Frequently Asked Questions about Credit

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About Credit Scores
What's in your FICO score
What's not in your FICO score?
How credit scoring helps you
Improving your FICO credit score
Credit score facts & fallacies
About credit reports
What's in your credit report
Credit inquiries
How credit report mistakes are made
Missing accounts on your credit report
Credit reports - know your rights
Credit applications - know your rights
Credit billing & EFT statements - know your rights
Debt & Debt collectors - know your rights
Contacts and resources
How will my FICO score consider a bankruptcy?
What are the different categories of late payments and how does your FICO score consider late payments?
How long will negative information remain on my credit report?
How long will a foreclosure affect my FICO score?
How do FICO scores consider student loan shopping?
What's the best advice for people shopping for student loans so they protect their FICO scores?
What does your credit report contain?
What is not recorded in your credit report?
How credit works - for or against you
What are different types of credit?
How is credit reported?
What are the consequences of bad credit?
Why is your credit score important?
Personal credit scores - Your credit history in a 3-digit number
What is credit?
Why is having good credit important?
What is credit scoring?
How is a credit scoring system developed?
What is the difference between a FICO score and a credit score?
Can an Item come back on my credit report once it has been deleted?
Is credit repair legal?
Can I repair my own credit?
How do I know which credit repair companies are legitimate?
How long does the process take?
Do I need to see my credit report before starting services?
Why do we need all documentation received from the bureaus forwarded to us?
How do I send in my results from the bureaus?
How do I find out the status of my repair process?
What documents are needed to apply for a mortgage?



About Credit Scores
 

When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they'd take by loaning money to you. FICO® scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scores can help you qualify for better rates from lenders.

For your three FICO scores to be calculated, each of your three credit reports must contain at least one account which has been open for at least six months. In addition, each report must contain at least one account that has been updated in the past six months. This ensures that there is enough information – and enough recent information – in your report on which to base a FICO score on each report.

About FICO scores

Credit bureau scores are often called “FICO scores” because most credit bureau scores used in the U.S. are produced from software developed by Fair Isaac and Company. FICO scores are provided to lenders by the major credit reporting agencies.

FICO scores provide the best guide to future risk based solely on credit report data. The higher the credit score, the lower the risk. But no score says whether a specific individual will be a “good” or “bad” customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders use to determine your actual interest rates.

Other Names for FICO Scores

FICO scores have different names at each of the credit reporting agencies. All of these scores, however, are developed using the same methods by Fair Isaac, and have been rigorously tested to ensure they provide the most accurate picture of credit risk possible using credit report data.

Credit Reporting Agency FICO Score
Equifax BEACON® Score
Experian Experian/Fair Isaac Risk Model
TransUnion EMPIRICA®

More than one credit score

In general, when people talk about "your score", they're talking about your current FICO score. However, there is no one credit score used to make decisions about you. This is true because:
  • Credit bureau scores are not the only scores used.
    Many lenders use their own credit scores, which often will include the FICO score as well as other information about you.
  • FICO scores are not the only credit bureau scores.
    There are other credit bureau scores, although FICO scores are by far the most commonly used. Other credit bureau scores may evaluate your credit report differently than FICO scores, and in some cases a higher score may mean more risk, not less risk as with FICO scores.
  • Your credit score may be different at each of the main credit reporting agencies.
    The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the credit reporting agencies are different, it's probably because the information those agencies have on you differs.
  • Your FICO score changes over time.
    As your data changes at the credit reporting agency, so will any new credit score based on your credit report. So your FICO score from a month ago is probably not the same score a lender would get from the credit reporting agency today.
What’s in your FICO® score  

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO score.

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History
  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
  • Severity of delinquency (how long past due)
  • Amount past due on delinquent accounts or collection items
  • Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
  • Number of past due items on file
  • Number of accounts paid as agreed
Amounts Owed
  • Amount owing on accounts
  • Amount owing on specific types of accounts
  • Lack of a specific type of balance, in some cases
  • Number of accounts with balances
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History
  • Time since accounts opened
  • Time since accounts opened, by specific type of account
  • Time since account activity
New Credit
  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
  • Number of recent credit inquiries
  • Time since recent account opening(s), by type of account
  • Time since credit inquiry(s)
  • Re-establishment of positive credit history following past payment problems
Types of Credit Used
  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
Please note that:
  • A FICO score takes into consideration all these categories of information, not just one or two.
    No one piece of information or factor alone will determine your score.
  • The importance of any factor depends on the overall information in your credit report.
    For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
  • Your FICO score only looks at information in your credit report.
    However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
  • Your score considers both positive and negative information in your credit report.
    Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score.
What's Not in Your FICO® Score?  

FICO scores consider a wide range of information on your credit report. However, they do not consider:
  • Your race, color, religion, national origin, sex and marital status.
    US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.
  • Your age.
    Other types of scores may consider your age, but FICO scores don't.
  • Your salary, occupation, title, employer, date employed or employment history.
    Lenders may consider this information, however, as may other types of scores.
  • Where you live.
  • Any interest rate being charged on a particular credit card or other account.
  • Any items reported as child/family support obligations or rental agreements.
  • Certain types of inquiries (requests for your credit report).
    The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.
  • Any information not found in your credit report.
  • Any information that is not proven to be predictive of future credit performance.
  • Whether or not you are participating in a credit counseling of any kind.
How credit scoring helps you  

Credit scores give lenders a fast, objective measurement of your credit risk. Before the use of scoring, the credit granting process could be slow, inconsistent and unfairly biased.

Credit scores – especially FICO® scores, the most widely used credit bureau scores – have made big improvements in the credit process. Because of credit scores:
  • People can get loans faster.
    Scores can be delivered almost instantaneously, helping lenders speed up loan approvals. Today many credit decisions can be made within minutes. Even a mortgage application can be approved in hours instead of weeks for borrowers who score above a lender's “score cutoff”. Scoring also allows retail stores, Internet sites and other lenders to make “instant credit” decisions.
  • Credit decisions are fairer.
    Using credit scoring, lenders can focus only on the facts related to credit risk, rather than their personal feelings. Factors like your gender, race, religion, nationality and marital status are not considered by credit scoring.
  • Credit “mistakes” count for less.
  • If you have had poor credit performance in the past, credit scoring doesn't let that haunt you forever. Past credit problems fade as time passes and as recent good payment patterns show up on your credit report. Unlike so-called “knock out rules” that turn down borrowers based solely on a past problem in their file, credit scoring weighs all of the credit-related information, both good and bad, in your credit report.
  • More credit is available.
    Lenders who use credit scoring can approve more loans, because credit scoring gives them more precise information on which to base credit decisions. It allows lenders to identify individuals who are likely to perform well in the future, even though their credit report shows past problems. Even people whose scores are lower than a lender's cutoff for “automatic approval” benefit from scoring. Many lenders offer a choice of credit products geared to different risk levels. Most have their own separate guidelines, so if you are turned down by one lender, another may approve your loan. The use of credit scores gives lenders the confidence to offer credit to more people, since they have a better understanding of the risk they are taking on.
  • Credit rates are lower overall.
    With more credit available, the cost of credit for borrowers decreases. Automated credit processes, including credit scoring, make the credit granting process more efficient and less costly for lenders, who in turn have passed savings on to their customers. And by controlling credit losses using scoring, lenders can make rates lower overall. Mortgage rates are lower in the United States than in Europe, for example, in part because of the information - including credit scores - available to lenders here. Knowing and improving your score can also lead to more favorable interest rates.
Improving your FICO® credit score  

It’s important to note that raising your FICO credit score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts can backfire. The best advice is to manage credit responsibly over time.

Payment History Tips
  • Pay your bills on time.
    Delinquent payments and collections can have a major negative impact on your FICO score.
  • If you have missed payments, get current and stay current.
    The longer you pay your bills on time, the better your credit score.
  • Be aware that paying off a collection account will not remove it from your credit report.
    It will stay on your report for seven years.
  • If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
    This won't improve your credit score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.
Amounts Owed Tips
  • Keep balances low on credit cards and other “revolving credit”.
    High outstanding debt can affect a credit score.
  • Pay off debt rather than moving it around.
    The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
  • Don't close unused credit cards as a short-term strategy to raise your score.
  • Don't open a number of new credit cards that you don't need, just to increase your available credit.
    This approach could backfire and actually lower your credit score.
Length of Credit History Tips
  • If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.
New Credit Tips
  • Do your rate shopping for a given loan within a focused period of time.
    FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
  • Re-establish your credit history if you have had problems.
    Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
  • Note that it's OK to request and check your own credit report.
    This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.
Types of Credit Use Tips
  • Apply for and open new credit accounts only as needed.
    Don't open accounts just to have a better credit mix - it probably won't raise your credit score.
  • Have credit cards - but manage them responsibly.
    In general, having credit cards and installment loans (and paying timely payments) will raise your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
  • Note that closing an account doesn't make it go away.
    A closed account will still show up on your credit report, and may be considered by the score.
Credit score facts & fallacies  

Fallacy: My score determines whether or not I get credit.
Fact: Lenders use a number of facts to make credit decisions, including your FICO® score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.

Fallacy: A poor score will haunt me forever.
Fact: Just the opposite is true. A score is a “snapshot” of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more favorable interest rates.

Fallacy: Credit scoring is unfair to minorities.
Fact: Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.

Fallacy: Credit scoring infringes on my privacy.
Fact: Credit scoring evaluates the same information lenders already look at - the credit bureau report, credit application and/or your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information - fewer questions on the application form, for example.

Fallacy: My score will drop if I apply for new credit.
Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called “inquiries”) will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

About credit reports  

Credit Reporting Agencies
Credit reporting agencies maintain files on millions of borrowers. Lenders making credit decisions buy credit reports on their prospects, applicants and customers from the credit reporting agencies. Your report details your credit history as it has been reported to the credit reporting agency by lenders who have extended credit to you. Your credit report lists what types of credit you use, the length of time your accounts have been open, and whether you've paid your bills on time. It tells lenders how much credit you've used and whether you're seeking new sources of credit. It gives lenders a broader view of your credit history than do other data sources, such as a bank's own customer data.

Creating Your Credit Report
Your credit report does not really exist until you or a lender asks for it. It is then compiled by the credit reporting agency based on the information stored in that agency's file. This information is supplied by lenders, by you and by court records.

Tens of thousands of credit grantors – retailers, credit card issuers, banks, finance companies, credit unions, etc. – send updates to each of the credit reporting agencies, usually once a month. These updates include information about how their customers use and pay their accounts.

Your credit report reveals many aspects of your borrowing activities. All pieces of information should be considered in relationship to other pieces of information. The ability to quickly, fairly and consistently consider all this information is what makes credit scoring so useful.

What’s in your credit report?  

Although each credit reporting agency formats and reports this information differently, all credit reports contain basically the same categories of information. Your social security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.
  • Identifying Information.
    Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.
  • Trade Lines.
    These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bankcard, auto loan, mortgage, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.
  • Credit Inquiries.
    When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years. The report you see lists both "voluntary" inquiries, spurred by your own requests for credit, and "involuntary" inquires, such as when lenders order your report so as to make you a pre-approved credit offer in the mail.
  • Public Record and Collection Items.
    Credit reporting agencies also collect public record information from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens and judgments.
Credit inquiries  

Will my FICO score drop if I apply for new credit?
If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

The Basics

What is an "inquiry"?
When you apply for credit, you authorize those lenders to ask or "inquire" for a copy of your credit report from a credit bureau. When you later check your credit report, you may notice that their credit inquiries are listed. You may also see listed their inquiries by businesses that you don't know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new credit.

Does applying for credit affect my FICO score?
Fair Isaac's research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO score can be lower as a result.

How much will credit inquiries affect my score?
The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on one's FICO score. For most people, one additional credit inquiry will take less than five points off their FICO score. For perspective, the full range for FICO scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part. Much more important factors for your score are how timely you pay your bills and your overall debt burden as indicated on your credit report.

Does the formula treat all credit inquiries the same?
No. Research has indicated that the FICO score is more predictive when it treats loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, the FICO score ignores inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for rate-shopping inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

What to know about "rate shopping."
Looking for a mortgage, auto or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. To compensate for this, the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.

Improving your FICO score.
If you need a loan, do your rate shopping within a focused period of time, such as 30 days. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.

Generally, people with high FICO scores consistently:
  • Pay bills on time.
  • Keep balances low on credit cards and other revolving credit products.
  • Apply for and open new credit accounts only as needed.
Also, here are some good credit management practices that can help to raise your FICO score over time.
  • Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time will raise your FICO score over the long term.
  • Check your own credit reports regularly, before applying for new credit, to be sure they are accurate and up-to-date. As long as you order your credit reports through an organization authorized to provide credit reports to consumers, such as myFICO, your own inquiries will not affect your FICO score.
How credit report mistakes are made  

When a credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because:
  • The person applied for credit under different names (Robert Jones, Bob Jones, etc.).
  • Someone made a clerical error in reading or entering name or address information from a hand-written application.
  • The person gave an inaccurate Social Security number, or the number was misread by the lender.
  • Loan or credit card payments were inadvertently applied to the wrong account.
Missing accounts on your credit report 
  • Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors voluntarily supply information to the credit bureaus: Some travel, entertainment, gasoline card companies, local retailers, student loan lenders and credit unions are among this group of non-reporting creditors.
  • If you've been told you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that don't appear in your credit file, you might consider asking your creditors to begin reporting your credit information to credit bureaus. It won't hurt to ask, but keep in mind that creditors are not required to report consumer credit information to credit bureaus. Another possible option is to move your account to a different creditor who does report regularly to credit bureaus.
Credit reports – know your rights  

Your credit payment history is recorded in a file or report. These files or reports are maintained and sold by credit bureaus. You have a credit record on file at a credit bureau if you have ever applied for a credit or charge account, a personal loan, insurance, or a job. Your credit record contains information about your income, debts, and credit payment history. It also indicates whether you have been sued, arrested, or have filed for bankruptcy.

The Fair Credit Reporting Act (FCRA) is designed to help ensure that credit bureaus furnish correct and complete information to businesses to use when evaluating your application.

Your rights under the Fair Credit Reporting Act:
  • You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
  • You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.
  • Any company that denies your application must supply the name and address of the credit bureau they contacted, provided the denial was based on information given by the credit bureau.
  • You have the right to a free copy of your credit report when your application is denied because of information supplied by the credit bureau. Your request must be made within 60 days of receiving your denial notice.
  • If you contest the completeness or accuracy of information in your report, you should file a dispute with the credit bureau and with the company that furnished the information to the bureau. Both the credit bureau and the furnisher of information are legally obligated to investigate your dispute.
  • You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.
Credit applications – know your rights  

When creditors evaluate a credit application, they cannot lawfully engage in discriminatory practices.

The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of sex, race, marital status, religion, national origin, age, or receipt of public assistance. Creditors may ask for this information (except religion) in certain situations, but may not use it to discriminate when deciding whether to grant you credit.

The ECOA protects consumers who deal with companies that regularly extend credit, including banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. Everyone who participates in the decision to grant credit, including real estate brokers who arrange financing, must follow this law. Businesses applying for credit also are protected by this law.

Your rights under the Equal Credit Opportunity Act:
  • You cannot be denied credit based on your race, sex, marital status, religion, age, national origin, or receipt of public assistance.
  • You have the right to have reliable public assistance considered in the same manner as other income.
  • If you are denied credit, you have a legal right to know why.
Credit billing & EFT statements – know your rights 

It is important to check credit billing and electronic fund transfer (EFT) account statements regularly. These documents may contain mistakes that could damage your credit status or reflect improper charges or transfers. If you find an error or discrepancy, notify the company and contest the error immediately.

The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) establish procedures for resolving mistakes on credit billing and electronic fund transfer account statements, including:
  • Charges or electronic fund transfers that you – or anyone you have authorized to use your account – have not made.
  • Charges or electronic fund transfers that are incorrectly identified or show the wrong amount or date.
  • Computation or similar errors.
  • Failure to reflect payments, credits, or electronic fund transfers properly.
  • Not mailing or delivering credit billing statements to your current address, as long as that address was received by the creditor in writing at least 20 days before the billing period ended.
  • Charges or electronic fund transfers for which you request an explanation or documentation, due to a possible error.
The FCBA generally applies only to "open end" credit accounts – credit cards, revolving charge accounts (such as department store accounts), and overdraft checking accounts. It does not apply to loans or credit sales that are paid according to a fixed schedule until the entire amount is paid back, such as an automobile loan. The EFTA applies to electronic fund transfers, such as those involving automatic teller machines (ATMs), point-of-sale debit transactions, and other electronic banking transactions.

Debt & debt collectors – know your rights  

You are responsible for your debts. If you fall behind in paying your creditors or an error is made on your account, you may be contacted by a "debt collector." A debt collector is any person, other than the creditor, who regularly collects debts owed to others. This includes lawyers who collect debts on a regular basis. You have the right to be treated fairly by debt collectors.

The Fair Debt Collection Practices Act (FDCPA) applies to personal, family, and household debts. This includes money owed for the purchase of a car, for medical care, or for charge accounts. The FDCPA prohibits debt collectors from engaging in unfair, deceptive, or abusive practices while collecting these debts.

Your rights under the Fair Debt Collection Practices Act:
  • Debt collectors may contact you only between 8 a.m. and 9 p.m.
  • Debt collectors may not contact you at work if they know your employer disapproves.
  • Debt collectors may not harass, oppress, or abuse you.
  • Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.
  • Debt collectors must identify themselves to you on the phone.
  • Debt collectors must stop contacting you if you ask them to in writing.
Contacts and resources  

Equifax
equifax.com
PO Box 105069
Atlanta, GA 30349
(800) 525-6285

Experian
experian.com

TransUnion

transunion.com
PO Box 6790
Fullerton, CA 92634
(800) 680-7289

Helpful Links
The National "Do Not Call" Registry
Federal Trade Commission
FTC Consumer Complaint Form
Equal Credit Opportunity Act
U.S Government Identity Theft Web Site
Identity Theft Complaint Form
FirstGov for Consumers


How will my FICO score consider a bankruptcy?  

A bankruptcy will always be considered a very negative event by your FICO® score. How much of an impact it will have on your score will depend on your entire credit profile. For example, someone that had spotless credit and a very high FICO score could expect a huge drop in their score. On the other hand, someone with many negative items already listed on their credit report might only see a modest drop in their score. Another thing to note is that the more accounts included in the bankruptcy filing, the more of an impact on your score.


What are the different categories of late payments and how does your FICO score consider late payments?  

Your FICO® score considers late payment using these general criteria; how recent the late payments are, how severe the late payments are, and how frequently the late payments occur. So this means that a recent late payment could be more damaging to your FICO score than a number of late payments that happened a long time ago.

You may have noticed on your credit report that late payments are listed by how late the payments are. Typically, creditors report late payments in one of these categories: 30-days late, 60-days late, 90-days late, 120-days late, 150-days late, or charge off (written off as a loss because of severe delinquency). Of course a 90-day late is worse than a 30-day late, but the important thing to understand is that you can recover from a late payment prior to charge-off by getting and staying current with your payments. If however, you continue not to pay your dept and your creditor either charges it off or sends it to a collection agency, it is considered a significant event with regard to your score and will likely have a severe negative impact.

It's important to always stay on top of all of your bills; your history of payments is the largest factor in your FICO score. There may be circumstances which cause you to be unable to keep current with your bills – maybe an unexpected medical emergency or losing your job. Before being late for any payment, we recommend that you reach out to your creditor; the creditor may be willing to work something out with you that you both can live with. If your creditors won't work with you, try to avoid having your account going so delinquent that the creditor sells your account to a collection agency or it becomes a judgment. Again, late payments hurt, but you can get current with them by paying them off – you can never again get that account current once it becomes a judgment or is turned over to a collection agency.

How long will negative information remain on my credit report? 
 It depends on the type of negative information. Here's the basic breakdown of how long different types of negative information will remain on your credit report:
  1. Collection Agency Accounts: Remain for up to 7 years from the Date of 1st Delinquency. 
  2. Credit or Other Reported Accounts: Accounts paid as agreed remain for up to 10 years from the Date of Last Activity. Accounts not paid as agreed (i.e delinquent, charge off, accounts placed for collection) remain for up to 7 years from the Date of 1st Delinquency.
  3. Public Records: Remain for up to 7 years from the date filed, except:
    • Bankruptcy - Chapter 7 and 11 remain for up to 10 years from the date filed.
    • Bankruptcy - Chapter 13 dismissed or no disposition rendered remain for up to 10 years from the date filed.
    • Unpaid state tax liens remain indefinitely.
    • Unpaid federal tax liens remain for up to 10 years from date filed.
    • Paid tax liens remain for up to 7 years from the date released.
  1. New York State Residents only: Satisfied judgments remain for up to 5 years from the date filed; paid collections remain for up to  5 years from the Date of 1st delinquency. 
  2. California State Residents only: Unpaid tax liens remain for up to 10 years from the date filed or up to 7 years from the date released.
Keep in mind:
For all of these negative items, the older they are the less impact they are going to have on your FICO® score. For example, a collection that is 5 years old will hurt much less than a collection that is 5 months old.

How long will a foreclosure affect my FICO score? 

A foreclosure remains on your credit report for 7 years, but its impact to your FICO® score will lessen over time. While a foreclosure is considered a very negative event by your FICO score, it's a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years. The important thing to keep in mind is that a foreclosure is a single negative item, and if you keep this item isolated, it will be much less damaging to your FICO score than if you had a foreclosure in addition to defaulting on other credit obligations.

How do FICO scores consider student loan shopping?  

The growth of the student loan industry has increased public interest in how lenders assess the credit risk of young college-bound adults. Both large and small lenders often use FICO® credit scores to help them underwrite student loans. How the FICO credit scoring formulas treat credit inquiries depends on the way in which those inquiries are reported by lenders to each of the three credit bureaus. If the inquiries are reported by the lender in a manner that indicates rate shopping for a single loan (such as a mortgage, auto, or student loan), the FICO scoring formula reflects that in its calculation of your score (for a more comprehensive discussion of rate-shopping and inquiries, click here). In general, student loan shopping inquiries made during a focused time period (for example 30 days) will have little to no impact on your score. In the rare instance in which a credit inquiry related to a student loan is not coded so that it receives our special rate-shopping inquiry logic, that inquiry typically would decrease one’s FICO score by only a few points.

What's the best advice for people shopping for student loans so they protect their FICO scores? 
Doing a little homework first is always a good idea no matter what type of credit you're seeking. As you're shopping for the best student loan rate, the lenders you approach may request your credit report or credit score. You can generally avoid having those inquiries affect your score if you finish your rate shopping in a reasonable amount of time. That's easier if you first do your homework ahead of time and decide which companies to get quotes from. Then try to finish your rate shopping and finalize your loan within 30 days. Not only will loan rates be easier to compare when the quotes come only a few days apart, but you also will protect your FICO score.

The three major credit bureaus used by most lenders in the United States are TransUnion, Experian and Equifax. Credit providers report account activity to the bureaus so it can be filed and shared with others. The bureaus then provide the collected information to requesters who are considering whether to give you loans, open accounts or offer related financial services.

The files at the different bureaus aren't always identical because not all credit sources report to all three. There are also entry errors, identity confusion and, sometimes, fraud that cause different information to be provided by the different credit bureaus. In fact, a 2004 California Public Interest Research Group study revealed that 25% of all credit reports had errors significant enough to cause credit to be denied. Later in this guide we will show you how to identify and correct these errors so you can increase your credit score and get more favorable terms.

What does your credit report contain? 
Credit reports contain the following types of information about you:
Your personal profile, including your name, address and Social Security number
A summary of your accounts, both open and closed, going back several years, showing credit limits, balances and your payment history
Histories of your accounts, such as the balances, any past-due amounts, the duration, type of accounts, date opened, date of the last payment, payment amounts, charge-off amounts, high credit, comments and payment record for the past seven years
Any public records of bankruptcies, tax liens, court judgments or child support information. Charge-offs or collection accounts stay on record for up to 7 years and bankruptcies show on your report for up to 10 years. Credit inquiries, other than your own, from creditors and others you've given permission to, including employers and insurance companies.

What is not recorded in your credit report? 
Your credit report will not contain your gender, race or ethnicity, national origin, religious preference or any other personal information that does not apply directly to your financial history. Nor will it contain checking/savings account information, charge-offs or collections from more than 7 years ago, or bankruptcies from more than 10 years ago.

How credit works - for or against you 
Credit is simple. Better credit typically translates into lower interest rates and it's based on straightforward business principles: companies who give loans want to be paid back and they want to earn a fair return for lending their money.

When you apply for credit, the interest rate that you get can increase with the risk that you may default and not pay off the loan as agreed. Banks and other lenders base rates and loan amounts on your history of paying off loans and making payments on time because they view your past behavior as a reliable indicator of how you will behave in the future.

What are different types of credit? 
There are two forms of credit: secured and unsecured.

Secured credit includes loans such as your home mortgage and car loan that are "secured" by collateral, such as the house or vehicle involved in the loan. If you default, the lender can take possession of the collateral and sell it to somebody else to try to collect the money still owed on the principal.

With unsecured credit, there is no collateral, just your promise to pay, usually by signing a note or agreement. Unsecured credit includes credit cards, personal loans and retail store cards. Since unsecured debt does not have an asset behind it that can be repossessed and sold to recover principal, it is riskier and one that commands higher rates.

How is credit reported? 
Credit bureaus create unique credit records and collect information about the credit exposure and behavior for anyone who applies for credit. The bureaus collect information from creditors nationwide and update your credit record with how you pay their loans and how much of your credit limits you use. They then provide this information to banks, consumer finance companies, insurance companies, employers, landlords and government agencies that request it for legitimate business purposes.

Equifax, TransUnion, and Experian are the top three credit bureaus that maintain your credit reports.

What are the consequences of bad credit? 
Creditors view your credit report as an indicator of your level of responsibility with debt and the risk associated with offering you credit. Therefore, if you have not been consistent in making your payments on time, it is likely that you will get credit at a higher interest rate in the future.

Other parties also look at how you manage your debt obligations as an indicator of your how responsible you are likely to be in other areas of your life. For this reason, many landlords and employers run a credit check before entering into an agreement with you. In addition, bad credit can also impact how much you pay in auto insurance. Since studies have shown that there is a relationship between your credit score and your auto insurance claims rate, over 90% of auto insurers use credit data in part to calculate your risk, and therefore, your premiums.

Why is your credit score important? 
Here's why your credit score is so important; it helps determine whether you can get credit cards, car loans and mortgages, and what interest rates you will pay.

The three major credit bureaus may report different credit scores to characterize your creditworthiness because they have different information in their files and they use different models to calculate the scores. Credit Scores are generally between 300 at the low end and 850 at the high end depending on which bureau you get the score from.

Lower scores are associated with higher risks of defaulting, so banks and other lenders demand high interest rates for taking risks in offering loans to these "subprime" customers. With higher scores, loans and credit cards are easier to get at lower interest rates because they are associated with successful repayment.

Personal Credit Scores - Your Credit History in a 3-Digit Number 
It is important that you know your approximate credit score when you apply for new loans. Your Personal Credit Score on the CreditKeeper website is based on the CreditXpert scoring model which varies between 350 to 850 and rates your score between Very Poor and Excellent. It is provided to help you better understand how lenders evaluate your credit report. It is calculated based on many of the same criteria considered by the leading consumer credit scoring companies, producing in most cases a consumer credit score that duplicates or closely approximates the typical consumer credit score used by banks, mortgage lenders, and loan companies when determining credit worthiness.

What is credit? 
The FTC, the nation’s consumer protection agency, describes credit as “so much more than a plastic card. It’s your financial trustworthiness. Having good credit means it will be easier for you to get loans and low interest rates. Low interest rates usually translate into smaller monthly payments. That’s important when you borrow money for a car or a place to live. Sometimes, people even check your credit when you apply for a job. So good credit is a big deal, and having bad credit can be a real problem.” (FTC. N.D.)

Why is having good credit important? 
The FTC asserts that “A good credit rating is very important. Businesses inspect your credit history when they evaluate your applications for credit, insurance, employment, and even leases. They can use it when they choose to give or deny you credit or insurance, provided you receive fair and equal treatment. Sometimes, things happen that can cause credit problems: a temporary loss of income, an illness, even a computer error. Solving credit problems may take time and patience, but it doesn’t have to be an ordeal” (FTC. 2005).The FTC also states that “Your credit report can influence your purchasing power, as well as your opportunity to get a job, rent or buy an apartment or a house, and buy insurance” (FTC. 2005)

What is credit scoring? 

The FTC defines credit scoring as “a system creditors use to help determine whether to give you credit. It also may be used to help decide the terms you are offered or the rate you will pay for the loan” (FTC. 2007)

How is a credit scoring system developed? 
The FTC explains that “to develop a credit scoring system or model, a creditor or insurance company selects a random sample of its customers, or a sample of similar customers, and analyzes it statistically to identify characteristics that relate to risk. Each of the characteristics then is assigned a weight based on how strong a predictor it is of who would be a good risk. Each company may use its own scoring model, different scoring models for different types of credit or insurance, or a generic model developed by a scoring company” (FTC. 2007)

What is the difference between a FICO score and a credit score? 
A FICO score is what is used in the lending industry, while a credit score is determined by each credit bureau. Different credit scoring systems are used to determine these; there is no correlation between the two. The FICO score is simply named after the company who developed the credit scoring system that is used to determine that particular number: the Fair Isaac Company. For instance, if you purchase your Trans Union credit score, it could give you a credit score of 890. Then if that same day you went to a lender and they pulled your FICO score, it could be 560 for Trans Union. This is because of the credit scoring systems that are used to determine each number.

Can an item come back on my credit report once it has been deleted? 
The FTC states that “If an item is changed or deleted, the credit reporting company cannot put the disputed information back in your file unless the information provider verifies that the information is, indeed, accurate and complete. The credit reporting company also must send you written notice that includes the name, address, and phone number of the information provider” (FTC. 2008

Is credit repair legal? 
Yes. There are several consumer acts that give you the right to dispute any information you think may be inaccurate, untimely, misleading, incomplete, or unverifiable. We use the laws within these acts to ensure all items reporting on your credit report are verifiable, accurate, and were reported in a timely manner. If the items are not, then they are removed from your report permanently.

Can I repair my own credit? 

Absolutely! The FTC states that “There is nothing that a credit repair company can charge you for that you cannot do for yourself for little or no cost” (FTC. 2008). They state the trick to success is to “be persistent. Resolving credit problems can take time and patience” (FTC. 2008).

We couldn’t agree with the FTC more. You absolutely CAN do the work to repair your own credit. The advantage to hiring us to do it for you is that we already know the current, up to date laws and what the current process and trends are with the bureaus so it saves you the time of having to figure out how to do it yourself.

It’s similar to hiring a Realtor to help you purchase a home. You COULD approach a seller on your own and educate yourself on how to close the purchase. While you will save a little money, you will not have an expert on your side looking out for your best interest so you probably will not get as good of results as you could if you did hire an expert.

How do I know which credit repair companies are legitimate? 

The FTC suggests not doing business with any credit repair company that does any of the following:

  • Wants you to pay for credit repair services before any services are provided
  • Does not tell you your legal rights and what you can do yourself — for free
  • Recommends that you not contact a credit reporting company directly
  • Suggests that you try to invent a "new" credit report by applying for an Employer Identification Number to use instead of your Social Security number
  • Advises you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution. (FTC. 2008)

We suggest that if you have encountered any companies that have done any of the above offenses, to report the company to your state Attorney General, the Better Business Bureau, and NACSO. We suggest NACSO, the National Association of Credit Services Organizations, because it is the relevant review organization which advocates industry standards and ethical business practices for the credit repair industry.

Find our approval by our state attorney general 
Find our approval and standing with NACSO

How long does the process take? 
We want to see results just as quickly as you do. Although everyone's credit history is different, most people will see progress within the first 45 days of their membership. The majority of time is spent waiting for the credit bureaus to respond to our requests. As a reference, the average person with inaccurate, misleading, or obsolete items on each credit report should be prepared for a 6 month commitment.

Do I need to see my credit report before starting services? 
Yes. We offer a free personalized credit consultation. We firmly believe we cannot give you a truly personalized credit consultation or legitimate advice on whether or not our services would benefit you if we do not see your credit reports. 
It would be easy for us to tell you how our services could benefit you and that you should hire us and call it a free consultation; but that does not give you any personal value, that’s just a sales pitch. Our goal is to review each reporting item with you and discuss an individual action plan for each item. Not everyone qualifies to be our client; if we do not believe our services would be worth our cost in your personalized situation, we will give you advice on what you can do and advise you not to retain our services.


Why do we need all documentation received from the bureaus forwarded to us? 
When we dispute items on your behalf, the credit bureaus have a "reasonable amount of time,", approximately 30 days, to investigate our dispute. Within this timeframe, the credit bureaus must provide proof of the discrepancies on your report or be forced to delete those negative items. They will send you an updated credit report and you will then send it to us so we can move forward on your case.

Since a recent law forces the credit bureaus to only correspond directly with you, not your credit repair firm, it is necessary for you to forward all responses you receive to us. These updated reports are crucial for us to see which items were removed successfully and allow us to know how we should proceed. Without having the responses we do not know the appropriate way to respond to the bureaus which can lead to unnecessary delays.

How do I send in my results from the bureaus? 
We accept documentation via our secured fax, our secured email, or by mail.

How do I find out the status of my repair process? 
Clients can find out the status of their repair several ways. Client can check their status online, call in or email us.
We give our clients 24/7 online access to their account information. This includes information about billing and a detailed breakdown for each item and account on that is being disputed from their report. Anytime a change or update is made to your file we will email you letting you know what it was. We want our clients to know exactly what is going on and not be kept in the dark. 


 What documents are needed to apply for a mortgage loan? 
These are some documents you will probably need in order to apply for a mortgage. There may be additional documents requested by specific lenders.
  • Application Fee (cost of appraisal and credit report)
  • Legible sales contract signed by Buyers and Sellers.
  • Social Security number of all applicants.
  • Complete address for the past 2 years (including complete name and address of landlords for past 24 months).
  • Name, address, and all income earned from all employers for past 24 months.
  • Copies of previous two years W-2 forms.
  • Copy of most recent year-to-date pay stub.
  • Name, address, account number, monthly payment and current balance for: installment loans, revolving charge accounts, student loans, mortgage loans, and auto loans.
  • Name, address, account number, and balance of all deposit accounts, including: checking accounts, savings accounts, stocks, bonds, etc.
  • Three months most recent statements for deposit accounts, stocks, bonds, etc.
  • If you choose to include income from Child Support/Alimony bring copies of court records of cancelled checks showing receipt of payment.


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