity Guard Monitoring Service which not only allows you to keep an eye on what is happening on your credit file but is also useful at protecting yourself against Identity Theft, something which is a growing problem. Get the upper hand on your credit today.

http://www.creditscorecowboy.com/ is your source for free credit report and free credit scores, credit monitoring, identity theft software and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score

How does Consumer Debt Counseling Services affect my credit score?

If you are already underwater with debt, it is likely that your credit score has taken a hit for the worse. When you fall behind on current credit obligations the lenders will report these defaults to the credit bureaus. When people fall way behind on their bills its often impossible to ever catch up. Debt management programs have been around for years and offer help to individuals trying to get out of debt. How do they work and how will enrolling in one of these plans affect my credit score?

They usually begin by setting up an initial consultation. Here a financial counselor will break down your income, living expenses, debts and discuss strategies to reduce spending and allocate more money to paying off your creditors. At the end of the meeting you are given a budget along with an action summary plan to help initiate your route to financial freedom. Many find that this one time meeting is enough and the advice of the counselor can be handled out on their own. Others see a benefit in actually enrolling in the debt management program.

A debt management plan is a reasonable way to resolve credit problems and get back on track financially. Your financial counselor will act as an impartial intermediary. Based on your income they will negotiate and establish a mutually accepted repayment plan with your creditors. Upon agreement, you make a single payment to the debt management company and they in turn make the monthly payments to all creditors that were enrolled in the plan. Best case scenario is that collection calls stop and ultra high interest charges and fees are reduced or every now and then eliminated altogether.

There are pitfalls to enrolling in the debt management plan. We have experienced many situations where the creditor accepted the plan, stopped collections calls and even reduced the interest but would not report the monthly payment to the credit bureaus as the minimum monthly payment. More than likely the new monthly payment to the creditor is less than what it was before as a result of the restructuring program. Each month the creditor could be reporting you 30 or more days late because of it. You’ll have no way of knowing it unless you frequently monitor your credit report.

If you are one of the many people in need of restructuring your debts be sure that you enroll in one of the credit monitoring plans available through Experian, Equifax and Transunion. Check out our free credit report directory and decide for yourself.

http://www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software your free credit report and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

Experian, Equifax and Transunion

Happy Thanksgiving everyone.

The Credit Bureaus address and phone numbers are listed below. We have also listed the online dispute links as well. We are your one stop shop for all three of you credit scores and free credit report.

Bureaus Addresses and Phone numbers:

Equifax
P.O. Box 740256
Alanta, GA 30374
(800) 797-7033

Experian
NCAC
P.O. Box 9595
Allen, TX 75013
(800) 583-4080

Trans Union
P.O. Box 2000
Chester, PA 19022-2000
(800) 916-8800

On-line dispute for each bureau:

Equifax
Dispute online

Experian
Dispute online

TransUnion
Dispute online

http://www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

You Need Credit Scores with a Credit Report

I recently logged on to annualcreditreport.com to get my once a year free credit report but to my surprise there were no credit scores. In case you didn’t know, everyone is entitled to their free credit report once every twelve months at http://www.annualcreditreport.com/. If you too have been there then you know that your credit report did not come with your credit scores. Just about everyone these days is looking at your credit scores so shouldn’t you know what they are? This magical three digit number is formulated to predict how you will pay your bills. Why should you know your credit scores?

When you make an application for credit your lender will use your credit score to make a quick on the spot decision as to whether or not you will be approved. The actual credit history is important but the credit score makes it easier for the lender to reach a decision. Before you make application with a lender you should check your credit score to see where you stand. You’ll go in knowing what your credit score is before the lender does. If you have a good score, its advantage consumer. If your score is low, then you’ll need to spend some time improving it before making a loan application. This is just one example of why you need to know your credit score.

While watching TV the other night I saw a commercial for Home and Auto insurance. The man on the commercial says he’s looking to put you with an insurance company that’s a little smarter than the one you’re with now. He goes on to say that some insurance companies base your premiums on your credit score. “Isn’t that dumb?” he says. Well, it may be dumb but it’s a reality. Through years of experience and studying the claims history of millions of policy holders the data reveals that people with lower scores are more likely to file a claim than people with higher credit scores. As a result, the higher your credit score the lower your insurance rates. You can even be denied insurance if your scores too low.

You may not know it but almost every employer is now obtaining credit scores as part of the interviewing and hiring process. If you are currently out there looking for that better paying job better hope you have decent credit scores. Your credit score will give the potential employer an idea of what kind of person you are. Just like applying for credit, a lower score could mean higher risk. You could get passed up by another applicant just because of your credit score.

I would say it is definitely time to know and get acquainted with all three of your credit scores. With credit markets tightening up it’s become more difficult to get credit unless you have a decent score. We’ve just discussed a few different scenarios that affect each and every one of us. What is a good score?

720 or better is very good

680 average

620 marginal

580 poor

http://www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

They Should Teach This in School....

Considering the years you spent in school and the number of courses you were required to take, isn't it strange that money management and credit issues were probably never mentioned?

Even accounting classes teach kids how to add up the numbers and how to tell a debit from a credit, but fail to mention a thing about budgeting, calculating the overall cost of an item when interest is added on, and the high cost of over spending.

Instead, kids barely out of high school are offered credit cards and encouraged to spend and spend some more.

I think every elementary school should offer a course on budgeting geared to the age of the children. Then every Junior High School should do it again, and every High School should require at the very least a semester with a class called "Money Management."

Kids don't realize the importance of a balanced checkbook – so don't learn to keep track. Thus they're often stuck paying huge overdraft fees. I remember one young woman who came in to a store where I worked. Over 2 days she wrote 3 checks – the total of which came to just over $10. But they all bounced, costing her an additional $29 each - $87 dollars down the drain for lack of record keeping.

Those same kids fail to recognize the importance of paying credit card bills on time, and no one has ever told them that they should stay within 30% of their credit limit.

The result, many young people are going out into the world, trying to purchase homes or even rent apartments, and having a terrible time of it. Their credit scores are in the basement, and many of them don't even understand why.

One young man, upon being told that he couldn't rent a house because his credit was shot, said "But I'm young. I have to have fun." He simply couldn't understand why the rental agent was discriminating against him.

Their schools – and their parents – failed to teach them that a good credit rating will make their lives much easier. Lenders will look favorably at them, offering lower interest rates, lower minimum payments, less paperwork, and more borrowing options.

If schools and parents taught the value of sacrificing just a little in the interest of saving and the value of a stellar financial reputation, young people would have a far easier time getting started in life.

But it's never too late to start. Check your credit score today, and if you find you've gotten off track, start today to build your financial reputation and your credit score.

http://www.creditscorecowboy.com/ is the most unique resource for free credit scores, free credit reports, credit monitoring and a BLOG with a wealth of information about credit. People around the world depend on Credit Score Cowboy for free advice and tips to improve their credit scores.

Home Loans and Your Credit Scores

So you’ve decided to take that bold step towards the American Dream of home ownership but you don’t know your credit scores. You’re a bit nervous because you’ve made a few late payments here and there or may even have gone through a bankruptcy. Experienced mortgage brokers understand that life happens and credit reports can get bruised by events such as unemployment, illness or other financial difficulties. Be honest and up front with your mortgage lender. Disclose everything you are aware of. They will soon have your credit report and that itself will reveal your creditworthiness.

Statistics say that the average household has more that $10,000 in credit card debt. If you too are swimming in excess debt its time to get a grip on it. Depending on where you stand, consider these recommendations:

Get a handle on your spending. I challenge you to keep track of every dollar that you spend over the next 30 days. You will find that you are spending hundreds if not thousands of dollars on unnecessary items. Don’t use credit cards for things that you consume quickly like meals or gasoline in your car. There’s no faster way to fall in debt than to use your credit cards for things that you cannot pay in full when the bill comes around.

Avoid the minimum payment trap. Credit card companies love this. They rack up high yields on the consumer that doesn’t pay in full each month. The worst part of it is that most people are paying interest on dining out, groceries, even the clothes on there back. Don’t pay the minimum as you are more than likely only covering the interest.

Lets say your credit is already shot up in pieces and these first two recommendations are simply too far out of reach. Find out where the nearest Consumer Credit Counseling Service is located and schedule a consultation. The mission of CCCS is to promote sound financial management. They offer expert financial counseling and work with your creditors to reduce the interest and get you on a reasonable schedule to paying off your debts.

Should CCCS not be an option you should consider filing a Chapter 13 bankruptcy. Also referred to as a wage earners plan, a Chapter 13 BK enables you to develop a plan to pay off all or part of your debts. Repayment plans are typically three years but can be stretched to five years under certain circumstances. Once you start this plan, creditors are forbidden from continuing collection efforts.

If you are so far in debt that you can never repay it, then the best solution may be a Chapter 7 bankruptcy. A Chapter 7 bankruptcy is the least desirable from a credit standpoint, but you are typically out of bankruptcy in 6 months and you don't have to repay any debt. The disadvantage is that this shows on your credit report for 10 years from the date of filing your bankruptcy. FHA guidelines state that you can be approved for a mortgage two years from the discharge date of a Chapter 7 BK. You cannot have accumulated any negative credit since filing and need to have re-established at least three trade lines. Secured credit cards are a perfect tool for accomplishing this task.

Savings is the key. Make it a personal goal to build cash reserves equal to three months of living expenses just in case of an emergency. Mortgage lenders love to see stability in borrowers just for that reason. Savings and liquidity could determine whether or not you can get approved for a home loan.

As far as credit is concerned you’ll need a minimum credit score of 580 and a clean slate for the most recent 12 month period. That means no late payments on anything. Also make sure you have at least three active accounts working for you. Credit cards, department store cards, gas cards, car loans and even a gym membership so long as good pay habits are being reported each month.

You don’t want to be renting forever. Get a copy of your credit report with credit scores before you even think about applying for a home loan.

http://www.creditscorecowboy.com/ is a great resource for free credit scores and credit reports as well as a BLOG with a wealth of information about credit.

Debt Consolidation and Your Credit Score

You've seen those screaming ads on TV – the ones urging you to take a second mortgage on your home to get rid of high interest credit card debt. They tell you how much they'll save you each month, and might even tell you that you can deduct this interest on your income taxes.

According to the IRS bulletin I read this year, that's no longer true. So do check with your tax accountant before consolidating for tax purposes. It appears that you must now prove that the home equity loan was used to make improvements on your home – so paying off credit card debt won't be deductible unless you can prove that the debt was due to home improvements.

When the same company that issued your credit card encourages you to switch to a home equity loan, they do have an ulterior motive – security. Credit cards are unsecured, but home equity loans are not. They also love spreading your payments out over a longer time period, because they'll earn more interest.

So… Should you do it?

It all depends upon you, and your levels of self-discipline. If you're apt to turn right around and run up my credit card debt again, then no – you should not do it.

How will this affect your credit score? That depends upon the dollar amount of the home equity line of credit, and how much of it you actually use. For instance, if you have $50,000 equity in your home and are granted a second “revolving credit” line of $35,000, you have just acquired a higher amount of available credit. If you use only about $10,000 of that available credit while paying off credit card debt, it will improve your FICO score.

However, if you use the entire $35,000, that’s not so good.

If you can eliminate those high credit card payments by using 30% of the credit available from your revolving home equity loan, you should consider it. After that, use your credit cards, but pay them off each month when the bills come in. And of course, never charge more in any one month than 30% of their available balances.

Get your free credit report right here at Credit Score Cowboy and read it carefully. Add up the balances you owe, and consider how large your home equity loan would be. If it all makes sense, then check with several Second Mortgage lenders to compare interest rates and programs before you make a decision.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Conservatism Will Lower Your Credit Scores!

Of course, liberalism will also lower your credit scores.

No, this has nothing to do with politics. It has to do with your attitude about money. If you're too conservative, that's not good. If you're too liberal, that's even worse.

If you're so conservative that you save for every purchase until you can pay cash, you aren't building a credit history, so your score will be low. Sounds crazy, but the simple fact is, lenders want to see that you can responsibly pay bills on time. If you have no bills, you can't prove that. Thus, FICO scores depend partly upon your bill-paying history.

Liberal spending, of course, can get you into even worse trouble. It's much harder to repair a bad credit score than it is to build one from scratch.

What can you do if you've been too conservative – or too liberal?

First things first. Find out exactly where you stand by ordering your free credit report. Read it carefully and see what your FICO scores actually are. Then you can begin to raise them.

Begin with getting some credit and using it. If you've never had bad credit, you may be able to obtain a conventional credit card with a low credit limit. But if not, you can get
a secured credit card. With a secured card, you've placed a deposit as collateral, so the lender has no risk – everyone can get a secured card.

Once you have the card, begin using it to make small purchases. Or make one large purchase – such as gasoline! Just be sure you don't exceed 30% of the credit limit on the card. When the bill arrives, pay it in full and continue using it. In a few months this activity will show up on your credit report.

Then, get another card and do the same thing – always being careful not to exceed 30% of your available credit on any one card during any one payment period. The amount you owe is reported as the amount on your monthly statement, so use the statement, not the calendar, to determine how much you can spend in a given month.

After you have been paying for a few months, ask to have your limit increased. Not because you want to use it, but because your credit report will then show more available credit that you aren’t using. The more unused credit you have, the better for your score.

Check your credit report again regularly – and have fun watching those FICO scores as they go up and up!

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Periodically Checking Your Free Credit Score Can Save You Big Money

Your credit score changes every thirty days therefore you should periodically check your free credit score. Each one of your creditors reports your monthly pay habits and fluctuations in the amounts you owe them. Since creditors report any changes with your credit report every 30 days, you should probably check you credit report once quarterly.

You are probably thinking why in the world would I want to check my free credit score every three months. Well consider this possible scenario: your mortgage company accidentally reports a late payment on your credit report, and you actually were not late. Because of this mistake on your creditor’s behalf, your credit score just dropped a hundred points. Now you find yourself at a car dealership that lured you in on the zero percent financing offer and because you weren’t monitoring your credit report you don’t qualify for the special offer. This creditor’s mistake just kept you from getting an interest free loan. Most don’t realize that this is a common mistake. People make mistakes and as a result more than 25% of all credit reports have errors that cause low credit risk people to get denied. Do I have your attention yet?

Most people think that checking their free credit score this often will lower the score. This is completely false. There are two types of inquiries. A “hard inquiry” is when you apply for credit and the creditor pulls your credit report. This type of inquiry can have a negative impact on your credit score. When more than four hard inquiries are reported within a 2 month period your score could drop. There is a grace period of two weeks when shopping for a mortgage, or a car. The scoring system understands that most people will shop around for the best deal and therefore hard pulls within a two week window are counted as one.

A “soft inquiry” is when an existing creditor grabs your credit report to approve you for special offers or you request a credit report yourself through one of our affiliates. Soft inquiries do not lower your score so there is no reason not to take control of your credit report. Save yourself the potential embarrassment of a credit denial but more importantly make sure you are getting the best terms on loans by having great credit scores.

http://www.creditscorecowboy.com/ is an excellent source for free credit reports, free credit scores and free credit score reports. Our blog contains a wealth of information written by a veteran in the finance industry that knows what determines credit scores and individuals creditworthiness.

Debt Strategies to Improve Your Credit Scores

Paying down your debt is a great way to stay on track financially and boost your credit scores. Which accounts should you pay down first? Where do you put your extra money each month to make the most difference? Here are a few ideas that we think make the most sense financially.

Priority #1: Pay down the highest interest rate accounts first.

Doesn’t matter what the amount is. I’m sure you would rather be paying down a debt than applying money to interest each month. Start with the accounts that have the highest interest rates and tackle them first. Then move on to the next one.

Keep in mind the 50% rule. Keep revolving account balances at no more than 50% of the total credit limit. In this economy that’s easier said that done but doing so will produce a better credit score. Regardless, pay off the highest interest rates first. Then tackle the rest of your debt accordingly.

Priority #2: Don’t add any more debt.

Probably the most important part of the plan to raise your credit scores. Old habits die hard, emergencies pop up that swallow money that otherwise would go towards reducing your debt. Credit cards that should be used sparingly can quickly add up. If you can’t afford it, don’t buy it.

Priority #3 Negotiate better terms with your credit cards

You’ll never know unless you ask. Often times credit card companies will reduce your interest rates if you ask. I recently received some convenience checks in the mail from one of my credit cards companies offering a lifetime rate of 3.99%. I quickly called and asked if I could simply have my current balance lowered and they obliged. Wow. All I did was pick up the phone.

Priority #4 Pay extra on secured debts

Secured debts are things like your home, car, boat or other assets that secure your loan. Credit cards are not secured and therefore not tied to any particular asset. Secured debts are usually for large amounts and as a result take longer to pay for. The interest charges on a $100,000 mortgage over 30 years at 6.75% is 133,493.82. Making extra payments on a secured debt such as your mortgage has the potential to really work in your favor. You’ll pay your loan off sooner and free up extra money for the finer things in life.

All of this is easier said than done. Watch and track all of your cash expenditures. Be mindful of how much you are spending on things like groceries and dining out. You’ll be amazed to see just how much you can save.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Get Your Free Credit Report Before You Go Looking For A Rental

Rental managers have an obligation to the owners of the properties they manage – and that obligation is to do their best to rent to tenants who are most likely to pay the rent on time and take care of the house or the apartment.

That means they'll want to see references from past landlords, and they'll want to see your credit report and know your credit score.

If you've mis-used a house or apartment in the past, you know what your references will be like, and there's not much you can do except search for a landlord who won't ask – and then do better in the future so you'll have good references.

However, if you get your free credit report and see that you have work to do, you can get busy with making repairs.

Rental managers have to be careful about not breaking any fair housing laws, so they have to treat everyone the same. The professionals will require a credit report, and most will charge you for it. It could cost anywhere from $30 to $60 – and that's too much money to spend if you're going to be turned down.

Instead of plunging ahead and letting that rental manager order his or her own credit report, present your free credit report. If you're going to be turned down, let them do it based on that report rather than one you've paid for.

They may have leeway to bend the rules a bit if your poor credit is the result of illness – too many unpaid hospital and doctor bills, or if the negative report is from a health club or gym. Both are notorious for going on with charging a client who has discontinued membership, so their reports don't carry much weight if everything else looks good.

They may also give you some leeway if your credit report shows that your problems are in the past – if all your current accounts are showing that you pay on time.

Be aware that they may still insist on getting their own, but be sure to ask if you'll be accepted based on your free report. I'll never forget the young man whose check for a credit report bounced – so the rental agent had him pay cash instead, knowing full well that she wasn't going to rent to him just based on the bad check.

Credit Score Cowboy will give you your credit report for free – so get it!

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Medical Insurance Can Ruin Your Credit Scores

Insurance is supposed to protect you, right?

Well, in some cases it does, and in others – it doesn't. Especially when it comes to your credit scores.

If your insurer decides to disallow all or part of your claim, the bill won't be paid. And you might not even realize it!

Medical bills are garbled at best, and they send them in little spurts, so it’s difficult to see if they’re all different, or duplicates. It takes concentration and a clear head to even figure out what you've been charged for, let alone what's been paid. When you're recovering from illness is not the best time to try to wade through them, so you're apt to just set them aside and trust that the insurance company will handle it.

So why wouldn't an insurance company pay? Two reasons. One of which has to do with the fine print in your policy. Some things they just won't pay for – or they'll only pay a reduced amount. And don't think you're OK because you were injured on the job. In some states, State Industrial Insurance is well-known for delaying payment or disallowing charges.

The other reason is data entry. All it takes is for one careless medical billing clerk to code your claim incorrectly and it will be disallowed. And think about that – most data entry people are just there putting in their time to get a paycheck until they can move on to something better. Accuracy is not the highest item on their priority lists.

If the bills aren't paid it could take several months before the doctor or hospital asks you to pay. And what if you can't? Medical bills are often too high to fit into the average family's monthly budget.

At this point you'll begin calling your insurance company and your medical providers in an attempt to straighten out the problem. But it could take so long that the bills will be turned over for collection.

You will be able to get these black marks removed from your credit report, but during the time you're struggling with it, your credit scores will have dropped to pitifully low levels.

So if you've had bills that were turned over to an insurance company for payment, get your free credit report today and see if any of them are now showing up in your name as unpaid.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Raise your credit scores: Change your debt to income ratios

Changing the ratios between what you have coming in and going out each month can dramatically change your credit scores.

We've already discussed cutting back on some non-vital spending and using the money to pay down debt. Even an extra $10 per month paid on a credit card debt can make a huge difference.

Now, consider ways to add a few dollars a week to your income, and using that to pay down debt as well. Even if you start small and only earn an extra $10 or $20 per month, you'll soon see a difference in your FICO scores.

Here are a few ways you can bring in a few extra dollars, even if you hold a full-time job. Using extra hours in the evening, or on week-ends you could:

1. Put up or take down signs for a real estate agent
2. Photograph homes for that agent
3. Keep flyer boxes filled for a real estate company – or all the real estate companies in your immediate vicinity
4. Pet sit for people on vacation
5. Walk dogs for neighbors who work long hours
6. Plant-sit, or water plants for people on vacation
7. Shop, or do yard or garden work for an elderly neighbor
8. Go through your garage or attic and sell unused items on eBay
9. Set up an interesting blog, post to it daily, and put adwords links on it.
10. Get paid to blog for businesses.
11. If you can write, sign up at a site such as Helium.com and enter the contests
12. Do on-line surveys for cash

You can also increase your income by making yourself more valuable at your current workplace, and asking for a raise. Begin by doing extra tasks, taking on more responsibilities, staying longer or working harder.

Start scanning the job ads for a position that carries more responsibilities and thus pays more.

The most important thing is that you use these extra funds to pay down your debt. Don't use them as an excuse to increase spending!

As you watch your credit scores climb, remember that the better your scores, the less you'll pay for credit in the future. Use that as an incentive to keep yourself on track.

Be sure you get a copy of your free credit report before you begin, so that you'll know where you began and be able to see the progress you're making along the way.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Your New Car and Your Credit Scores

You've probably laughed at the TV ad with the guy driving an old beater instead of a shiny new car – It seems he didn't pay attention to his credit scores and was denied a loan on the car he really wanted.

The ad is funny, but the reality is not. It's just another reason why you should pay attention to your credit rating, and work hard to keep your scores high.

If your income is high enough, you might still be able to buy the car you want with marginal credit scores, but you'll pay almost 3 times as much in interest than you would with a high credit score.

Research shows that a borrower with a score under 600 will pay over 18% for a car loan – while a borrower with a score over 720 will pay only 6 5/8%. As you might expect, the difference in the payments is staggering. On a $15,000 car purchase, the difference in the first year is about $1,700 – or $142 per month!

If the high payments weren't bad enough, insurance companies also charge more if your credit score is low. While there doesn’t seem to be a correlation between credit scores and driving habits, there is a correlation with regard to paying the premiums regularly and on time. Insurance companies like to have their money, so they charge more at the outset, knowing they might not get the full premium.

Rather than use the FICO score in its pure form, insurance companies use a variation called an “insurance score.” This is recently coming under fire and several states are now regulating what information insurance companies can use. Before long, they may be limited to looking at your actual payment history, but that won't help you today.

To find out the regulations where you live, go to your State’s Department of Insurance website.

Remember that in addition to your credit score, lenders consider the amount of your own money you are investing in a purchase. You’re obviously less of a risk if you’ve made a substantial down payment. On the other hand, if you have nothing invested you're more apt to simply walk away if the going gets tough.

Wait until your scores reach 720 to head off for the car dealership – you'll end up with a nicer car for less money.

You may already be there – check your credit score today with a free credit report from Credit Score Cowboy.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

How can your credit cards hurt your score if you pay in full each month?

If you travel on business or entertain clients you may use a credit card as an accounting tool. They're a convenient way to keep track of gasoline, hotels, airline tickets, meals, etc. all in one place – especially if you have a credit card that separates the purchases and sends you an annual statement.

If your employer is reimbursing you for expenses, it's easy for you to pay those cards in full each month so the balances don't get higher and higher from month to month.
The fact that you always pay in full and on time should raise your credit scores, right?

Not necessarily. It all depends upon the credit limit on each card. If you stay below about 30% of your limit, then you're right – using the card will help raise your credit score.

But if you spend 50% or more of the available credit each month, your scores will begin to slide. Why? Because companies report on the statement balances each month.

So what can you do?

If you work for someone who reimburses your expenses, you could ask your employer to furnish you with a company card – and not run those charges through your own accounts at all.

If you pay your own expenses, call your credit card company and ask to have your limit increased, so the debt to limit ratio is lowered. Sometimes you can even arrange this increase on line – provided you have a good payment history with the card issuer. Ask for a credit limit that will allow you to stay within the 30% mark each month.

But be careful – If you're about to apply for a home loan or a car loan, you might want to wait. Your credit card company could pull a “hard credit report” before granting the increase. Because the number of inquiries on your account also plays a role in determining your FICO score, this inquiry could harm you. Call customer service first, tell them why you want the increase, and ask the procedure.

If you believe asking for an increase will generate an inquiry on your credit, you can instead spread your purchases over several cards, keeping the ratios low on each of them. This isn't as convenient for bookkeeping, but you can go back to the other method once your new home or car loan is in place.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Tips to Boost Your Credit Score

We've previously discussed how many credit reports contain errors and what impact it has on your credit score. Since your credit score determines stuff like getting good rates on home and auto loans, credit cards, insurance and even employment its important to check your credit report frequently. Here are some tips to help boost your credit score:

• Read your credit report very carefully. Identify anything that isn't yours. Especially negatives items like late payments, charge-offs and collections. If you do have legitimate collections, make sure they aren't being reported twice. Sometimes when accounts go to collection the original creditor will list it as a debt as well as the collection agency. Any duplicates must be deleted.



• Negotiate bad debts with the creditor and have them deleted. If you have a collection or charge off that's been out there a while the creditor is likely to settle for a lessor amount and quite possibly delete it from your credit report. Be sure and get something in writing from them stating that they will "delete it" upon receipt of settlement. If you are in the process of buying a home at the time of negotiating a debt, DO NOT TELL THE CREDITOR. They will be less likely to settle for less than what you owe.


• Make sure that all of your revolving accounts never carry a balance more than 30% of the available credit. If you have a credit card with a $10,000 limit make sure that the outstanding balance doesn't float more than $3000 for any 30 day period. This tells the world that you aren't overextended and are in control of your finances. If you've maxed a card out already see if the creditor will up your limit. Do not use this extra cushion or you will soon be maxed out again!


• Do not close old credit card accounts because these accounts show your established credit history. Keep these accounts open as they tell a story about your stability and pay habits.


• If you do not have credit cards and at least one active installment account open some immediately. Go for secured credit cards if you've been turned down for traditional credit cards. The scoring system likes to see three open credit card accounts. Secured cards are an excellent way to establish credit. Typically you make a deposit that is equal to the credit limit. This ensures the bank that you will repay the card each month. Installment loans are things like car loans, appliances and furniture. Getting a mortgage is the ultimate installment loan that will surely boost your credit score with timely payments.

It takes time to build up a good credit score. Be patient and follow these tips. Remember to check your credit report and credit scores quarterly. These soft credit pulls will not affect your credit score. Soon you will be on your way to saving sweet moolah through lower interest rates because of your excellent credit score.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Scoring your Credit - How's your Credit Score?

In today's fast paced on-the-go automated society, it should come as no surprise that when you apply for a mortgage, your ability to pay can be reduced to a single number known as your credit score. Your credit score is an indicator to prospective creditors of the odds that you will pay on time or not. Your past history of mortgage, car and credit card payments have been chopped down to this number.

All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The most popular is called the FICO score, based on a model developed by Fair Isaac and Company and used by Experian. Equifax's model is called BEACON, while TransUnion uses EMPIRICA. Each system considers a similar range of data available in your credit report, the primary factors are:

• Credit History - How long have you had credit?


• Payment History - Do you pay your bills on time?


• Credit Card Balances - How much do you owe on how many accounts?


• Credit Inquiries - How many times have you had your credit checked?


• Public Records - Had a bankruptcy, Judgement or Tax Lien?

Each of these factors are assigned a value and a weight. The results are added up and broken down into a single number. Credit scores range from 300 to 850, with higher being better. Typical home buyers likely find their scores falling between 620 and 850.

Credit scores are used for more than just determining whether or not you qualify for a mortgage. A higher credit score will open the door to better mortgage products and terms. You will have the cream of the crop to choose from. A lower score typically means less products to choose from. You will probably be required to put more money down. In many cases more money than you can get your hands on. You can also expect to pay a much higher rate that what you see in all those teaser pop up ads.

What can you do about your Credit score? Make sure it’s healthy. Give it a regular check up just like you do your body. The most important thing is to know your Credit score and to ensure that your credit history is correct. Conveniently we have created a web site http://www.creditscorecowboy.com/ that let's you do just that. You can quickly get your free credit score and free credit report from all three reporting agencies. You also get access to the credit analyzer software that enables you to see what different actions will have the greatest impact on your credit score. There is a 30 day free trial period. After that you pay only $14.99 per month for quarterly updates to all three of your credit scores. You also get daily monitoring for maximum credit file security against identity theft and fraud.

Armed with this information, you will be a more informed consumer and better positioned to obtain the most favorable mortgage available to you.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Common Credit Report Errors and How to Erase Them

Experts tell us that at least one in four credit reports contain errors. The most common credit report errors are simple mistakes like incorrect reporting of payments. Other errors include confusing people that have the same name like John Jones or John Smith and the fastest growing problem of accounts being opened without your approval by someone committing identity theft.

The faster you pinpoint errors and handle up on them the better. Even the smallest errors on your credit report can cost you considerably. Fixing them will likely raise your credit score.

Where do you start? First things first, get your free credit report from http://www.creditscorecowboy.com/ You will have several choices from our credit report menu. Print your credit report and review it carefully. If you see inaccurate information on your credit report you have the right to dispute that information with the credit bureau. By federal law the credit bureaus must investigate all disputes within 30 days and remove any false information.

Did you see errors in your credit report and credit score? If so, get proof of the error. Creditors make mistakes and when they do they are quick to rectify them. Request a letter from the creditor admitting their mistake. This is the ultimate proof that will fix your credit score at the bureau level. Be sure and send the letter to all 3 credit bureaus.

Trans Union Corporation

P.O. Box 34012

Fullerton, CA 92834

Equifax Information Services

P.O. Box 740241

Atlanta, GA 30374-0241

Experian National Consumer Assistance Center

P.O. Box 2002

Allen, TX 75013

Within 30 days you should get a response with additional contact information. At that point simply follow up. Keep in mind that results are not guaranteed. Removing inaccurate information may or may not raise your credit score.

If you suspect identity theft or identity fraud take action immediately. File a police report with your local police department as soon as you can. Notify each credit bureau and address your correspondence to the Fraud Division. Request that they put a fraud alert on your credit report. Close any accounts that were fraudulently opened and follow up in writing to that creditor. Check your credit every few months to make sure no additional fraud has taken place. Soft credit pulls will not lower your score.

For your convenience the following example dispute letter can be copied and pasted to any word processing software.

[today's date here]

Trans Union Corporation Experian and Equifax

Request to Dispute Account Information on My Credit File

I currently received my credit reported and located the following problems of inaccurate reporting.

[credit info detailed here]
[credit info detailed here]
[credit info detailed here]

Under the provisions of the Fair Credit Reporting Act (FCRA) and the timeframe allowed, please re-investigate and delete/correct this information. Please send me the names and the addresses of the persons contacted. I shall assume that thirty days constitutes a "reasonable time" to complete the actions unless you notify me otherwise immediately. It should be understood that failure to verify within this time constitutes non-verification and these items must be promptly deleted according to Section 611(a).

Also according to Section 611(d) of the Fair Credit reporting Act, please send me notification that the items have been deleted. Send an updated copy of my credit report to the below address. According to the provisions of Section 612, there should be no charge for notification of changes on my credit report.

Sincerely,

Full name:

Home Address:

Social Security Number:

DOB:

Be sure to include the name and number of the account in question. Send supporting documentation when available and Sign the letter. We also recommend sending the letter return receipt so you have record of when they actually received it.

http://www.creditscorecowboy.com/ is one of the most unique on line resources for free credit score report, free credit scores, free credit reports, identity theft protection, and a BLOG with a wealth of information about credit.

How to Buy a Home When Your Credit Scores are Low

Gone are the days of sub-prime mortgages, stated-income, and zero down loans and loans for folks with no credit scores. Gone also are the creative financing options that allowed sellers to carry back a note for part of your down payment.

Maybe they'll come back as part of the government's "bail out" program, but it isn't very likely. Lenders will probably continue to be cautious, and to lend only to those borrowers with high credit scores and money in the bank.

So if your credit scores are low, are you doomed to living in a rental for years until you can raise your scores and save a large down payment? No, you're not. There is another way.

You can look for lease to own properties, and seller-financed homes.

Remember, homeowners who need to sell are in as much of a bind as borrowers. The pool of buyers who will qualify for loans is getting smaller and smaller as lenders tighten their requirements, so fewer homes are selling.

For sellers who have to move, this is a crisis of major proportions.

Thus, more and more sellers are entertaining the idea of seller financing and lease to own arrangements. In fact, some entrepreneurs are buying up under priced properties for the express purpose of reselling them to buyers who are unable to get a mortgage.

The down side of seller financing is that it usually comes with a higher interest rate than those we’ve seen in the past few years. That means you’ll get less house for the same payment. You need to weigh the costs of renting versus buying – and be careful not to purchase an over-priced home.

That leaves “rent to own” or “lease-purchase” arrangements. You'll be paying a few dollars over fair market rent, and those dollars will be applied to your down payment. Thus, you'll be building equity each month.

But do be careful. Read ALL of the fine print before you sign anything. Many “rent to own” companies require you to get a loan and cash them out within a set time frame. If you can’t do it, you’re out and all payments made toward the down payment are kept as “liquidated damages.”

Get your free credit report today. Call your favorite lender and ask if your score qualifies you to purchase a home. If not, work on raising your credit score while you search for seller financing or a lease option.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Your High Credit Score Could be a Ticket to Opportunity

You may be offended by what I'm about to say – but often the truth combined with the hard realities of life is offensive.

Right now, in America, millions of people are losing their homes to foreclosure. We don't know the next steps the government will take, but we can be fairly certain that many of those homes will be offered for sale at greatly reduced prices.

Homes sitting in inventory provide zero income to mortgage companies – in fact, they cost money each month. Thus, as each month passes, they drop the price a bit. After a few months, those homes become true bargains.

If you’re at all interested in becoming a real estate investor, the coming months will present the opportunity of a lifetime – as long as your credit score is high and you have some money in the bank.

But repossessed homes are only part of the picture. When faced with the competition of these lesser-priced repo homes, the others have to follow suit or they’ll sit there unsold. Thus, the entire inventory of homes begins to fall in price.

You, as a would-be real estate tycoon, stand to profit if your FICO scores are high enough. You can purchase one to live in and that will carry the lowest interest rate. For the others you’ll have to admit that you’re buying rental properties, but with a stellar score, even those rates will be favorable.

Now is the time to order your free credit report – the one that shows your FICO score at each of the 3 major credit bureaus. Get it, study it, and then get busy working to get it all the way to the top.

Meanwhile, begin studying the market, so you'll know when you spot a true bargain. Look for homes that are structurally sound and just need new paint and other cosmetic touches.

Avoid luxury homes and focus on homes that can be rented for a reasonable rate while still giving you a positive cash flow. Study the rental ads while you're studying the for sale ads – know what rent the market will bear so you'll know what you can pay for the houses while charging enough rent to make the payments and give you a cushion for repairs and cleaning between tenants. Remember, this is an investment – so make wise choices.

But first... order your free credit report. You won't know what you can do until you take that first step.

About the author: John Rasor is the owner of Dallas, Texas based http://www.creditscorecowboy.com/ Credit Score Cowboy is one of the most unique on line resources in the world for free credit score reports, free credit scores, secured credit cards, identity theft protection and a BLOG with a wealth of information about credit and how to raise your credit score.

Credit Score 101, Do's and Dont's

A credit score is an indicator of how likely you are to default on a loan or credit card. Your credit score is determined by a combination of the following:

1. Payment History.

2. Do you pay your bills on time? Are there recent late payments? How many times were you late?
3. Amounts owed. Are your cards maxed out? Do you have a ton of debt?
4. Length of credit history. How long have you been using credit? Have you established good credit history?
5. New Credit. Are you opening new accounts and borrowing more? How many recent inquiries do you have?
6. Types of credit in use. Do you a good mix of various accounts?

Things like age, race, color, national origin, sex, and marital status do not have any bearing on your credit score. Only positive and negative information from the five categories mentioned above make up your credit score.

Follow these tips for reaching your maximum credit score:

DO

1. Pay your bills on time. Accounts paid more than 30 days late have an adverse affect on your credit score. If you have missed payments, get current and stay current. The sooner you can begin to manage your credit and pay on time, the sooner you will see your credit score improve.
2. Keep credit card balances low. If you cannot pay the balance at the end of the month, don’t keep charging it up. High outstanding debt will lower your scores.
3. Re-establish credit especially if you’ve had problems in the past. Getting back on track and showing the world that you are worthy of credit will raise your score in the long run.
4. Check and monitor your credit regularly.

DON’T

1. Open a bunch of credit cards or accounts that you don’t need.
2. Transfer credit card balances from one card to another. It’s best to simply pay them down and gradually pay them off.
3. Open a lot of new credit all at once especially if you are a new credit user. Rapid account build up looks risky if you are a new credit user.

Credit scores make a difference. Anything below 500 is a credit night mare. Hit the 620 mark and you are considered Fair, 680 is good and anything above a 700 is great. At 700 or above you will be considered a prime borrower and should have no problem getting credit and the very best interest rates. Your credits your life so take it seriously.

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/ This site is one of the most unique on-line resources for free credit score reports, Internet identity theft software, secure credit cards, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Check your free credit report before buying a home

Why get a free credit report before talking to a mortgage broker? Because you need the upper hand when it comes to shopping for a home loan. Knowing your credit score and qualifying for a mortgage should be done before you actually find a home. Attaching a pre-approval letter to an offer on a home gives the seller confidence that you can actually afford and qualify for the home in question. Your offer may be accepted over some one else’s just because of this letter. And your offer may even be lower!

Having a good credit score will influence not only your settlement costs, but also the monthly costs of your mortgage loan. There are many different types of loans to choose from but they all have one thing in common. Good credit means lower costs and bad credit means higher costs.

Check out the differences here on a 30 year $400,000 mortgage:




The lower score paid nearly $500 per month more and $176,956 over the life of the loan in finances charges. More than likely the 650 credit score paid more in home owner’s insurance premiums as well. What would you do with an extra $500 per month?

Don’t rule out the possibility of an out right loan denial if you have a low credit score. The Fair Credit Reporting Act requires a lender or mortgage broker that denies your loan application to tell you whether it based its decision on information contained in your credit report. If that information was a reason for the denial you should get your free credit report immediately. You have the right to dispute the accuracy or completeness of any information in your credit report. If you dispute any information, the credit reporting agency that prepared the report must investigate free of charge and notify you of the results.

Example dispute letter:


Date
Your Name
Mailing Address
City, State, Zip

Re: Disputing Inaccuracies on My Credit Report

Name of Credit Reporting Bureau Mailing Address City, State, Zip

Dear Sir or Madam:I am writing for two (2) reasons:

1. To dispute certain information in my credit file; and

2. To have you investigate/re-investigate and remove inaccurate information from my Credit Report and prevent its re-insertion. The item(s) I dispute are encircled on the attached copy of the credit report and further identified by (identify the items by name of source, such as creditor or tax court, etc. and identify type of item, such as credit account, judgment, etc.)This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or whatever specific change you are requesting) to correct the information.(If you are enclosing documents such as copies of cancelled checks, payment records, court documents, send copies only, you should always retain the originals -- and use the following sentence.)Enclosed are copies of the following documents supporting my position?

1.

2.

3.

Please reinvestigate this (these) matter(s) and (delete or correct) the disputed items within the time frame required by the Fair Credit Reporting Act (FCRA) and inform me in writing of the outcome. Thank you for your time and consideration in this matter.




Sincerely,________________________


(Signature)Your name

Filing your dispute by mail is the suggested way, but only Equifax and Transunion allows this kind of dispute. Experians requires all disputes to be submitted online.Here is the 3 Credit Bureaus information.



Equifax
P.O Box 740256
Alanta, GA 30374-0241
Dispute online


Experian
Dispute online

TransUnion
2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
Dispute online

The bottom line is to know your credit score before you even make a loan application. If you have a good score, let your lender know it. You deserve the best terms and lowest closing costs. Not sure about your score? Save yourself the potential embarrassment of crummy terms or worst than that a loan denial. A free credit report is within your reach.

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/ This site is one of the most unique on-line resources for free credit score reports, Internet identity theft software, secure credit cards, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Who is looking at your credit scores - and why?

Strangers – all kinds of strangers – are regularly looking at your credit scores, accessing your history, and forming pictures of your life. All they need is your social security number – and that isn’t hard to get any more.

Who are these people, and why do they want to know your private business?

· Credit card issuers – who may want to offer you a card, or may want to change the percentage rate on cards you currently hold

· Insurance companies – to determine if they want you for a customer, and if so, what kind of rates they'll offer you

· Cell phone, cable, and satellite companies – to decide if you can have their service

· Prospective employers – because now they do consider your credit rating

· Prospective landlords – to decide if you're a good risk as a tenant

· Car dealerships

· Furniture stores

· Department and office supply stores

· Mortgage Lenders

· ... and even prospective mates

Looking at your financial life gives people an impression of you, and of how you conduct your life in general. Of course, much of it is none of their business – but it’s a fact.

A prospective employer looking at your credit report will see if you’ve been job-hopping or if you move from city to city with regularity. Why do they care? Because it costs time and money to train a new employee and they want people who will stay and work after they're trained.

They’ll even know if you’ve changed spouses, because your credit report shows who shared responsibility for each debt.

As for prospective mates – it's very unromantic, but when you tie your financial life to another's, it's good to know if it will hurt you or help you.

Of course everyone who might extend credit to you wants to know if you're a good risk. That only makes sense. But what about insurance companies, cell phone and cable companies, and satellite providers?

Apparently insurance companies have decided that you're more likely to file a claim if your credit score is low. I don't know if that's true, or just an excuse to charge more.

Cell phone, cable, and satellite providers generally have money invested in getting you as a new customer – the "free" equipment and installation isn't free – they figure it into your first year or so of service, so they want to know that you can and will continue to pay your monthly fees.


Shouldnt you be looking at your free credit report? Get it now and see what the world knows about you.

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/. CreditScoreCowboy.com is one of the most unique on-line resources for free credit score reports, Identity theft protection software, secured credit cards, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Your Credit Score Affects Your Reputation

When you think of your reputation you think of things like honesty, sense of humor, generosity, punctuality, your love life, and the way you treat other people.

They're all personal habits, and so is the way you handle money.

The difference is, while all the rest of those attributes are tossed around between your friends and acquaintances, your money management reputation is also made public record for any potential creditor, landlord, employer, or insurer to access.

Unlike some other things that might have gone on in your life, you can't move to a new community and escape your financial reputation. Your credit report and your credit score tell all – at least for 7 years.

The worst of it is - that financial reputation affects things that you might think have nothing to do with your bill-paying or borrowing habits. Things like qualifying for a new job.

That’s why it’s worth your effort to protect it, and to keep it accurate.

If your credit right now isn't so hot, it's time to take steps to rebuild it. I know, 7 years seems like a long time to completely erase blots on your reputation. But if you wait, that 7 years will just keep moving further into the future.

So, get started. Here's what to do first:
· Order your free credit report from Credit Score Cowboy so you'll know exactly what you're dealing with.
· Start paying down your bills! Even if it means finding a small side job to boost your income, or cutting back on something you enjoy, just do it.
· Pay off any collections on your record. Many of these collection agencies will negotiate with you, so see how low you can get the balances, and then take care of them. Be sure you get the payoff agreement in writing, so if they don't remove them from your record you can contact the credit bureaus and take care of it yourself.
· Don't go shopping and let some sales person check your credit. This is the time for "window-shopping" only. Whatever it is you're longing for – set it as a goal for when you've paid the bills and built some cash reserve.
· Get some good credit going. Gather up what cash you can and get a secured credit card. Use it sparingly and pay the balance each month – so the notation on your credit report will say "Paid as Agreed."

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/. CreditScoreCowboy.com is the one of the most unique on-line resources for free credit score reports, Identity theft protection software, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit.

Teens -- Begin Adulthood With Great Credit...

Starting out in life with a good credit score will open doors for you that you can't even imagine. You'll get better jobs, live in better places, drive better cars, and best of all – the things you want will cost you far less than your "poor credit" friends will pay.

Why? Because when you buy on credit – such as a house or a car – you'll pay a lower interest rate than a person with poor credit.

A good credit score comes as a result of good money management, so here are some ways to get started on the right foot.

First, remember that this takes time and the effect is cumulative. The time to start building a reputation is right now, so it will be there for you later.

Discipline is the first step. This means saying “no” to most of the credit card offers that come your way, and working hard never to use over 30% of the credit available to you. It also means paying every one of your bills by the due date, and paying a bit more than the minimum payment. Strive to keep your non-mortgage debt down to 15% of your income, even when it means delaying the purchase of a new gadget or a classy addition to your wardrobe.

One simple method to make sure you pay your bills on time every time is to use a blank calendar page. Enter each bill and its due date about a week ahead of time – so there's time to mail the check. One caution: don’t assume that the due dates will be the same each month. Read each bill when it comes in and record the payment date accordingly. Mark off each bill as it is paid.

Add up all your payments, deduct them from your income, and see what you have left to save and spend. And do be sure to save some – building your net worth is the next important step toward your high credit score – and a bright financial future.

Small amounts add up, so just keep putting a few dollars away from each paycheck. By the way, having both a checking and a savings account will earn you a score 4 times higher in that category than having a checking account alone – so open a savings account – and never give in to the temptation to withdraw money for luxury items or entertainment.

Lastly, be sure to check your credit score often – so if there’s a mistake you can get it corrected quickly!

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/. CreditScoreCowboy.com is the one of the most unique on-line resources for free credit score reports, Identity theft protection software, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit.

Sad but true: Your credit score depends on accurate data entry

You know what they say about computers: "Garbage in, garbage out." And all too often with data entry, garbage goes in.

If you do any typing yourself, you know how easy it is to make a mistake. Even when the document you're writing means a great deal to you, you sometimes find that you've sent it out with a glaring error.

Well, the people who enter information that goes into your financial records also make errors. Only their errors will do more than embarrass you – they can ruin your credit score. One wrong number in a social security number, one wrong letter in a name, and something could land on your credit report that has nothing to do with you.

In addition, sometimes bookkeeping tasks that affect your credit are overlooked. For instance, there are certain kinds of information that should be removed after 7 years, but it doesn't always happen. Sometimes you have to contact each of the credit bureaus and remind them that the time is up.

That's why you should always be keeping an eye on your credit report and your credit scores. Why not order your free credit report from Credit Score Cowboy right now, so you can get started?
When your credit report arrives, take the time to read and understand each entry. Your report could include accounts you’ve paid in full, as well as accounts you've never had.

It could also include lawsuits, judgments, paid tax liens, collections, late payments, and even child support. This information should have automatically fallen from your record (if it was even yours), but that doesn't mean it has. You need to take responsibility for knowing what’s on your report, and getting it changed if it’s wrong.

If you find errors, write a letter to the credit reporting agency that listed the incorrect information. As carefully and accurately as possible, list every inaccurate or outdated piece of data and describe why it is incorrect.

When they receive your request, they’ll investigate the items you listed and contact you within 30 days to notify you of changes. If your next report still shows errors, contact them again until you get them corrected.

Credit scores are re-figured every 30 days, so be sure to check your reports each time they come in. Catching an error immediately could save you weeks of hassle and untold dollars!

About the Author: John Rasor is the owner of http://www.creditscorecowboy.com/. CreditScoreCowboy.com is the one of the most unique on-line resources for free credit score reports, Identity theft protection software, and a BLOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit.

Rebuilding your credit: Where to begin?

If your credit score has fallen recently it could be the result of events over which you had no control – like being "downsized" or becoming ill and unable to work. It could mean that you've been living on credit card advances in order to keep going.

It could also mean that your expenses are greater than your current income, so you're charging more and your credit card balances are slowly advancing into the danger zone.

Either way, the path toward great credit scores is to get those debts paid down as quickly as possible. That could mean making some sacrifices right now, but in the end, they'll be well worth your effort.

Begin now by making some lifestyle changes that will allow you to put an extra few dollars on your accounts each month. Every dollar you pay off is a dollar you won't pay interest on again, so it's worth much more than one dollar.

The first thing to do is get your free credit report so you know where you stand. Next, go over your checkbook entries and see where your money has been going.

Are you paying for services you don't really need? Lots of things are nice to have, but if you don't actually need them, now is the time to get rid of them. For instance, if you watch cable or satellite TV, could you switch to a less expensive plan? Could you cut back on cell phone use and switch to a smaller plan?

If you stop for an espresso every morning on the way to work, could you get an inexpensive machine and make your own before you leave in the morning? Could you take your lunch to work instead of eating out?

If you really look at where your money is going, you'll find places that are like "leaky holes" that you can plug.

Next, are there ways to earn a few extra dollars? Even an extra $10 per week, added to a credit card payment, can make a big difference over the course of a year.

The internet offers several ways to add a little to your income. Paid surveys and blogging come to mind immediately. You might also pick up a few dollars providing some kind of service in your neighborhood during your off hours.

A combination of less spending and more earning – even in small amounts – will help you rebuild your credit score.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Engaged? Get your free credit reports before you tie the knot.

Marriage is about much more than love and romance. It's about a life partnership, and that partnership includes money. So before you set the date, check your credit scores.

If you're dreaming of setting up housekeeping in that cottage with the white picket fence – or that condo in the sky – you'll either need a lot of money in your pocket, or good credit.

And, you won't know unless you ask. If either you or your beloved has bad credit, your dream could go up in smoke. In fact, if one of you has really bad credit, you might not even be able to rent a decent apartment.

A life coach would probably tell you not to marry until you both learn to handle money wisely – and that's not a bad idea.

If, however, you are determined to marry soon, settle your housing question before the wedding.

If you plan to rent, do it now, in the name of the party with the best credit.

If you plan to buy, get started with a mortgage lender and find out how much you can spend for a house based solely on the income of the person with the best credit scores.

Because your mortgage lender will only be able to use that one income, you may have to settle for a little less expensive house than you'd prefer, but that's not really a bad thing. It means that when you combine your incomes, making that payment each month will be far easier than if you'd borrowed to the limit of what you can afford together.

Remember, Realtors and Mortgage brokers get paid a percentage based on the dollar value of your purchase. That means both of them will encourage you to spend just as much as your debt to income ratios will allow.

Spending less may not buy you the house of your dreams, but it will allow you to live a less stressful life. And it will help you build equity in a house that you can sell later, when you're in a better position to "move up."

Today the housing market is being flooded with repossessed homes. Lenders can't keep homes in inventory for too long, so prices will be dropping monthly This is good news for you if you're a careful and smart shopper and can wait just a bit to buy. Perhaps that wedding should be postponed for 6 months or a year...

Meanwhile, get your free credit report right here at Credit Score Cowboy, so you'll know exactly where you stand.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Before You Get a Free Credit Report, Read the Fine Print

You see tons of ads for free credit reports, but unless they include your credit scores, they're worth exactly what you're paying. Worse, when you get there you'll probably find the old "bait and switch" tactic at work.

But assume that they do let you get your credit report. Without the score, you won't know how much the different entries on the report are affecting you. And if you try to take it along to show to a prospective creditor, they'll tell you "Sorry, we need to order a credit report."

Even if they have the expertise to decipher all the entries (which most do not) they won't want to take the time. So unless your report shows a ton of late-pays and collections, they won't know what it means. Of course, if that's what it showed, you wouldn't be trying to use it to get credit.

Anyway most people wouldn't. I once knew someone who tried to buy a house on seller terms and agreed to provide a credit report. When it showed up it spewed pages and pages out of a fax machine – and they showed one collection after another. They had to have been goofy.

The bottom line is that would-be creditors want your credit scores more than they want your credit report.

The FICO credit scoring system is the result of years of study into the financial traits that mark the difference between a person who is a good credit risk and one who is not. And while no system can predict the future accurately 100% of the time, the FICO system works well enough to instill confidence in lenders. And that's what matters when you want to borrow money.

Who wants to know your credit score? Seems like almost everyone:
· Mortgage companies
· Banks
· Car loan companies
· Credit Card Companies
· Credit Unions
· Department stores
· Potential employers
· Potential landlords
· Insurance Companies
· Cell phone companies
· Satellite Television providers
· And even your soon-to-be spouse!


Take the time to read the fine print before you hand your social security number over to a company promising a Free Credit Report. Make sure that you'll be getting the full picture – including your FICO scores.

The good news is, when you request your free credit score reports from Credit Score Cowboy, you’ll get all you need – including the scores you need to know.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Don't over pay for credit repair services

Credit repair companies typically have an internal process where they attempt to have inaccurate items removed from credit reports. They dispute negative items with the major credit bureaus and also dispute directly with the creditors.

Items such as Collections, Charge-Offs, Late Payments, Inquiries, Repossessions, Foreclosures, Bankruptcies, Judgments and Tax Liens are among the usual suspects of things that credit repair companies target. Depending on how severe your situation is will determine how much you will pay. Since no two credit reports are exactly alike the costs will vary. Expect to pay anywhere between a few hundred dollars to several thousand.

If I just knocked the wind out of your sails, relax. There are alternatives. You can actually take matters into your own hands and potentially save thousands of dollars that could be put to better use.

Identity guard and credit monitoring are easy to use and powerful tools to help you take control of your own credit report without paying someone else. Once you sign up you instantly receive a copy of your credit report and credit scores from Experian, Equifax, and TransUnion. Your credit report is divided into four sections. Indentifying information, credit history, public records, and inquiries. Study each section and look for errors.

Now that you’ve signed up for credit monitoring you can take control of errors on your own by following simple instructions within your account. You are just a click away from disputing and correcting inaccuracies on your credit report.

My favorite tool within Identity Guard is the Credit Analyzer. This function allows you to explore the impact that various credit actions may have on your credit score. You can experiment with making payments, opening or closing accounts, transferring balances, paying off accounts and more. This will help you determine whether or not certain actions should be taken to get the results you want.

The Credit Analyzer is a simulation tool and doesn’t actually carry out any credit action. You select the bureau you wish to simulate then choose what action or scenario is of interest to you. If it is going to make a positive impact on your score, then by all means put it in to action. These are the same tools that most credit repair companies use and charge hefty fees for doing so. You can achieve the same thing on your own with a few simple clicks.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Credit Score Misinformation

You've heard of the 80-20 rule. 80% of the people in any industry do 20% of the business, while the top 20% do 80%.

The mortgage industry is not immune from this rule, so you need to be careful where you get your advice.

When you consider that 80% of the mortgage lenders and bank representatives haven't taken the time and made the effort to really learn about credit scoring, you can see why you're apt to get bad information.

If your lender is trying to help you raise your scores so you can qualify to buy a home, he or she will probably outline some steps you should take.

I've heard people say that their lender told them their credit score would come up if they closed open accounts. And that's exactly wrong. You shouldn't open any new accounts, but if you close accounts you have now, you could lower your score.

Your debt ratio is measured by looking at how much credit you have available and how much you've used. So if you close every account you aren't using, you have less available, and you appear to be pushing the limits of your credit.

Instead, ask for a credit line increase – and then don't use it.

Some lenders will tell you not to get your free credit report, because that inquiry will lower your score. That's also not true. Inquiries from a car dealership or a furniture store will hurt you, because they indicate that you're about to spend money. Inquiries that you make yourself are completely ignored.

Your lender may tell you to pay cash if you want to buy furniture for your new home. Don't do it. Unless your credit score is at the top of the FICO scale and you have several times more dollars in the bank than you'd need to close, just wait. You can go shopping after your loan has closed.

Why? Because the lender is apt to do a last-minute check on your bank balances.

If you're shopping for a lender and get any of this bad advice, keep shopping. They're in the 80%, and you'll be better off dealing with someone in the 20%.

Oh, and get that free credit report right here at Credit Score Cowboy. Knowing your score is the best place to start getting ready to qualify for that new home.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Want to save money? Raise your Credit Score

Home buying isn't the only reason for maintaining a good credit score. You also need it for buying a car, or getting a credit card.

In each of those cases, a good credit score will mean that you can borrow – and that you can borrow at a lower interest rate than you could with a poor score. Often there are several points difference.

And think what that means. If you borrow $3,000 on a credit card at 18% interest, you'll be paying $45 per month on interest. If you borrow that same $3,000 at 6%, your interest charge will drop to only $15 per month.

That means, if you're paying $100 per month on the loan, it will take 4 and a half years to pay the balance at 18%, and under 3 years to pay it off at 6%. What could you do with an extra year and a half worth of hundred dollar bills?

But that isn't all. Your credit score also affects:
Your insurance premiums
Your ability to own a cell phone
Your ability to obtain satellite TV
Your ability to rent a house or apartment

I suppose the insurance companies consider a person with a poor credit score a greater risk because they might not take care of things. Or perhaps they think you'd burn your house or wreck the car to collect the insurance. Whatever the reason, if your credit is poor, they'll charge you more.

And of course, the cell phone and satellite people are trusting you to make a monthly payment for their services. Often they provide you with "free" equipment up front, knowing that they'll recoup their costs from those payments. They don't want to give you equipment in May and have you default in August.

As for landlords – they expect that people with good credit will pay the rent on time, while those with bad credit might get a month or two behind before disappearing in the night.

But that’s still not all. (Do I sound like a late night TV ad yet?)

Professional employers, especially in fields tied to financial practices, check credit before hiring. In their eyes, a good credit score indicates trustworthiness and responsibility. A poor score creates suspicions of irresponsibility and disorganization.

The first step you need to take is to learn about your current score. Get your free credit report here at Credit Score Cowboy, read it carefully to make sure it has no errors, and then begin working to make it as good as you possibly can.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Why Your Credit Score Matters

If your credit score is good, you’ll know it. Pre-approved credit offers will be stuffed in your mailbox every day, and banks will likely bend over backwards to offer you the lowest rates on all types of loans. However, if your credit score is low or non-existent, you’ll be trapped in a world where loans are hard to come by and the rates and fees on loans you are able to get will be very costly. This can potentially add up to hundreds of thousands of dollars over a lifetime, all because of a three digit score that is calculated by a computer program. And to make matters worse, many employers and insurance companies are also using credit scores as a factor in making employment decisions and pricing insurance rates. So there is more risk at stake by having a bad credit score than just higher interest on loans. A low credit score can affect your life in many ways you might have never even imagined!

Luckily, as the significance of credit scoring has increased, so has the transparency of how credit scoring works. Credit scores are determined by a mathematical formula run by a computer program. This program considers several factors regarding payment history, account balances, type of credit used and new credit recently acquired. Most people are able to effectively manage their credit once they learn how this scoring model works.

Technology and the internet have also made it much easier to keep track of your credit score and credit history. Many companies provide services that allow for regular monthly monitoring of your credit report and score, and also offer additional services, such as identity theft protection. Identity theft and fraud are the fastest growing crimes in the world, and many people don’t learn they are a victim until it’s too late. Unfortunately this means that regular monitoring of your credit score and report are no longer a luxury-it is now a NECESSITY. Protecting against identity theft in the digital world can go a long way towards preserving a good credit score. And many people who rebuild their credit history are devastated to learn an identity thief has compromised their personal information. Identity thieves don’t target people with bad credit; they target those with GOOD CREDIT since those are the people that can easily obtain credit and loans.

Managing your credit score and guarding your identity have never been more important. The time to take control is now.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

How your credit report reveals identity theft

You may have wondered why anyone would want to steal another person's identity. What fun is it for Joe Smith to go around pretending to be George Clark?

The reason is: Money. And people with high credit scores are the ones these thieves target.

Think about that. If you were going along with unpaid bills, unable to qualify for a mortgage or a car loan, or even unable to purchase a cell phone plan, wouldn't you rather "be" someone else? Wouldn't you rather be someone with a good credit score who could buy anything you wanted?

And if you wanted to buy a lot of "stuff" and never pay for it, wouldn't it be fun to use a credit card that would be billed to someone else? Identity thieves can do just that.

They get your vital information, then begin opening accounts in your name. And then they begin using those accounts. Even simpler, they may just start using accounts you have open, but aren't using. Since you don't know about it, balances begin to build, payment dates come and go without payments being made, and soon your credit is completely shot.

Now you're thinking that's silly – you'd get the bills and know something was up. But that doesn't happen, because along with stealing your identity, they change your address. The bills don't come to you – instead they go to your "new" address.

That's why you should stop what you're doing right now, and order your free credit report from Credit Score Cowboy.

When you get it, go through every entry to make sure that:

1. You actually have credit with each of the companies listed
2. Your true address is listed for each of those accounts
3. The report accurately reflects your payment history.
4. Balances due agree with what you know to be true

If any one of those items is inaccurate, it's time to do some further research. For starters, contact each of the companies and find out when the accounts were opened, when and why your address was changed, etc. If you know you didn't do it, it's time to notify the authorities and get letters written to all of your creditors, letting them know that someone else is using your identity.

Think how fast you could spend money if you knew you didn't ever have to repay it? That's exactly what the identity thieves are doing, so you need to protect yourself with knowledge and then take action if you see the red flags.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Rebuilding Credit

Lenders check credit score of applicants and use that to determine loan eligibility and interest rate. Bad credit doesn't necessarily mean that you can't get a loan, but it does mean that you'll pay a higher interest rate and quite often have to make a larger down payment.

Rebuilding credit should consist of three steps:

1) Take action to get debt under control. If you’re missing payments, consider debt settlement or credit counseling. Credit repair cannot begin until payments are under control.
2) Request a copy of your credit report and check for errors. Save all documentation of payments on accounts and collections and compare this against the records shown on the credit report. Federal Law allows consumers to dispute inaccurate information, and the creditors only have 30 days to verify the validity of disputes or the account information must be deleted.
3) Consider applying for a secured credit card or other type of secured credit if your score is low due to lack of credit. Since credit scores cannot improve much without new account information, secured credit is often the only choice for consumers with low or no credit score.

With the credit crisis taking a toll on nearly every lender in the country, many lenders have increased their credit score requirements for certain types of loans and are now demanding much higher interest rates on consumers with less than perfect credit. Getting a handle on your credit score has never been more important. Ideally, a score of 720 or above will typically get you the best rates on all types of credit. Although this will happen overnight, taking appropriate action sooner than later will jump start the process.

Credit monitoring is a service that notifies you if there are any changes on your credit report or if the score rises or lowers. Since many credit reports have errors, keeping track of credit status on a monthly basis is a great tool for many wise consumers. Many services also provide a level of identity theft protection as well, and often sell this as a package deal along with credit monitoring.

A good credit score will not make you wealthy, but will preserve cash flow so that money can be used for other things (like savings). High interest can quickly become a problem for many consumers, but credit score management helps to increase the likelihood of getting the best rates.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.

Credit Scores

Credit scores have long been a mystery to many consumers. But, the scoring process has become much more transparent recently, and consumers are beginning to understand this process more.

Credit scores are generated by a computer program that looks at many different factors associated with payment history, debt and type of credit used. Many different factors affect the score. It can be difficult to estimate what affect certain actions will have on the score, but some factors are much more important than others. However, the various factors that affect score, broken down by percentage of relevance, are public information. Here they are:

35% of credit score is determined by payment history.

Paying bills on time should be the top priority since it makes up the highest percentage of credit score. Even missing a small minimum payment on a credit card can have a drastic impact on the score. Late payments do stay on a credit report for seven years, but their impact diminishes over time in this order:

· Late payments made in the last 12 months account for 40% of this factor.
· Late payments 1-2 years old make up 30% of this factor.
· Late payments 2-3 years old make up 20% of this factor.
· Late payments 3-4 years old make up 10% of this factor.
· Late payments over 4 years old have little or no impact on the score.

The frequency and severity of late payments also has a great impact. For example, an isolated 30 day late payment doesn’t necessarily indicate a problem with a consumer’s ability to make timely payments, but if account were to become 60 or 90 days late, this can be an indicator of a larger financial problem that may show the consumer is no longer a good credit risk. Additionally, if more than one account is late, especially at the same time, the impact on the score can be much more significant.

30% is determined by the amount owed on accounts.

New credit accounts with high balances and revolving accounts, such as credit cards, have a particular impact on this part of the score. When an installment loan is opened, such as a car loan or mortgage, the initial balance is usually always equal to the credit limit. Once payments are made, the balance goes down, which raises the score over time (provided, of course, those payments are made on time). Credit card accounts work differently since the balance can change daily. Keeping credit cards at or below 50% of the credit limit will tend to raise the score. Requesting a credit line increase can be an alternative to paying down a card if that’s not possible. It’s important to do this with discipline to avoid the temptation to charge up the balance to a level that causes financial stress.

15% is the length of time credit has been established.

New credit tends to bring down the score while established credit tends to raise the score. The credit bureaus calculate the average age of open accounts. Many consumers make the mistake of closing old credit card accounts thinking this will improve the score. They are often shocked to discover their score drops after closing old accounts.

10% is new credit.

If many new accounts are opened within a short period of time, this tends to lower the score since it may show that a consumer is attempting to use credit to supplement a loss or reduction in income.

Credit inquiries also count into this part of the score, but the TYPE of inquiry also has an effect. Credit inquiries from mortgage lenders only affect the score one time every 30 days. So there’s no need to worry if several mortgage companies request credit all at the same time; they will only count as one inquiry if done within a 30 day period. Credit inquiries for credit cards and high interest finance company loans can have a more negative impact on the score, especially if several of these inquiries are recorded within a short time span

10% is the types of credit used.

Having a fair mix of credit is important. For example, a consumer with five credit cards and no installment loans shows a tendency to use all revolving credit, which may indicate higher risk. In addition, having too many high interest loans from finance companies can have a negative impact since those loans are viewed as “loans of last resort” and tend to indicate a consumer is relying on high interest loans to pay everyday expenses.

About the author: John Rasor is the owner of http://www.creditscorecowboy.com/. And a 20 year veteran of the mortgage and real estate business. CreditScoreCowboy.com is a great source for free credit reports, free credit scores, fico scores, identity theft software, and free information on how to repair your credit for free.