Credit In The News

You Still Have Options!

2012-02-14T07:43:00.000-08:00

If you recently applied for a credit card but were declined because you have bad credit or no credit history, don’t lose hope. You still have options!

There are two types of cards that you need to be aware of in this situation: secured credit cards and prepaid cards. Both have pros and cons.

Secured Credit Cards

As the name suggests this is a credit card that is secured by a cash deposit that you make and is tied to the card. Once the deposit is made you can use the card just like any other credit card- charging purchases and paying monthly bills. In addition, if you maintain a regular payment history, the card issuer will typically reward you by increasing your credit line without requiring you to add to your security deposit.

Pros: The monthly payments made on most secured credit cards are reported to the credit bureaus. For this reason, a secured credit card can help you build a good credit history — as long as you pay the bills on time.

Cons: The main disadvantage of secured credit cards is the cost. Because these cards cater to higher-risk consumers, most issuers of secured cards charge higher fees and interest rates.

Watch out: Avoid online credit card applications that don’t enable you to see the card terms and conditions until you’ve gone through the application process. They are likely to hide sneaky terms, like charges for increasing your credit limit or high annual fees. Also watch out for secured credit cards with high interest rates.

Prepaid cards
Prepaid cards look like credit cards, but they function more like debit cards. Your credit line depends on how much money you have loaded onto the card, and each time you make a purchase you draw down those funds. In other words, with a prepaid card, you don’t have access to a line of credit. You can spend only the money you put into the card account.

Pros: Anyone can get approved for a prepaid card.

Cons: Prepaid cards have two main drawbacks: They come with a multitude of fees, and they don’t help you build a credit history!

Prepaid cards have been criticized, not only for the fees they charge, but also because the pricing and structure of most prepaid cards make it difficult to determine how much it will cost you to use them.

Watch out: Recently there has been a lot of publicity over prepaid cards, most notably with a new program launched by Suze Orman. She is partnered with TransUnion for this card and claim that there is a possibility that some day it could be used in credit scoring. Even on the card’s website Orman says, "I'm proud to say that the Approved Card is the first prepaid card in history to share information with TransUnion, a major credit bureau." The actual truth behind all of this is if you sign up for new card and then opt into an anonymous pilot program for 18 to 24 months you can give TransUnion permission to use that data to see if they can find anything with your spending habits on this card that might be helpful for credit scoring purposes! That information isn’t as catchy as simply saying “the approved card is the first prepaid card in history to share information with TransUnion!”

Just in case you didn’t know, the industry standard for credit scores is the FICO score, so really what this means is just about every lender that you might actually want to get a loan from is evaluating you based on your FICO score. Not some score made up by TransUnion with the help of data from Suze Orman’s approved card! Take my advice on this, if your motive for getting one of these cards is to improve your FICO score, get a secured credit card, use it properly and don’t get suckered into getting a prepaid card just because Suze Orman sticks her name on it. Do what is best for you and your family, not just blindly follow others with ulterior motives.

Your Credit Score- Top 7 things you need to do before buying a house

2012-01-12T08:37:00.000-08:00

When it comes time to purchase a house one of the things that mortgage companies are going to do is evaluate your credit report and credit score. Just having a score high enough to qualify should not be the goal so here are 7 easy steps that you can take to ensure you have no unwanted surprises. The sooner you can start on these the better!

1. Get a copy of your credit report. The best place to do this is www.annualcreditreport.com. This is a website that is set up where every consumer can obtain all three of their credit reports every 12 months for free from the 3 largest credit bureaus. This site will not give you a FICO score so I suggest that you pass on buying the score they offer to sell you as it is not the score a mortgage company will be using when the time comes.

2. Review the report. This should go without saying but just to be clear I will say it! Taking the time to order a report but then not looking it over will not do you any good! Make sure the information is accurate, some studies suggest as much as 80 to 90% of reports have errors on them, don’t assume it is accurate!

3. If you find inaccurate items dispute them or ask for help. If it is on the report, it is consider accurate in the eyes of the FICO score until it is removed or fixed. Be careful as the bureaus have lots of tricky was to try to get rid of you. This might be a step that you need some help with as it can become very frustrating and turn into a full time job!

4. Check your revolving accounts (credit cards). See how many open and active accounts you have. The best mix is 3 to 5. Depending on how long you have until you want to buy your house it could make sense to open a new credit, but I do not recommend going out and getting 3 at once if you have a short time-frame. Just get one, if you have more than 5, do not close any of them!

5. Compute your Aggregate Revolving Utilization. What? I know that is mouthful, simply put how much do you owe on your credit cards compared to the limit. For example if I have $1,000 limit and I owe $500 my utilization is 50%. With this, the lower the better, ideally you want to be less than 10%.

6. Avoid apply for new credit. Inquires will never be positive for your score and usually are negative. Don’t apply for anything unless you are doing it for strategic purposes. Buying the house is more important that getting a new credit card to safe 15% at your favorite department store!

7. Be careful where you get advice. Understand all kinds of people or companies are quick to give credit advice, just be careful where you get that advice. With your credit score a little bit of wrong advice or incomplete advice might just cost you your dream house. Make sure you are getting advice from someone that is an expert when it comes to credit scores, not just someone that you think “should” know!

Top 3 reasons NOT to apply for a store credit card

2011-12-20T13:49:00.000-08:00

If you've gone shopping at a department store lately, I’m sure you have been asked to open a store credit card. For doing this, you could save 10-, 15- or even 20 percent on your purchase that day.

Here are 3 reasons this is a very bad decision:

1. When you apply for a credit card, retailers pull up your credit report and scores. Multiple inquiries in a short period of time can reduce your credit score, especially if you don't have many credit accounts. Inquires account for 10% of your total FICO score. This type of inquiry stays on your report for 2 years and will affect your score for one year from the date it took place.

2. Retail credit cards come with a low limit in most cases compared to a general credit card. This is highly important because the second largest factor in your FICO score is the amount of credit card balances or credit card debt compared to the limits. For example, take a $250 balance on a store credit with a $500 limit; you'd have a 50 percent credit-utilization ratio. But on a $5,000 credit limit on a general credit card, the ratio is just 5 percent. The higher the ratio, the worse your credit scores!

3. Store credit cards usually also have very high interest rates.

With all that combined, stay away from the ever so tempting offer next time you are checking out to open a new card for the 15 or 20 percent discount. Don't use a new credit card as a discount coupon.

Did you hear about this?

2011-11-21T07:02:00.000-08:00

Have you heard about the newest gadget you can buy for your car? You hook it up to your car and then as you drive it will give you a very rough estimate of how fast you are going. Plus it will give you a vague estimate of what the speed limit might be in the area you are traveling! This service has a monthly subscription fee of only $14.95 per month! The service I just described doesn’t exist and I made up the scenario just to prove a point. We as consumers can easily see the flaws in a product like this one, but when it comes to our credit we fall for things like this all of the time!

Let me explain. There are all kinds of “credit scores” on the market, but the credit score model used by the over whelming majority of lenders is the FICO credit score. Other scoring models will evaluate the information on your credit report and give you some kind of scoring range to show you where your score falls. Referencing back to the example above, Police Officers gauge our speed on miles per hour, not on some “other” calculation; therefore we are concerned with what they use to determine our speed. Similarly we need to concern ourselves with the model that lenders are using when it comes to our credit score. Here is a quick tip for you: if you are buying a credit score online, or getting a score from any source and it doesn’t say “FICO score” on it, chances are it is not a score that any lender would ever use to determine your credit worthiness!

Next, if you are concerned with your FICO score (which you should be unless you can pay cash for everything you will ever need in your lifetime) then you need to make sure you are getting advice on things you can do to improve your FICO score, not things you could or should do to improve some other credit score that has no merit. So many of these monthly monitoring services, credit score simulators and other services give you advice on ways you can improve your “credit score” not actual advice on how to improve your FICO credit score. If I can get a ticket for speeding I would much rather be able to look at the speed limit sign that tells me the actual speed limit that I am being judged on rather than receiving a ticket based on someone else’s guess of what the speed limit is.

Lastly, why would you ever pay a monthly fee to look at something you can view for free and, with a little research, get free advice on how to improve (I’m talking about your FICO score), which as you now know is really the only score that most lenders currently care about.

Most of the companies that have developed these other products (monthly monitoring services, credit score simulators, etc.) suck us in with catchy advertisements or by using reputable people in industries that we would assume are giving us correct information when promoting themselves and their services. In reality they are not much more than services that prey on our lack of knowledge as consumers and add even more confusion to the topic just to rope us in to a monthly subscription fee. My advice for most people is stay away from these kinds of services. They will just cost you money and confuse you even more.

More Foolish Advice!

2011-10-12T08:13:00.000-07:00

A few weeks ago I was doing a public speaking event and one of the questions I received was “what is the best way for someone with no credit to build a credit score?” Before I answered the question the person got even more specific and told me that a bank had told him the best thing he could do was to deposit $1,000 (with this institution) then to take out a $1,000 installment loan against that deposit.

I am sure the bank had lots of “great” reasons as to why this was helpful advice, but telling someone this is the best and fastest way to build a credit score is where I take issue. Let’s address the issue of time first.

In order to generate a FICO score two things have to happen;

1. You have to have an account that has been open for at least 6 months (collection accounts do not count)

2. You have to have an account that has been updated to the credit bureaus at least once in the last 6 months. One account can work to qualify for both of these rules.

In looking at the criteria listed above you will not see that it mentions the “type” of account as a factor, since it doesn’t then we know the “type” of account is not a factor in how long it will take to generate a score! So in answering the time question of the equation the answer is 6 months if you currently have no credit now. Regardless of the “type” of account!

Let’s look at the other issue now; the goal is not to just have a score, but to have the best score we can.

If you understand how the FICO score works you know that revolving accounts (credit cards) hold a much higher value than installment loans. Knowing that is why I disagree completely with the advice from this bank. In this scenario it will be a lot better to get a credit card and use it properly, than it would be to get an installment loan. For someone with no credit at all the biggest challenge will be what type of card to apply for to have the best chance to get approved. For this situation we want to get a secured credit card. In case you are not familiar with this term, very simply it is a credit card where the limit is secured by a deposit. Most banks have a minimum amount of $250, so you give the bank $250 that they hold as a deposit, you then get a credit card with a limit of $250. This is what makes the account secured. Since it is secured it is a lot less risky for the bank which makes it a great option for people with no credit or damaged credit.

Comparing these two ideas, both will take 6 months to generate a score, the revolving approach will yield you a higher score when you generate a score than the installment option (if you use it correctly) and the last factor, with the banks installment idea it will tie up $1,000 of your money vs. only $250 with my approach!

Be careful with the advice you listen to when it comes to your credit. Clearly the bank had an ulterior motive with this type of advice. It sounds to me like it is a plan to generate higher deposits instead of the best and fastest way to generate a FICO score for this person!

How long will it stay?

2011-09-21T09:30:00.000-07:00

One of the most common questions I get from people is regarding how long certain items will remain on a credit report. Many people have heard all kinds of crazy answers, especially when it comes to negative information. People are usually shocked to find out how long something can stay on their report or they have been told lies by collection companies trying to scare them into making a payment. Here is the real truth about accounts and credit reporting limitations.

Accounts Paid on Time –Accounts that have never been late can stay on your credit report indefinitely or can be removed ten years from the last time the account had activity. If the account is closed, this would be based upon the date it was closed. If the account still has activity, it will stay until there has been no activity for 7 years.

Bankruptcies – Chapter 7, 11 and non-discharged or dismissed chapter 13 bankruptcies are removed in ten years from the filing date. Chapter 13s are removed seven years from date discharged, but not to exceed 10 years.

Charge-offs – Charged off accounts are removed seven years from the date it was charged off.

Collections – There are two types of collections: the original account, which was turned over to collections and an account reported by a 3^rd party collection agency. Original accounts remain for seven years from the time they went 180 days delinquent prior to the default. Accounts reported by a collection agency remain for seven years from the same date. This means that the collection can remain on your report no longer than the original account that went into default. No where in that statement did I mention “from the date it was PAID” this is because paying a collection does not change how long it can be reported to your credit report.

Inquiries – Inquiries are placed on your credit report to indicate who has looked at your credit report. Inquiries that you initiate from an application (such as credit card, auto or mortgage loan) will remain on your credit report for 2 years. These type of inquires are commonly known as “hard inquires” and they can negatively affect your score. When you request your own credit report, that inquiry stays for 6 months and nobody other than you sees it. Inquiries that you didn’t initiate, such as pre-approved credit offers or companies monitoring your credit report, remain for 6 months and are not seen by other companies and do not impact your score.

Judgments – Judgments stay on the credit report seven years from the filing date.

Repossessions - Repossessions are removed seven years from the date your auto loan went into default.

Tax liens – Tax liens include federal, city, state and county liens. They remain seven years from the date they’re released. If they aren’t paid they can remain indefinitely.

Keep in mind all these times are the maximum things can stay, that doesn’t mean they can’t come off sooner. Also unfortunately not all companies always follow the rules, just one more reason to check your reports regularly for inaccurate reporting.

Finally the TRUTH about Mortgage Inquiries

2011-08-18T09:25:00.000-07:00

Understanding how inquiries impact your FICO score is easily one of the most complicated aspects of the scoring system. This is easily on the “Top 5” list of the most misrepresented facts about FICO scores. In efforts to clear this up here are some truths about credit inquiries and how they relate to your FICO score. What you will read is 100% accurate.

1. Inquiries are all specifically coded by the credit bureaus to reflect the industry from which they came. This means whatever “type” of credit you apply for will likely be clearly indicated. This is important because the “Type” of inquiry plays a key role in how it is evaluated.

2. Mortgage, auto and student loan inquiries are treated differently from all other inquiry types. If you don’t already know, these are the type of loans that you can shop for the best interest rates and terms. Shopping for these loans most likely will result in your credit report being loaded up with multiple inquiries in a short amount of time.

3. FICO doesn’t want to penalize smart consumers for rate shopping. So, rather than assume each inquiry indicates a discreet and unique credit application, they have built logic in their credit scoring model that identifies when you’re shopping for one loan rather than many loans.

Here’s how these 3 rules work in a mortgage application example…

Mortgage related inquiries, which are very easy to identify because of #1 above, are ignored for the first 30 days they’re on your credit reports. If you were to apply for a mortgage on August 15^th it will take until September 15^th to become “visible” to the FICO score. This means you can apply with 50 different mortgage loan lenders during that 30 day window and all 50 of those inquires will be ignored for FICO scoring purposes. In other words these inquires will have absolutely NO impact to your FICO score.

When the mortgage inquiries age past 30 days they become fair game and will be seen by the FICO scoring system. The rule doesn’t end there however. Any of those inquiries that occur within the same 45-day period will be treated as 1 inquiry for scoring purposes. So in my crazy example of applying for a mortgage with 50 different lending companies all those will only be counted as 1 inquiry because they all would have happened within 45 days of each other.

Many years ago the 45-day period was only 14 days. For this reason, you still hear some people claim that you only have 14 days to shop for a mortgage, which was true about a decade ago but isn’t true any longer.

These rules apply not only to mortgages but also to auto loans and student loans. It does not however apply to credit cards, which means if you apply for 3 credit cards then the 3 inquiries will immediately be seen by the FICO score AND they’ll all be considered unique loan/credit applications.

It will surprise you!

2011-07-14T14:20:00.000-07:00

One of the most common questions that I receive has to do with what would be the best thing to payoff to improve someone’s FICO score. Judging by the frequency of the question and the overall surprise of the answer I thought it would be a good “FICO Score pop quiz” question, so here you go!

Which of the following would improve your FICO score the most?

A. Paying off a $2,000 Collection

B. Paying off a $30,000 Auto Loan

C. Paying off a $300,000 Mortgage loan

D. Paying off a $7,000 Credit Card

Before you answer there are a few ground rules to this quiz. First, the starting score is a 620. This is important for a few reasons but mainly because this is a score that needs improvement. Second, the payoffs of the accounts are a payment in full, not a short sale or settlement and everything else on the credit report remains the same. OK, good luck!

Using a scoring tool built by FICO here are the results…

Paying off the collection account in this case actually decreased the FICO score!

Your FICO score is more concerned with the incident when it comes to collections not the balance. People get this idea that if they pay off their collection accounts that it is going to magically improve their FICO score. Reality is, doing this will have a slightly positive to neutral effect on your score. However things can go wrong, most commonly if dates get updated on the account it can appear as if it’s a new collection which will cause a negative impact to the score! Talk about great motivation to pay off a collection!

Paying off the auto loan had a 5 point improvement

Balances or lack of balances on installment debts are not that important to the score and this simulation provides more proof. A lot of banks that want to “help” their customers improve their FICO score sell them on this idea of having the customer give the bank $1,000 to put into a CD and then using that as collateral on a $1,000 installment loan. They usually tell the customer that by doing this they will get a new installment loan on their report which will be great for their credit score. Keep in mind this is not an interest free loan by any means. I know their motives are only to “help” the consumer improve their credit rating but this approach is not the best answer!

Paying off the mortgage had a 5 point improvement

Guess what, a mortgage loan is just another installment loan! This helps to squash the Myth that the larger the balance, the more it hurts your score idea. Pay off your mortgage to save money on the interest if you want too but don’t get caught up in the idea that this is a credit building tool.

Paying off the credit card improved the score by 35 points!

Credit card debt is considered more risky than installment debt because usually installment debts are secured by some asset. This is the reason that revolving accounts (credit cards) play a much bigger role in the score. In this simulation we paid off one revolving account all together as well as lowered our overall “utilization” to less than 10 percent, both of which are great for our FICO score.

These results are simulated, but prove that when it comes to paying off debt to improve your FICO score use it on credit cards.

You Have Got to be Kidding Me…or Maybe Not?

2011-05-26T08:03:00.000-07:00

Sen. Dick Blumenthal wants explanations from the three credit rating bureaus about a New York Times report about a VIP list they allegedly keep that favors the rich and famous over everyone else. The article says the Connecticut Democrat wrote a letter Monday to Equifax, Experian and TransUnion about the reported separate system in which errors and disputes are resolved faster and with more attention than with other consumers, who must rely on an automated system and outsourced customer support to clear up mistakes.

"I am deeply troubled by the implication that your companies are neglecting the majority of consumers and providing preferential treatment for wealthy, famous or well-connected persons, and I ask you to confirm or deny these reports and provide more information on your dispute resolution process," he wrote in the letter.

"An error-free credit report is vital to a consumer's financial health, and consumers must be able to quickly resolve disputes and mistakes with the cooperation of the credit reporting bureau," he wrote. "Every consumer deserves this cooperation, not just the rich and powerful."
But the credit bureaus deny keeping VIP lists, all according to the article On May 17, 2011 FoxNews.com.

The good news is now we all know what may be the easiest way to ensure ourselves a good credit score...just become rich, famous and well connected! Just in case you think that might be an unrealistic plan for you, here are 5 solid tips that everyone should know and follow.

#1 Pay your bills on time. Of course you should pay your bills on time, it sounds simple but it doesn’t just stop there. If you get in a situation where it is impossible to pay the minimum on all your bills, try to look ahead and see if you can get things caught up before they go 30 days past due. This is important because if you are reported as 30 days past due, this will be a negative on your credit report for 7 years. Know that just paying your bills on time is not a guarantee for a good credit score! Since this area makes up only 35% of your FICO score, you need a more comprehensive credit plan in place, but this is a good start.

#2 Keep your credit card balances low. This is the most misunderstood component of the FICO score. Most people have no idea what this really means and more importantly what is optimal. Too make this as simple as possible, make your overall goal to only have a balance of 7% or less of the total limit, for example if your credit card limit is $100 try to have the balance be $7.

#3 Do not close your credit card accounts. This advice is easy and applies to just about everyone, so if in doubt, leave the card open!

#4 Only apply for things you need! Be strategic about the things you apply for. Only allow someone to pull your credit if you need the credit or you are doing things to build your credit profile. In case you are wondering, getting 10% off at your favorite department store by applying for their credit card is not a “need”. Stay away from those “spur of the moment” decisions when it comes to your FICO score.

#5 Check your credit regularly for errors. Whether the bureaus want to admit it or not, a large number of credit reports have errors. Check yours to make sure it is accurate. I recommend going to www.annualcreditreport.com. You are able to check with all three bureaus once every 12 months and it is free. They might try to sell you a “credit score” for $7.95 but don’t waste your money on it. Get the free report and look it over carefully.

These are five easy tips that can help you take control of your credit life. And they are not unrealistic or far-fetched. They are simple and anyone, not just the rich and famous, can do them. Good luck, and as always remember credit education is extremely important, make sure that the advice you follow is from an expert and complete.

They REALLY don't care about you!

2011-04-21T07:28:00.000-07:00

The Government Accountability Office states that as much as 80 to 90% of credit reports have serious errors on them. In other words, only 1 or 2 people out of every 10 actually have a credit report that is 100% accurate! Not exactly the best success rate. Granted not every error on a credit report will directly effect that person’s credit score, but a huge majority of them will. The credit score world we live in is not like our judicial system, you know “innocent until proven guilty”. This system is the exact opposite, you are guilty unless you can prove yourself innocent, that is assuming you even knew how to do this.

If you were wrong 80 to 90% of the time and most likely every time it happened you were responsible for costing someone thousands of dollars or worse crushing their dreams, how would you respond? Most people would do everything they could to fix the problem and help their victims recover as fast as possible. Sadly when it comes to the accuracy of your credit report there is a different philosophy being employed.

The “Big Three” (Transunion, Experian, and Equifax) have a much different way of dealing with this major problem. Most of us know that if there is something wrong or inaccurate on our credit report we have the right to dispute that information. Disputing it is how it will get fixed, but did you know that there are several ways or methods to go about disputing something?

If you look at the websites of the “Big Three” they will make it really easy to dispute anything that is inaccurate on your credit online with just a few clicks of the button through their online dispute process. Have you ever wondered why they would push this option so hard, and make it so easy for you to complete? It has to be so their product (your credit report) is as accurate as possible, in the shortest amount of time possible, and this is the best way to ensure future accuracy, correct? How would you feel if you learned that by following these instructions to fix their error, in reality all you are doing is waving several of your rights and changing the things they are required to do by law?

By disputing online you agree to make the “Big Three’s” job easier by having preselected generic ways that you can dispute something. There is no paper trail to even prove you actually do dispute something, and you allow them more time to “investigate” your dispute. All of this along with a few other minor details like waving your right to be notified if a previously deleted negative item is re-inserted back on your credit report. By using the online method, you allow them to not have to send you any results of the investigation and lastly give them more loopholes as to what information the original creditor has to provide. All these things will greatly hinder the chance of you getting your credit report corrected.

Don’t just assume the bureaus are right or that they are doing anything in reality to help you improve or maintain a good credit score. That is not the business they are in. Having you dispute online is just one more way they prove how little they really care about you having an accurate credit report. It is pretty clear that the real motive of the credit bureaus is only to make money, to sell you worthless add on products, and confuse you. Even when they recognize their product has flaws, their first instinct is to create a way of dealing with that problem by making their job easier, not one that will ensure the best accuracy possible. Credit bureaus make money storing and reporting data, unfortunately for us nowhere in that statement is the word ACCURATE data.

Why are you paying that Collection?

2011-03-17T07:30:00.000-07:00

When it comes to collections, and more importantly paying past collections, there are two common myths that consumers have. The first is that paying a collection will remove it from your credit report. It would be great if that were the case but unfortunately that is not how the FICO system works. Paying a collection will just have the account updated to a zero balance, but will not do anything for you as far as removing the collection from your report. Collections can stay on your report for 7 years from the date of first delinquency.

The second most common myth I hear about collections is the idea that paying a collection will somehow drastically improve your FICO score. If you understand the purpose of the FICO scoring system, which is to predict the statistical chance of consumer being 90 days late or more in the next two years, you will understand how this belief is flawed. If the purpose of the FICO score were to predict the statistical chance of a consumer paying a collection then yes, paying that collection would be fantastic advice for credit score improvement. In most cases paying a collection will have a neutral to slightly positive effect on your FICO score.

I am not saying don’t pay your collections if you have them, I just want you to know what to expect by doing so. There are several reasons for paying your collections, just understand that if you are hoping for a large score improvement or that the item will be removed from your credit report you are greatly mistaken.
The FICO score cares about the incident, meaning the fact that you had the collection in the first place, not the balance. After paying a collection the incident needs to be addressed. If you are able to get the collection removed from the credit report one way or another then you will see the improved credit score you were hoping for.

Obviously the best advice is to not let accounts get to the collection stage, but there may be circumstances that you cannot control which lead to collections. If you get a collection letter and have the ability to pay it, always ask the Collection Company if they will remove the incident from your report when you make the payment. This doesn’t always work, but it is worth a shot, if you are successful you will save your FICO score, which in this day in age is extremely important.

Don’t try to outsmart your FICO score…

2011-02-22T08:15:00.000-08:00

When it comes to FICO scores people have lots of ideas about how to build or improve credit scores. One of the most common I hear has to do with how to use credit cards. For those who don’t have a credit card, some of the most common advice that they are given is to get a credit card, max it out, and then pay it off when the bill comes. People who are giving this advice will then tell you to repeat this process, and by doing this, it will look good on your credit report and improve your FICO score because it shows you can manage your debt. If this is advice that you commonly give…stop giving it!

Here is the truth about this advice and why you don’t want to follow it. Your FICO score is a real time calculation based upon what is on the credit report, at the exact moment and time that a score is requested. Meaning your FICO score doesn’t care what your balance was last month, or the month before, it cares about what your balance is at that exact moment in time! Also it is important to remember that by the time you receive a statement on your credit card, the balance has already been reported to the credit bureaus and will not be updated until the next billing cycle ends.

Following the max it out, pay it off when the bill comes theory means that what you have most likely done is cost yourself a lot of time and tanked your score in the process. Remember that following credit score advice that is just a little bit wrong, can cost you thousands of dollars in the long run!

So what is the best way to properly handle this situation; get a credit card, only charge less than 10% of the credit limit, and when the bill comes pay it off. Repeat this cycle every 3 to 6 months just so that your new card doesn’t get closed for you. See how much easier that is? Don’t try to outsmart your FICO score, most likely all you will do is hurt yourself in the long run.

What is the FASTEST way to improve your credit score?

2011-01-25T07:31:00.000-08:00

I get asked all the time, “What is the one thing I can do to improve my credit score the fastest?” Now my answer is, “Usually it depends, but good advice for anyone is to always pay down credit card debt.” This is the easiest and most efficient way for most people to quickly improve their credit score. A very important piece of your FICO score is balance-to-limit on revolving accounts (credit cards). More people quote poor advice about this piece of your score than anything else.

The two things you need to know are; the lower percentage of your credit card you are using, the better. And the second thing to know, if you are crunched for time you need to pay the extra on your card before the billing cycle ends. If you are not sure when your credit card’s billing cycle ends, check your statement or call the company and ask.

Let’s assume that I want to buy a house and I only have a month till closing, but also let’s assume if my FICO score were 10 points higher my loan would be approved. In this situation I have a few choices but the best choice I could make is to take some money and apply it towards my credit card debt. However, I want to make sure I know when the billing cycle ends. If I don’t know this date, my efforts might not do me any good. This will also prevent me from being able to help my Mortgage Loan Officer in letting them know when to pull a new report.
If I know the date the billing cycle ends, I will take all the money that I can apply towards this debt and make that payment a few days before the cycle ends. Then I will tell my Mortgage person to pull my credit report a few days after the billing cycle ending date. By doing this, the new updated (lower) balance will now be reporting on my report and my FICO score will calculate off that, which in most cases will improve my score and make everyone happy now that I am approved to be a Home Owner!

It can be a relatively easy process with just a little education and proper planning instead of just guessing and then being frustrated when my score doesn’t improve the way I had hoped it would. Balance-to-limit is extremely important on revolving accounts, be careful about this number.

A lot of people wrongly assume that as long as I pay my bills on time my FICO score will be good. Unfortunately it is not that simple. If you want to score the best you can in this area of your score 7% is the magic number. Meaning if I have one credit card with a $100 limit, the best thing I can do for my score is to have my balance at 7% of $100 or $7. Remember this tip, it just might allow you to qualify for your dream home now!

A 2011 goal you MUST have...

2010-12-10T13:42:00.000-08:00

By Dan Beck, Certified Credit Scoring Expert

The New Year is here and with that comes a time of reflection. If you are a person that is not in the habit of setting goals, I would encourage you to do so. Having goals gives you direction and clarity about where you are headed in life. If you normally set goals for yourself I want to strongly encourage you to add a goal that I bet you have never had.

Many people have goals based around; health, relationships or finances. The goal I believe that everyone MUST have will help you in just about all of these areas. Whether directly or indirectly there is one goal that can positively affect your finances, health and relationships. The goal that has to be a part of your life, especially in this day in age, is to get control of your FICO score. I don’t care how good or how bad your score currently is, you need education and you need a plan moving forward to improve your score.

Credit scores can be linked to all kinds of other things. Think about the stress that people have. A lot of this comes from worrying about your financial future. Relationships, how many divorces are caused because financial issues are a big part of the problem? Just about everyone has one or two financial goals; the most common are to get out of debt or create more wealth. Understanding your credit score and the options that are available to you will help you get out of debt. Having a better FICO score will allow you to pay less for just about everything you do. This then allows most people the monthly savings they need to begin investing, or to increase their available investing dollars monthly!

Learning the things to do, or not to do that will affect your FICO score is the first step that I want everyone to understand. By doing this, awareness is created. I am a strong believer that when people are aware of how things affect them they make different choices. No longer is it the time to stick our heads in the sand when it comes to credit and hope that things will be ok. If you are hoping your FICO score is good, I will tell you most likely, it isn’t.

The other most common reaction from people is to get angry or call the system stupid. Whether this is your belief or not, one thing I can promise you is that lenders don’t care. I don’t mean that to be mean, but it’s the truth. You are not going to change the current system which leaves you with two choices; get educated and reap the benefits or, call the system stupid or unfair and continue to be told “no” which means you pay more for everything you want or need.

The other reaction people employ is to believe it makes good financial sense to “exit the system”. This is a very strong belief by some very popular financial experts. I agree that not having debt can be a fantastic financial plan for people. But I believe this advice goes too far to an extreme, which will then take it over to the bad advice column.

If you do not have any credit there are two big problems that come up even if you don’t have any debt. The first, for most of us, is that at some point in time something will come up that we need that we cannot just pay cash for, then what do we do? The second problem is that there are things we have to have such as insurance. Most insurance carries factor your credit score into the equation to determine your premiums. So by exiting the system, you hurt your FICO score which makes you pay more for something you have to have. I don’t think any financial expert will ever tell you that paying more for something that you have to have makes financial sense, especially when you can easily avoid it!

Think twice about adding credit scoring education or credit score planning to your 2011 goals. You will be amazed about how many ways it can affect your life. Credit Score Planning is a term that we all need to add to our lives.

Even if you have an excellent FICO score, what most don’t understand is one small wrong move could plummet your score. Take some time and make this a priority in your life. Even if you don’t, lenders everywhere are doing it for you. Hopefully I have encouraged you to start addressing this three-digit number.

The last very important thing you need to understand is where you get education or advice. Most of the things you will hear, read, or find about FICO scores are unfortunately made up, misleading, or just flat out wrong. Be very careful who or what you listen to when it comes to something as important as this. Good luck with your Credit Scoring Planning in 2011.

Popular advice that can be costly…

2010-11-22T19:10:00.000-08:00

By Dan Beck, Credit Management Specialists

How many times can you think of that you had the best intentions, did just about everything right, but the end result turned out to be negative? Some of the most popular advice about how to improve your FICO score is just like this, great intentions, just about all the right advice advise but one key element is not addressed. This key element can take great advice and turn it into devastating results.

A lot of people think they have a handle on what makes up a FICO score, and consequently what needs to be done to improve it. I am certain we have all heard the advice to; “Just pay your credit card off in full every month and your FICO score will improve” or “If you don’t have a credit card, get one and use it, then when the bill comes just pay it off in full every month.” Now this advice is never meant to be misleading or harmful, I am certain of that. The one key factor that is not addressed with this advice is the element of time.

Following the advice can actually cause your score to go down all because one little piece was over looked. For purposes of illustration let’s assume I want to buy a house, I go apply for a mortgage and my scores are a little shy of what is needed to secure a mortgage. The mortgage broker looks at my credit report and trying to be helpful tells me to go get a credit card, use it and then pay it off in full when the bill comes. So being a good listener I go out and get a credit card with a $300 limit. I decide instead of paying cash this holiday season I will just use the card and then use the money I have set aside to pay off the card. A month later I get the bill in the mail, write a check for $300 which pays the card off and takes my balance to $0. I go back to my mortgage broker to pull a new report so I can buy the house I want and to my surprise, and that of my mortgage broker’s, my FICO score is lower than it was the previous month!

To understand why this happened, we need to understand that balance-to-limit on a credit card is actually the second largest component of our FICO score. It makes up roughly 30% of our overall score. Now before I had no credit cards, which is negative to my score, so I followed the advice and did exactly as I was told. I got the new card, used it and paid it off in full when the bill came. The element that was overlooked is by the time the statement comes in the mail the balance has already been reported to the credit bureaus from my credit card provider. The new credit report that I have will show the one credit card I have has 100% utilized, thus causing my scores to drop, most likely severely.

An easy solution to this problem is just a little more education. If we are educated we can avoid a lot of frustration and heartache. If the advice that was given to me would have contained one more step, the plan would have worked perfectly and I would be approved for my new house. We know that balance-to-limit is extremely important to our FICO score. I will also share with you the absolute best percentage to utilize for your credit card limit is 7% for maximum gain to your FICO score. 7% of $300 is $21, so if I would have had a balance on my card of $21 I would have seen the most improvement to my score with this advice. But only if I knew the proper time to pay down my card, this is the ingredient that was over looked from the beginning.

Credit cards have cycles. It is important to know when you’re billing cycle ends. Most cards tell you that date on your statement or you can call and they will tell you. Mechanically what happens is when my billing cycle ends my credit card reports to the credit bureaus that my balance is $300, and then they mail me my statement and give me a 21 day grace period to pay my bill. So you can see that this piece of the equation being over looked is a huge problem. By the time I paid my card off in full, it was too late! The damage has already been done. My FICO score is showing the effects of being maxed out on my credit, even though I just paid it off in full! Talk about frustration.

To keep this original advice from resulting in a negative outcome, all we need to do is know that paying the card when the bill comes is too late. The simple solution or the last part of the advice that I needed to have received should be, call my credit card company and pay it off in full, five (5) days before the billing cycle ends. Now instead of being frustrated and angry, I am a homeowner and I am telling everyone I know how wonderful my mortgage broker is! Just one little thing can have a huge effect to overall success of the advice. Credit education is extremely important, make sure that the advice you follow is from an expert and complete.

The Easiest Financial Plan…

2010-10-20T23:22:00.000-07:00

By Dan Beck, Credit Management Specialists

It seems that everywhere you go people are discussing the economy. The proof of the bad economy is everywhere, and millions of people are searching for answers. Whether the economy is doom and gloom or it is booming, one constant is the number of financial plans that people have come up with or tried to implement in order to get ahead.

Some of these plans are very complex and some still are very simple. Think about all the different types of plans or approaches you have personally heard about. They start out as; “the best way to get ahead with your finances is…” I am not saying any of these plans are bad or that they can’t work, but I will tell you why I believe so many of them end up failing.

I believe that one of the biggest reasons people end up not being successful with different plans is they associate the journey that leads to the final destination as one involving pain. Most people I see know the plan will work and try to convince themselves they can do the things they need to reach the final outcome they desire but more often than not they fall short. The pain that is associated with getting ahead for most people ends up stopping them from staying on track.

The pain I am referring to is “don’t”. Such as, don’t go out to dinner, don’t go to a movie, don’t go on vacation, don’t buy the kids new school clothes, just to name a few. Some people even go as far as not running the air conditioner at their house or wearing coats inside instead of turning up the heat. All these kind of things will save people money, which is the pivotal part of their financial plan, but so many lose interest of the goal because they get tired of the not doing the things they want to do.

We don’t like the pain of doing away with things we want to do and in the end that alone is enough for most people to just give up. Therefore the well constructed plan fails.

How about a way to get ahead that doesn’t involve pain? Personal finances can be very basic in terms of complexity. You have a few options; make more money or spend less money. Doing either of these things if you don’t increase your monthly obligations will give you flexibility to get ahead. Once you have the extra money that is where you can get into many other options and much debates as to what is the best way to use those funds. That is for you to decide.

So keeping this as simple as possible let’s assume that just going out and making more money is not an option that is viable for most people. If that option is off the table it comes down to saving money every month, but how do we do that without getting back into the cycle of pain, otherwise known as not doing what we want or sacrificing? Drum roll please…Pay less for the things that we have and have to have.

No I am not telling you to only shop at Wal-Mart that would put many people back into the pain cycle. Instead, simply pay less for most of your monthly obligations by improving your credit score! Think about it, credit scores are vital in determining your rate on Mortgages, Auto loans, credit cards, Insurance, personal loans, etc. Improve your FICO score, and pay less for things you have. It’s really pretty simple, and pain free. You then have the ability to take the monthly savings awarded to you by having a better score, and use that to get out of debt faster.

Incorporating your FICO score into your financial plan needs to be at the foundation of any variation of a plan that you want to use. This is simple. You can do it. Best of all, it is relatively pain free! The only pain involved with this plan, is you need to get credit education, or hire an expert to help you with the things you need to do to improve your FICO score.

Improving your FICO score becomes a lot simpler if you actually know what is good for your score and what is not. It is a lot easier to make good choices or decisions once you know what the outcome will be. Most people if they know doing something today will be negative for their FICO score will no longer make that same mistake once they get over the myth that they have no real control of their FICO score. Very few people understand the scoring system; therefore they try to add common sense to FICO scores. This just causes people to end up mad which yields negative results. Education is key.

The last step is getting education from an actual expert. Not just a person that thinks they know the rules or someone that you think should know the rules. There is a big difference from an actual expert vs. someone that just should know the answers because of their job. So, be very careful who you listen to when it comes to credit score advice.

There you have it. Simply put, improve your FICO score and save money. One of the easiest, most effective and pain free plans you will ever come up with.

My Credit Score is costing me how much?

2010-09-15T17:49:00.000-07:00

By Dan Beck, Credit Management Specialists

Never in history has a three digit number been more important than it is right now. Many people get an idea that if they can qualify for the loan or credit card that they want then their score is good enough. Unfortunately, that kind of thinking is a very costly approach.

Your goal when it comes to your FICO score should not be, it is “good enough.” A recent study suggests that the American Consumer could save in excess of $28 Billion a year in credit card interest rate charges if they could just raise their score 30 points! A 30 point increase in your FICO score for most people should be a very simple process, the problem is that we as consumers are very uneducated and/or confused about the things we can do to improve our score.

People that are so-called experts have all kinds of crazy advice for when it comes to what to do to improve your FICO score. Unfortunately most of these people, or companies really have no clue what they are talking about. Their advice gets published and several people follow it with great hopes for a better score only to find out the hard way that the advice they received is usually way off track.

One of the fastest ways we as consumers can reverse the current economic situation we are in is to become educated about what to do and how to improve our FICO scores. If we increase our scores, more people are able to qualify for the things they want.

Look at the housing situation for example, prices will never increase unless there are more people that can buy a house; it is purely a function of supply and demand. The problem is that roughly 25.5% of American consumers currently have less than a 600 Credit Score. Millions of these people would love to buy a house, which would increase the buyer pool and create greater demand, but without proper education these people will never pull out of the bottom tier and become credit worthy for house buying purposes.

It doesn’t matter if you can’t qualify for things or if you can, our goal needs to be to become educated so that we can improve our scores and stop paying more for everything we do. There are 3 easy steps that most all of us can take to quickly and dramatically improve our scores.

Step #1; understand what Aggregate Revolving Utilization is. It sounds complicated but it really isn’t. In simple terms it is the percentage of revolving credit (mainly credit cards) that we are currently using.

For example, if I have one credit card and the limit is $100 and I have a balance on that card of $50, I am utilizing 50% of my available limit. If I have more than one credit card then I add all the limits together, then all the balances together, and divide. So if I have three credit cards, each has a limit of $1,000, I would add those together ($1,000+$1,000+$1,000) and I would get a total of $3,000 in available limits. Lets assume all three of these cards have a balance of $500 each, I would add these balances together ($500+$500+$500) for a cumulative total of $1,500. So for this example we have $1500 in total balances and $3,000 in limits which again would result in 50% utilization.

That is step 1; understand what Aggregate Revolving Utilization is, by the way this makes up most of the second largest piece of your FICO score. If you do not have any revolving accounts, you need to get at least one. I don’t want you to get in debt, but I do want you to play the game. Without any revolving credit you are losing several points on your FICO score, which in the end means you are paying more than you need to for several things.

Step #2; compute your own Aggregate Revolving Utilization. One thing I recommend you doing for this step is to go to www.annualcreditreport.com and pull your own credit report. This is a free service and you are entitled to it once every 12 months with out charge. You will not get scores on this site for free, but we are not concerned with that right now, we need education first. By the way, don’t pay for anything on this site. They will offer you a “credit score” on this site that you can buy, don’t buy it. It is not a FICO score, so no one really cares about it.

For this step I want you to compute your number based off of the balances and limits on this credit report. The first thing most people will notice is that the balance on this report is probably different from what they think should be. That is part of step three. For the purpose of this hint, let’s say your number is 75% Aggregate Revolving Utilization.

Step #3; what to pay and when to pay it. There are two parts to this step, lets tackle the “what to pay first.” Many people that really don’t know much about the FICO scoring system will tell you that there are three separate break points for utilization. They preach that 100% to 70% is one category, 70% to 50% is the next, 50% to 30% and the last being below 30%. So if you listen to one of these people and what they are teaching, if you had 35% utilization they would tell you to pay your balances down below 30% of the limits and you are maximizing that part of your score. This advice is very misleading, incomplete or just flat out wrong.
The easiest advice is the lower the better. The number that I would set for you as an ultimate goal would be 7%. Don’t be discouraged if you compute your number like the example and are at 75% for instance. Work on 10% chunks. Set a goal. Most likely you didn’t get into credit card debt overnight and you probably will not be able to get out of it overnight either. If you are at 75% work to get down to 65% and keep going all the way down to 7% or lower.

The last step is when to pay. Understand that most credit cards have a 30-day cycle. Look at your statements and find the cycle ending date. That date is very important because in most situations that is the day the credit card reports your balance to the credit bureaus. Then they mail you a statement and give you a 21-day grace period to make your payment. So if you are thinking of applying for anything and have the money to pay down balances on credit cards, you will want to make that payment a few days before the cycle ends, if not your score will not reflect your effort.
Knowing these easy three steps will get most of us those 30 points that we are currently losing. Hopefully you will start to understand that improving your FICO score through credit education and/or credit repair can and will work for most of us. Don’t be selfish with these tips, please share them with the people you love or care about, they will thank you.

If you want to learn more about your FICO score or would like to see that score improve, I can help you. Credit repair does work if done by someone that truly knows what they are doing and use credit education as the backbone to their practices.

2010-08-09T08:18:00.000-07:00

How Bad is Bad?
By Dan Beck, www.expertcreditrepair.net

New numbers have been released that I believe are very informative, but can also be scary unless something is done. When talking about FICO scores, remember the whole purpose of the system is to predict the statistical chance of a consumer being 90 days late, or more, in the next 24 months on an obligation. This model has been created to evaluate certain things on our individual credit reports that have been classified as predictive information, and then a 3-digit number is generated. These numbers most commonly have been said to range from 300 as the low to 850 as the high. This is not 100% accurate but for our purposes it is close enough.

All the information on our credit report is analyzed then a 3-digit number is produced to determine our credit score. Lenders, for example, love this system because it makes their job easier and faster. They have predetermined ranges that they use to approve clients and also know what rate to charge.

So for lenders, a lot of the guesswork is out of the equation. The model has always been somewhat secretive because the more information that we know as consumers, the less predictive the model becomes. Lenders take this number and base decisions from it.

Some of the new facts that are coming out are that a lot of lenders have not been validating the performance of their lending portfolio as often as the system would suggest. Most lenders want to re-evaluate their portfolio every six months, for whatever reason many of them have not been doing that and now we have even more problems when it comes to the stability of the credit arena.

To illustrate this let’s assume that a lender knows that if they have 10 borrowers with a 720 FICO score, one of those ten will become 90 days late or more in the next 24 months on any one payment. Also, let’s assume that if the same lender approved 10 people with a 650 FICO score that 5 of those will go on to become 90 days late or more in the next 24 months on a payment. Again these are not actual numbers just showing you how the system theoretically works. What has been found is that borrower’s that had a 720 three years ago are now performing more like borrowers with a 650.

What this tells us is that more and more people are having problems. But you can see how this can cause huge problems for lenders, if they give loans assuming that 1 in 10 will have problems in the next two years, but in reality it turns out that 5 out of ten are non-performing, this presents some huge challenges.

The most recent numbers say that 25.5% of the American population has a 600 FICO score or lower, and 35% has a 650 FICO score or lower. Lenders usually classify 650 or lower as subprime (talking about industries).

This tells us that 35% of US population is currently subprime or less, which equates to about 70,000,000 people! The scariest part about all this new information is that most people don’t drop down to the 600 category just by maxing out a credit card. Most of them get down to this level by a severe negative incident occurring on their credit report. The biggest problem with this is most of these people are not going to have the desire or the ability to just make a quick change and jump themselves back to the level they were before.

Most of these items will stay on the person’s report for 7 years. These people are in great need of credit repair.

This is important because it shows the real effect of the economy and the potential recovery as well. A lot of these 70,000,000 will not be able to buy houses, cars or other goods unless they make a huge change and become cash buyers for everything. Which is great until they need to, or want to, buy something they can’t just write a check for.

Looking at housing for example, prices steady or increase with demand. If more and more people are becoming credit challenged or just un-financeable the demand goes down which as we have all seen; slows, stops, or reverses financial recovery. Rates can be low, prices can be low, but if no one is out there that can qualify to buy the houses, we all have problems.

All the new legislation or potential legislation is making credit qualifying harder. I am not debating whether that is a good thing or not, but I am saying that credit as we know it is not going away.

The system is not going to change, and until we as Americans start getting educated and actively start implementing Credit Score Planning into our financial lives, the road to recovery is just going to get longer and longer.
Credit Education and Credit Repair works, but make sure you are working with an expert, get started today!

If you have a Credit Question or need some Credit Advice For yourself or a friend or
client - Contact me today for a totally Free Credit Review - 970.302.5185

2010-07-10T08:34:00.000-07:00

Why aren’t the rules just given?
By Dan Beck, www.CMSconsultants.net

When most people start being educated about how the FICO scoring system works some of the most common responses are; “that is crazy”, “that doesn’t make sense” and “why can’t they just tell us the rules!”

Just in case you are not aware, FICO scores are designed not to be common sense.

The purpose of the FICO score is to predict the statistical chance of a consumer being 90 days late of more in the next two years, that is it. The key word there is predict, or predictive. So don’t get hung up on trying to add common sense into the equation, because unfortunately that will just confuse you more.

To better understand this whole process or system it is helpful to understand how the model was created in the first place. Fair Isaac (FICO) went to the credit bureaus and requested 1.5 million random credit reports; two years later they went back and requested new reports on the same 1.5 million people.

From there they started to find similarities between the reports more importantly between the reports of the individuals that had become 90 days delinquent or more on a debt during that course of time. That is how the FICO scoring system that we all know now was created. As you can see it is all about predictive information. Why that is so important to know is because now you understand why FICO is not in the practice of sharing much information about their model.

The more information people know about the model, the less predictive the score becomes. If you know all of the factors that will hurt or help your FICO score more people will change the things they do so their score will improve. As people do this, the model loses some of its value. FICO doesn’t want you to know the rules and the rules are not common sense, they are all about predictive information.

Lenders don’t know how the model was created or the ways your information is being valued, they are just looking at scores and then based on that score, they have done research to know if they will approve you or not and also what rate you will receive. The FICO scoring system has made the world of credit much more efficient and streamlined.

Having said that, the more things that we learn that will positively affect our score the more money we will save. To illustrate just how important this is The Consumer Federation of America found that consumers could save $28 Billion a year in lower credit card finance charges if they improved their credit score by 30 points!

The rules are not going to change nor is the process going to change any time soon. The system is the way it is and we all need to become as educated as possible, or just continue to waste money by having higher interest rates.

The biggest challenge that we as consumers have is not finding information about FICO scores, but finding correct information. The world of credit has become cluttered with new companies sprouting up every day.

All of them have some new way of packaging a product that will either help improve your score, allow you to monitor your score or save you all kinds of money on your current bills.

The challenge for us as consumers is to sort through all of these offers and find out which ones are actually basing their education or advice on actual factual information. To help you with this, one of the first things you need to look for is if the advice you’re getting is being based off “credit scores” or FICO scores. Many companies are using “credit scores” as a way to get the attention of their potential customers.

A FICO score and a "credit score" can be summed up quickly as they both are evaluating the information on your credit report, and that analyzed data then produces a score.

The big difference is just about every lender is only checking your FICO score, not many people or industries care about any of these other “credit scores” or models. So if no one uses those other models to determine your credit worthiness, then why should we care about them? The answer is we shouldn’t. Why get advice on any model or system that is basically irrelevant when it comes to getting a loan? When it comes to credit scores FICO is king.

Knowing that FICO is not in the habit of publishing their model, it is pretty safe to guess that just about all of these new companies are either purely guessing about the FICO system, or they have created new ways to sell you information based on some other “credit scoring” model. Long story short, they are teaching you how to improve a score that no one cares about.

Make sure any product or service that you are buying or getting advice from is actually giving you your FICO score or information that is FICO factual. Most of these credit monitoring systems or credit score simulator systems will tell you if you read the disclaimers that they are not tied to FICO in any way and they are evaluating your “credit score” based on some other model than that of FICO. Knowing this doesn’t make the products completely worthless, but in a lot of cases pretty close.

Potentially the only thing worse than not knowing anything about our FICO score, is paying for something that we think will help us improve our FICO score only to find out we just became an expert on a model that is basically worthless.

If you have any questions or just need some Credit Repair advice -- Please contact me at: 970.302.5185