Get A free
Another 10 facts about credit scores, credit reporting, and debt.
That’s because your credit score impacts so much in your life these days, from rent and homeownership to credit card approvals, interest rates on student and auto loans to even employment. But too often, we’re still in the dark when it comes to credit scores, credit reporting, and general financial knowledge about debt management.
As the nation’s leader in credit repair solutions, Nationwide Credit Clearing is committed to helping educate you about these important topics. This is part three of our ongoing series as we count up to 50 things you didn’t know about credit score, credit reporting, and debt.
Look for part one and part two here and contact us if you have any questions or credit issues at all!
1. A survey by the Consumer Federation of America (CFA) discovered that the majority of consumers (just over 50%) had no clue that their credit scores can be checked and monitored by anyone other than credit bureaus. Only 53% of respondents knew that electric utilities checked credit scores and only 68% knew that home insurers, cell phone companies, and landlords regularly do the same.
2. However, even you may be shocked to hear that 90% of home and auto insurance companies check credit scores to help determine your coverage options and also what premiums you’ll pay.
3. A 2016 survey conducted by VantageScore found that only 32% of Americans (less than one-third) had received a copy of their free credit report within the last year, and 16% hadn’t even received a free report within the last three years.
4. Not to pick on college students, but they still have a lot to learn – about their classroom subjects as well as about credit scoring. In fact, a study by Equifax found that only 45% of college kids have any idea what their credit score is! It seems the majority of college students check their credit when applying for a credit card (41%), a new debit card or bank loan (33%) compared to only 4% who request and receive a paid copy.
5. Not only is credit score a crucial factor when you want to apply for a new loan or a mortgage, but employers are screening their potential employees for credit score like never before. It’s estimated that 1 in 4 unemployed Americans have been subjected to a credit score check when they applied for a job, and 1 in 10 has been denied a job because of a bad score or something on their credit report!
6. Adding to the credit score confusion, 45% of respondents think that age is a factor in credit scoring, and 38% believe marital status plays into their credit score. (Do they believe single or married people get a score bump?)
7. On the other end of the spectrum, about 26 million people – or 14% of the adult U.S. population – has no credit score at all, called “credit invisible.” Some of them are immigrants who haven’t had the chance to establish credit lines in the U.S., while others are from low-income or unstable environments and never have taken out a credit card or loan.
8. We all know the Big Four credit card companies now (Visa, MasterCard, Discover, and Amex), but the first ever credit card that allowed a member to purchase anything they’d like and then pay it back over time was called BankAmericard. Issued in 1958, they changed their name to the more-familiar “Visa” in 1977.
In 1966, the Interbank Card Association bought the rights to “Master Charge” from the California Bank Association, which they renamed “MasterCard” in 1979.
9. Americans may be buying new cars, homes, and fancy electronics, but how are we paying for everything? Too often, the answer is with debt. In fact, 52% of Americans spend more money than they earn every single month, and 21% have regular monthly bills that are more than their take-home pay! 1 in 4 Americans have more debt than savings, and the average American spends $1.33 for every dollar they earn.
10. The American Bankers Association found that 44% of Americans surveyed thought that credit scores and credit reports were the exact same thing! That’s probably why a study by the National Foundation for Credit Counseling (NFCC) revealed that a significant portion of consumers thought that they didn’t need to know their credit score because they already had a copy of their credit report.
Online fraud is one of the fastest growing forms of crime, reaching epidemic proportions in a nexus of technology and cruel anonymity that defies international borders. The highest instance of fraud attempts is now aimed at businesses, violating their often-weak or nonexistent firewalls to access customer financial data, and using it with impunity.
The Pyramid of Financial Success
No matter what our financial situations look like, everyone pretty much wants the same thing: low bills, plenty of savings, living in our own home, and enough investments to retire whenever we wish. Achieving that lofty goal is also very obtainable if you follow these 10 steps to climb the Pyramid of Financial Success:
1. Track expenses
Before you do anything else, it’s critical to know exactly how much you’re spending every month, and on what. Sure, you may THINK you know what your bills are and how much you spend, but I bet that you’ll be pretty shocked when you write down every single penny you spend (or use one of the great financial apps that help you record expenses). Try this for a month and then add up the total expenses and you’ll be amazed how much you’re blowing on impulse purchases, things you don’t really need or even want, and items that you didn’t realize are costing you!
2. Set a budget
Now that you know exactly what you’re spending your hard-earned dollars on, it’s time to tighten the belt. Ruthlessly slash everything from your budget that’s not a necessity – and hold yourself accountable to it. This will take some discipline but turn it into a fun game, and keep reminding yourself that by sacrificing NOW, you’ll be able to put yourself in a much better financial situation that lets you spend more on the things you really love and want later on.
3. Build an emergency fund
Did you know that 40 percent of Americans couldn’t come up with $400 in cash if faced with an emergency today, and two-thirds don’t have even $1,000 saved? As we’ve turned to debt more and more, the savings deficit in the U.S. has grown. However, it’s so important that you accumulate a rainy-day fund, which is a fair bit of cash that you can use when the car breaks down, you miss work because of a medical problem, or some other challenge. Start by putting $400 away, then $1,000, and keep saving until soon, you’ll have at least a few month’s total expenses saved as a cushion.
4. Pay debt
This is a big one! Once you’ve set a budget and put aside a few bucks as a safety net, it’s time to tackle the hardest part of all: paying off debt. In fact, the average American household now has $16,883 in credit card debt, $50,626 in student loans, $29,539 in auto loans, and, if they’re lucky, a mortgage on top of all that. But the one that we want to start with is paying off credit cards, as well as other revolving debt and retail installment loans. This is essential if you want to free yourself from a life of struggling and stressing about money and bills, and open up a much more secure and comfortable relationship with money.
There are several ways you can pay off your debt, but one of the best is using the technique of Debt Snowballing which is advocated by financial gurus Dave Ramsey, Suzie Orman and others. We’ll bring you more info on Debt Snowballing soon.
5. Repair credit
In fact, it’s a good idea to tackle #4 and #5 on this list in conjunction so that you’ll end up debt free AND with a fantastic credit score, starting with a free credit report and consultation from Nationwide Credit Clearing. We’ll go over your credit report and debt load with you, identifying which of them should be paid off first since they have the highest interest rates (or smallest balances).
Likewise, we can advise you which of your credit accounts should just be paid down (not off) and kept open. Our service will also attempt to remove negative, incorrect, and outdated items from your credit report, boosting your score to new heights.
How important is a great credit score? These days, just about everything you pay is tied to credit score, from all of your credit cards, your mortgage, and other loans, as well as utilities, cell phone accounts, the ability to rent a home, and even your job!
6. Buy a house
Speaking of (not) renting, once you have some savings and your debt paid off, the next big step in your financial pyramid is buying your own home. In fact, homeownership is still the American Dream, allowing you to build equity, pay down your loan, enjoy lucrative tax breaks, and experience the pride of ownership. These days, down payment programs make it easier than ever to come up with the money needed to buy a house, and you’ll essentially be paying yourself every month instead of your landlord!
Your bad debt is gone, and you’re now in your own home, so it’s time to start investing. Actually, you should be investing from day one in a 401K, mutual fund, or other safe, stable vehicle, as the power of compounding really comes into play the earlier you start. Contact a financial planner or advisor for the best way to invest and save for retirement considering your situation and goals.
8. Fund college
Remember how we mentioned that the average household has $50,000+ in student loan debt? Why not give your children a head start (not extra hurdles) in life by funding as much of their college education as possible instead of piling on more debt?
9. Pay off your home
We paid off your bad debt when we zeroed-out those credit cards, and you’ll get to a point high up the pyramid of financial success where the next logical step will be to pay off your home, too. There are several great strategies to help you do this, such as sending in a 13th payment every year, paying every two weeks instead of monthly, or adding extra funds to pay off principal faster. Either way, once you pay off your home in 20 or even 10 years instead of 30 (like most mortgages), your biggest bill will be knocked off the list.
With little or no debt, plenty of savings, a well-spring of investment income, and your home paid off, you’ll be in the enviable position at the top of the pyramid, where you can choose to retire whenever you like. Of course, that doesn’t mean that you must stop working, as many people opt to pursue their passion or work a lighter schedule just because it’s enjoyable. Either way, you’ll be the master of your financial life – not the other way around! Congratulations on making it to the top of the pyramid!
How long will negative information stay on our credit reports?
Did you miss a credit card payment, have a bill go to collections, or even had to file bankruptcy recently? If so, your credit score has probably taken a pretty big hit. You’re also probably wondering when it will stop showing up on your credit report so you can move on.
Luckily, negative information that’s reported on your credit doesn’t last forever. In fact, we know the timeline when they will “fall off” and not be reported anymore thanks to the Fair Credit Reporting Improvement Act of 2014, which defines the timelines for how long negative information can remain on your credit file.
Here’s a rundown of how long common items will remain on your credit report, where they very well could be hurting your score:
Credit cards, store cards, retail accounts, auto loans, and other credit accounts that are paid on time can keep reporting on your credit for up to 10 years from the date of last activity.
Late payments for credit accounts
However, if you missed payments or failed to pay on time, that negative data will also be reported, but for a period of 7 years (starting from the exact date the account was first past due.)
Late payments for other debts
While late payments on common credit accounts will show up for 7 years, those same rules don’t apply for revolving or installment loans. In fact, if you have a revolving or installment debt that is now current but does have a late payment some time in the past, that negative item (late payment) will appear on your credit report for 10 years past the date of last activity.
While it may get a little confusing, the late payment history will be removed for these installment and revolving debts after 7 years, but the reporting for accounts that are current will show up for 10 years.
Collection accounts usually will show up on your credit report for a full 7 years after the date the account first became past due. Remember that the date it was past due will be earlier than the date it was sent to collections, which could be 90 days or more after that.
If you’ve been through a chapter 7 bankruptcy (most common for consumers), a chapter 11 bankruptcy, or a non-discharged or dismissed chapter 13 bankruptcy, that will typically keep reporting for 10 years from the date the bankruptcy was first filed (not the date they were discharged).
However, chapter 13 bankruptcies that have been discharged can only stay on your credit report for 7 years from the date they were first filed.
Judgments usually stay on your credit report for 7 years after the date they were filed, whether you have satisfied (paid) them or not.
If you have a tax lien and then pay it off in full, the lien will still report on your credit for 7 years from the day it was satisfied.
However, tax liens that go unpaid (unsatisfied) will stay on your credit report indefinitely – which means that you’re stuck with them until they’re paid off.
When a third-party requests a copy of your credit report (usually a lender, retailer, or employer), that activity shows up on your credit report, and can possibly impact your score. But the good news is that there’s usually not a big hit, and the credit bureaus only keep this on your report for 1 or 2 years.
But there are different types of credit inquiries that might have different reporting timelines. For instance, promotional inquiries (when you received a pre-vetted offer for credit) don’t affect your score and generally remain on your credit for only 12 months. When one of your current creditors performs a review of your account, it also does not affect your score and remains for 12 months. Finally, when you request a copy of your own credit report, it does not affect your score and will remain on your credit file for up to 24 months.
However, there are some slight variations on these timelines depending on state law:
For instance, in California, paid or released tax liens will stay on your credit file for 7 years from the date released, or ten years from the date filed. And unpaid tax liens remain on your credit file for only ten years from the date they were filed – not indefinitely.
New York State residents see their satisfied (paid) judgments only remain on their credit file for 5 years and paid collections only reporting for five years from the date of last activity.
I know – that’s a lot to remember. So we’ve put together this easy list so you can quickly see how long a certain negative item will stay on your credit report:
The item remains two years (or less);
The item remains no more than 7 years:
Released tax liens
Charged off accounts.
Note: the timeline begins from the date of default OR 180 days after the date of the first delinquency that eventually went to collection.
The item remains no more than 10 years:
A Chapter 7 bankruptcy can remain on a credit report for up to 10 years from the date it was first filed.
A Chapter 13 bankruptcy can also remain on a credit report for up to 10 years.
The item will remain indefinitely (until paid):
Federally guaranteed student loans that are unpaid and in default can remain on a credit file indefinitely until such time as they are paid.
Unpaid tax liens may report on a credit file indefinitely.
Remember – there’s another way to get rid of negative items that are reporting on your credit BEFORE they naturally fall off after all of these years! Contact us for more information!
The difference between hard and soft credit inquiries.
Most people check their credit periodically, such as when they’re about to apply for a big loan, once a year, or every four months (like you should). But you may not realize that a whole lot of others are checking your credit – and probably on a more frequent basis. In fact, every time you apply for a credit card, submit an application for a student loan, take out a store discount card, or even apply for insurance or rent a new apartment, your credit is probably being pulled.
Those credit pulls also can ding your credit score, if not handled correctly. Sometimes, that’s inevitable, and other times it’s avoidable. But it’s important to understand the facts about hard and soft credit inquiries, or credit “pulls.”
In fact, only 26% of women and 31% of men know the difference between “hard” and “soft” credit inquires, or credit “pulls.”
So today, we’ll give you some fundamental information about credit inquiries, both hard and soft. Contact Nationwide Credit Clearing if you have further questions about credit pulls, and would like a free copy of your credit report and consultation with a credit expert!
Hard credit pulls:
Hard credit pulls only take place when you apply for new credit accounts.
Or, a hard pull will occur when one of your existing creditors decides to pull your credit. In fact, most creditors can access your credit any time, for any reason they deem, without needing your permission first.
Creditors commonly do this when they’re reviewing your account to consider an increase to your credit line.
Soft credit pulls:
Sofer credit pulls, however, can occur either with inquiries where the consumer voluntarily agreed to have their credit accessed, or other involuntary inquiries.
For instance, soft pulls usually take place when you’re applying for a new job, a cell phone account, trying to rent an apartment, etc.
Effect on credit score:
There is no one set rule for how credit pulls will affect your score. But, typically, hard credit pulls will only have a slightly negative impact on your credit score, possibly dropping your score a few points in the short term.
Typically, your FICO score can go down about 5 points per inquiry if you have your score pulled too much by the wrong vendors. The drop could be greater if you have few accounts or a short credit history without seasoned, positive factors to compensate.
In fact, the negative effect of hard pulls usually last only one year, but most of the damage disappears within the first 90 days.
Are all credit score pulls considered equal?
Since credit scoring is primarily a means of gauging the risk of default, consumers with high credit scores will suffer a little more damage from hard credit pulls. That’s because the credit algorithms consider the fact that they’re getting their credit pulled atypical, and more of a red flag.
So the higher your score to begin, the more damage a hard credit may do.
Additionally, unsecured credit inquiries, like you’ll find with personal credit cards, retail cards, and in-store accounts, will cause the most damage to your score.
When current creditors pull your credit:
We are certain that soft credit pulls have a negligible negative effect on credit scoring – or none at all. That’s the reason why most of your current creditors will only order soft credit pulls on your account, not hard pulls.
Current creditors usually also do a soft pull every month or so, although some check up on their consumers much more frequently.
Some credit pulls always act as hard inquiries, some are always soft injuries, and some can show up as either/or.
Hard pulls are most often found with:
• Applications for new credit cards
• Requests t activate a pre-approved credit offer (such as you receive in the mail)
• Applying for a new cell phone account and contract
Soft pulls are most often found with:
• Background checks by potential employers
• Your bank verifying your identity
• Initial credit checks by credit card companies that want to issue you preapprovals
Who can pull your credit, whether through hard or soft inquiries?
Credit card companies
Financing departments of retail stores
Auto dealerships financing departments
Cell phone companies
Child support agencies
Anyone with “Permissible Purpose,” as deemed by the Federal Credit Reporting Act.
Timing is everything with credit pulls:
Timing is so important when it comes to credit pulls. The more “bad” inquiries that appear on your report within a short time, the bigger hit to your score. For instance, if you apply for five new credit cards within a two-week period, it definitely is seen as risky to the credit bureaus, and your score will drop accordingly.
However, the credit bureaus do account for consumers who want to “shop around” for large and important loans, like mortgages, business loans, etc. Of course, shopping for the best rate on a single loan (not applying for multiple loans at once) means getting your credit score pulled several times within a short period, but the good news is that this practice won’t hurt your credit score.
In fact, the credit bureaus typically just count this group or batch of inquiries as one if they’re within a 30-day period (or a 45-day period with some credit scoring versions).
So, if you’re shopping around for the best rate on an important loan, try to contain all credit pulls to within a 30-day period to keep your score in good order!
Contact Nationwide Credit Clearing if you have further questions about credit pulls, and would like a free copy of your credit report and consultation with a credit expert!
The 15 most common credit score wrecking balls!
Of course, one of the biggest wrecking balls that smash through your credit score and finances is paying your bills late. For accounts on your credit report, like mortgages, credit cards, auto and student loans, and many others, paying even just a day or two late can trigger a 30-day late, which will significantly ding your score.
Even worse, being 90 days late causes further damage to your credit report that. Remember that payment history (paying on time every month) is 30% of your score, so pay on time to dodge this wrecking ball!
2. Max out credit cards or accounts
Your credit ratio, or the amount of total debt you hold compared to your available credit, is also a major factor for your score, making up 30% of your FICO as well
So, when you max out your credit cards, even if they are paid on time, your score will get smashed.
3. Have an account charged off and go to collections
Once you are 90 days late with your credit card payment or bill, the next step is typically that your creditor soon charges off the debt, sending it to a third party for collections, causing even more damage to your credit score that can be hard to erase.
4. Cosign for someone who doesn’t pay
Maybe you have a friend or even family member that asks you to be a cosigner on their credit card, auto loan, or another account. I know that you’d like to help, but aware that if they don’t pay, YOU are fully responsible for their debt. In fact, those late payments will show up on your credit report just like you took out the debt, yourself.
5. Filing bankruptcy
If you want to talk about a big, heavy wrecking ball, filing a Chapter 7 or 13 Bankruptcy is one of the most damaging events to someone’s credit score. However, for some people, legal insolvency is still the best option if they are drowning in debt with no way out. The good news is that Nationwide Credit Clearing can work with you during and after the BK process to repair the damage!
6. Foreclosing on your home
Another major wrecking ball is foreclosure, which occurs when you miss enough house payments so the bank legally repossesses the home. Foreclosures cause serious damage to your credit score and will take seven years to fall off your credit report.
7. A judgment against you
This is a dangerous and scary wrecking ball for consumers. When you don’t pay your debt obligations, your lender or third-party collection agencies may take you to court, trying to secure a judgment for the amount you owe (plus late fees, penalties, and court costs). Also, there are state and federal judgments for unpaid child support, alimony, IRS tax liens, etc. that will never disappear from your credit file until they’re satisfied! Contact us immediately if you have judgments!
8. Applying for new credit recklessly
If you start filling out a lot of credit card and loan applications within a short period, it shows the credit bureaus that you’re financially desperate, or something is wrong. Since their main job is indicating risk for lenders, your credit score will take a hit, accordingly.
9. Close old credit cards in good standing
It may seem like good financial sense to cancel old or unused credit cards, but by shutting down a seasoned card or credit line in good standing, you’ve just effectively erased a positive track record of paying on time. Sorry, but your score will go down once that positive payment history is taken out of the equation.
10. Not pay student loans
Remember when we were talking about judgments? Unpaid federal student loans will level your credit very quickly, and they also won’t naturally disappear from your credit report until they’re paid. Unfortunately, unpaid student loans are the fastest growing form of credit score “wrecking ball” in the United States.
11. Utilize payday loans, cash advances, or financing through Rent-a-Centers
All credit is not created equal, and when you take out loans that are deemed risky, it will hurt your score. Payday lenders, check cashing services, certain retail credit cards, and financing purchases like furniture can shake the foundation of your score.
12. Try to outthink the credit card companies with balance transfers
Are you “jumping around” between credit card offers, taking out 0% interest or cash-back offers and moving balances around just to stay one step ahead? The chances are that questionable financial practice will catch up with you sometime, in the form of penalties, late fees, small print you miss, or higher interest rates. But even if it works, your credit score will be battered and bruised.
13. Not using your credit at all
About 30 million Americans are considered “Credit Invisible,” as they don’t have a sufficient – or any – credit history. If you don’t have any credit cards or other accounts, there’s no established payment history for the credit bureaus to judge you by, and your score will be rock-bottom. Luckily, you can contact Nationwide Credit Clearing, and we will guide you through how to establish credit and build a good score.
14. An imbalanced mix of credit
Do you have only credit cards on your credit report? Or, is have you taken out four installment loans but nothing else? An imbalance between credit cards, installment debt, auto or student loans, mortgages, etc. can also act like a demolition crew to your credit score.
15. Not checking your credit frequently
These days, credit and identity theft is the fastest growing form of crime around the world, and companies that collect your sensitive financial data – and even credit bureaus (like Equifax) are susceptible to hackers. Even if you pay all of your bills on time and do everything else correctly, the best way to protect your credit and finances is to regularly monitor your credit report.
Start by contacting Nationwide Credit Clearing for a free credit report and consultation at (773) 862-7700 or MyNationwideCredit.com.
5 Ways to jump-start your credit score.
Is your credit score far less than ideal these days? If your FICO is lagging, just like about 30 percent of all Americans, it may be holding you back from getting a better credit card, applying for a mortgage loan to buy a house or even being hired for your dream job.
But the good news is that there are strategies you can use to build your credit, raising it to the point that you are considered a prime candidate for the best interest rates and credit approvals from banks, lenders, and other financial institutions.
Some of these strategies are part of a long-term plan to maintain good credit, but we also have ways to almost instantly boost your score.
If you are planning to apply for a home mortgage, finance a new car, or try to get a job that checks credit as part of the hiring process (like about 45 percent of all employers these days), you’ll want to utilize these five tactics.
Remember that Nationwide Credit Clearing is the U.S. leader in fast, effective, and affordable credit repair, so call us if you’d like a free credit report and consultation to get started!
- Pay down balances.
We know that the ratio of your debt to total available credit – called credit utilization ratio – makes up about 30 percent of your credit score. Therefore, people with maxed out credit cards or high debt loads compared to their available credit will see their scores steadily sinking.
So, the first thing you want to do when improving your credit score is to pay down as much debt as possible.
It’s important to get your credit utilization ratio below 30 percent (so you only owe $3,000 or less on a credit card with a $10,000 available balance). Credit experts even suggest keeping a utilization ratio of 10% or less to achieve a great credit score. However, don’t go all the way to 0% because it won’t show an established payment history they can use in their calculations (since you won’t have any payment).
- Request a credit line increase.
Don’t have enough money sitting around to pay down your credit balances enough to raise your scores? Another sneaky-good way to improve your credit utilization ratio – without paying down one cent of debt – is to increase your total available credit. For instance, let’s say you had a $10,000 credit line but owed $4,000 (so your utilization ratio was 40 percent).
Instead of paying down your debt, if you could get the credit card company to increase your available limit to $15,000 from 10k, your utilization ratio just went down to about 27 percent – and your score would go up! To do this, simply call the credit card company or lender and make your case over the phone and they’ll either approve or deny your request or approve a lesser increase.
- Ask your creditors to remove late payments from your credit report
Did you know that you can simply ask your creditors to remove evidence of late payments from your credit report? Why not? It’s free for you to ask (nicely), and the worst thing they can say is “no.” Called ‘Goodwill late-payment removal,’ this practice is more common than you may think. In fact, any creditor has the power to remove a late payment from your credit report.
For instance, department store credit accounts and other retail accounts are usually pretty liberal with goodwill late-payment removals. They may do just that if you can make a good case that it was a one-time incident because you didn’t receive the bill on time, an address change, etc. and that you otherwise have a perfect record with them.
Once they tell you that the late payment is removed, ask for payment history update letter, which is your confirmation in case you need to present documentation to the credit bureaus.
- Pay for deletion of collections
Many of us have collections on our credit reports, which can do some serious and ongoing damage to your score But there may be a way to get it removed. If you’ve missed enough payments to have an account in collections, your creditors may agree to erase any negative credit reporting for that account if you pay it off.
The good news is that you can also negotiate your payoff, and if it’s in collections, they may accept less than the full amount to settle you up – sometimes even 50 percent of your balance or far less!
Once you negotiate the payoff amount AND they agree to remove the item from your credit report, only pay the collection via a mailed certified check, with “Cash only if you delete account from credit report” written above the endorsement line. Also, make sure you get their promise in writing via a letter of deletion. We can use the letter to apply for a rapid rescore instead for you, so you won’t have to wait a month or more to see your credit score rise!
- Dispute any errors on your credit report.
Most people don’t realize that credit reports often contain mistakes, misreporting, duplicate items, or outdated information. All of these things may be lowering your score, but they can also be removed. Start by contacting Nationwide Credit Clearing for a copy of your credit report, and we’ll help you review it carefully for any errors or inaccuracies.
By reviewing it line-by-line, we’ll be able to highlight inaccuracies or items that are lowering your score. Remember that there are three major credit bureaus and they each may report different information, so it might be a good idea to check all three. Look for errors on larger accounts first, length of history, payments reporting on time, and that your balances are accurate.
The last step is formally disputing each inaccuracy or error with each of the credit bureaus, Equifax, Experian, and TransUnion, separately. They are legally obligated to get back to you in a certain amount of time with proof that the information you’re disputing is correct – or they have to change it or remove it.
If you have more questions about disputing items, how to boost your score quickly, or want a free copy of your credit report, contact Nationwide Credit Clearing!
Can you achieve a perfect credit score? We’ll show you how!
When you get together with your friends, family, and coworkers, there’s always one person who loves to brag about how well they’re doing. It may be about their new car, high-paying job, or even the amazingly low interest rate they just got on their mortgage.
So wouldn’t it be great if the next time they opened their mouth to be braggadocious, you could one-up them by reporting that you had a perfect credit score? There’s no topping that!
But there are plenty of financial benefits to a perfect (or excellent) credit score, too.
FICO, the most popular credit scoring model, issued by the Fair Isaac Corporation, ranges from 300 all the way up to 850. Generally, a score above 680 or so is considered “good,” and once you hit the 720 to 740 range, your score is considered “excellent.”
But there’s another level or two above that for consumers to strive for. In fact, 32.8 million people have FICO scores between 700 and 749, but approximately 70 million consumers have FICOs above 760.
Don’t stop there, because it’s possible to raise your credit score even higher. An estimated 36.4 million people have scores between 750 and 799, and 38.6 million are in the 800+ FICO range.
Only about 1% of consumers, around 2 million people, ever reach high-end 800-850 scores.
In fact, FICO estimates that only about .5% (half of one percent) of all consumers with a credit score have a perfect 850 FICO. To put in in context, the average FICO score in the United States has just reached 700 for the first time.
Remember that FICO isn’t the only credit scoring model, as there are dozens of other scoring models that banks and lenders use to make lending decisions, and then different versions of each depending on what kind of loan or even consumer they’re vetting.
So let’s say you reach an 800 credit score, or even an enviable 850 – a perfect credit score. Beyond bragging to your friends, what are the benefits?
An 850 credit score may not help as much as you think IF you compare that to another great score, like an 800, 780, or even lower. That’s because FICO uses algorithms that rate scores within “brackets,” which means that if you have above 750 or maybe 780, there really won’t be an additional benefit the higher you go.
“It’s important to understand,” reports FICO spokesman Anthony Sprauve, “that if you have a FICO score above 760, you’re going to be getting the best rates and opportunities.”
For instance, a consumer with an 850 FICO will most likely be offered the same mortgage interest rate, auto loan rate, or 0% interest credit card offer as another consumer that “only” has a 780 score.
While you may expect little perks, additional beneficial terms, and premium services with a perfect credit score, you most likely won’t see any huge benefit once you reach the “super-prime” scoring bracket.
So why strive for a perfect score? Remember that credit scores are dynamic, constantly going up and down, so today’s perfect score may be a little less next month. Furthermore, it certainly doesn’t hurt to aim for a perfect score and still have an excellent FICO even if you fall a little short. And since your credit score is a good indicator of your financial acumen and dealings with debt, a perfect credit score most likely means that your financial house is well in order.
Whether you want a perfect credit score – or just trying to improve your score until you reach 700 or even 800 – here are ten important strategies:
- Pay on time (and never miss a payment)
Even one late payment can hurt your score, and paying on time is about 35% of how FICO calculates your score. In fact, 96% of people with a FICO score of 785 or greater have no late payments on their credit reports.
- Pay down your balances
Your credit utilization ratio – how much debt you keep compared to total available balances – makes up about 30% of your credit score calculation. While you commonly hear that you should pay your credit cards and debt down below 30% of the available balances, to shoot for that perfect credit score, you’ll want to pay then down to 10% or below. In fact, a survey of consumers with 800+ scores revealed that their average credit utilization rate was just 7%.)
- Keep older and seasoned accounts
About 15% of your credit score is calculated by the length of your accounts, so older is better. According to FICO research, the average credit super scorer has an account that’s 19 years old. Likewise, the average age of their accounts is between 6 and 12 years, and they opened their most recent account 27 months ago or more.
- Keep a good mix of credit
10% of your credit score depends on managing a healthy mix of credit, including mortgages, installment loans, and high-quality revolving accounts. Consumers with FICO scores 760 and up have an average of six accounts that are currently “paid as agreed,” and an average of three accounts with a balance.
- Shop around in clusters
When you have your credit pulled to “shop around” for a loan, make sure it’s within a 30-day window and FICO won’t factor those pulls into your score. Even if they are spread out within 45 days, they’ll only be treated as one credit inquiry.
- Check your credit report often
About 25% of all credit reports contain errors, and ID theft and fraud affect about 1 in 8 American consumers. So to achieve a great score, check your score frequently and consider a credit monitoring service.
- Make payments before the due date
To earn an 800+ credit score, make payments well before you receive your bill and the due date. Try paying off (or down) your purchases at the end of every week for the best credit score.
- Increase your credit limit when offered
Another way to improve your credit utilization rate and boost your score is to take advantage of any offers to increase your credit line.
- Stick to one or two good credit cards
It’s best if you only use one or two cards on a regular basis. American Express is a great choice, as the balances don’t report to FICO since you pay them off in full every month.
- Improve your score with Nationwide Credit Clearing!
We’re the trusted leader in credit repair done right. Contact us at (773) 862-7700 or MyNationWideCredit.com for a free report and consultation so we can get you started on the way to a perfect credit score!
How Many Credit Cards Is Too Many?
You are at the register paying for a pair of new shoes at your favorite department store. The cashier asks if you would like to sign up their rewards program to save 10%. You are thinking who wouldn’t want to save 10%, of course you want to sign up. So you sign up for the stores credit card to get a discount on your purchase. Is that 10% off and a new credit card really benefiting you?
Stop and ask yourself if you really need another credit card. The more credit cards you have the greater chance you have of getting deeper into debt. It is important to remember that credit cards are not a form of supplemental income. The annual fees of the credit cards can also add up, so that 10% you saved will eventually cancel out.
Your credit score can also be negatively impacted by having too many credit cards. Which will in turn impact your ability to borrow money. Learn more about how a bad credit score can affect your life in our recent blog post (Little Known Causes for Bad Credit
In contrast, adding more cards can help your score by decreasing your credit utilization ratio (the amount of debt you carry compared to your available lines of credit). However, if you have a lot of credit cards with high limits and you go to a lender to take out a loan, the lender will take into consideration a situation where you ran those credit cards up and what your debt-to-income ratio would look like then.
So, how many credit cards is too many? There are people who are very successful using a single credit because it is easiest to manage one card. Having 3-5 cards is typically not a problem. But if you find all your credit card balances are increasing, that is a danger signal.
If it’s been a long time since you have checked your credit report, give us a shout here at Nationwide Credit Clearing. Our Initial Credit Report and Consultation is Free of Charge! Call Today!
“Home of the Free Credit Report & Consultation”
2336 N. Damen
Chicago, IL 60647
Toll Free: 877-334-3296
Find us on …
Bad Credit Requires Hiring a Credit Repair Company
Bad credit can affect every area of your life, from home ownership to being able to obtain a good job to replacing your car. Many people in need of credit repair simply avoid the situation, usually out of an abundance of anxiety or simply being uncertain how to proceed. This is where hiring a credit repair company can come in handy – they can help you handle the need for credit repair without putting yourself in an unfamiliar and scary situation.
Expertise and Experience
Credit repair companies have expertise in nearly every situation requiring credit repair. Some people find themselves in need because of a divorce, identity theft, or a sudden loss of employment. Whatever the reason, credit repair companies have experience in handling the situation with tact, sensitivity, and in a way that will work out best for the consumer. Think of how often you do the same task at your job, and how skilled you have become because of it. This same principle applies to credit repair companies. They have dealt with these situations on a daily basis since beginning to operate, making them experts at negotiation and at handling the unreasonable demands of creditors.
For a person in need of credit repair, the situation is fraught with high emotions. This leaves the debtor in a bad position when trying to negotiate terms with creditors who know how to take advantage of the situation. A credit repair company is removed from the situation, putting them in a much better position to negotiate without feeling re-victimized by the process. A creditor is going to take demands made by someone who isn’t overly emotional much more serious than one who is, making a credit repair company a huge asset in this situation.
Credit repair companies help those who are in need of credit repair for a living, meaning they are significantly faster at identifying errors on a credit report and working with creditors than a debtor can. They have the time to answer calls as they come in, rather than going through the voicemail, call back, voicemail game of phone tag many debtors experience. Debtors are often busy working or dealing with other aspects of their life, and cannot handle their credit repair with the timeliness or accuracy of a credit repair company.
If you are someone who has tried to take these steps numerous times, yet can’t seem to keep up with all the chaos, then credit repair is right for you!
Why wait! Better Credit can be yours! Contact our experts at Nationwide Credit Clearing. “Home of the Free Credit Report and Consultation”
“Home of the Free Credit Report & Consultation”
2336 N. Damen
Chicago, IL 60647
Toll Free: 877-334-3296
Find us on …