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Credit Scores & Credit Reports- Things That Hurt and Things That Help
August 3, 2009 by Jim Bigelow · Leave a Comment
Ever wondered exactly how the credit reports and credit scores could effect you? Here is a simplified breakdown of what can help you and hurt you regarding your credit.
Credit Score Model
• Scores are Somewhat Counter Intuitive
• 30% of your score is based on Balance to Limits
-Individually & Cumulatively
-Balances normally reported at month End.
• Closing Accounts could hurt credit scores
• Recent Negative Information could be Damaging
-Paying off 5 year old charge off becomes recent and could damage credit rating.
What Can Consumers Do?
• Keep balances low to credit limits
• Some credit issuers don’t issue limits
-Dispute all bureaus to get issuer to report
• Monthly accounts like American Express will demonstrate high balance over time
• Review person credit reports regularly
Annual Credit Reports
• New Federal law provides for annual credit reports
-www.annualcreditreports.com
-Available Annually, Quarterly
Rapid Re-Score
• Independent Credit Re-sellers can provide updated scores based on corrected information
• Most re-sellers part of NCRA or National Credit Reporting Association www.ncra.org
• Potential increases 20-100 points
• Cost ranges from $75 to several hundred dollars based on trade lines involved
Identity Theft
• Identity Theft is the fastest growing While Color Crime
• Can drive scores from 700+ to 580
• It is time consuming to resolve
• Cost incurred can be extensive
• Check your credit report regularly
• Be aware of inquires from Out of the Area
• Dispute with Grantor immediately and file a fraud alert , police report or fraud affidavit
• You may have to file suit to get the identify theft resolved
What about Inquiries
• You can shop for 45 days with a hard inquiry, Mortgage, Auto, etc
• Inquiries pulled from consumer do not count against you
Who else wants to know your Score?
• Employers view credit reports as inexpensive background checks
• Insurance Industry- if under financial stress you may be more prone to cause loss for insurance company- increase rates
• Mortgage Insurance Premiums can be impacted by scores, positively or negatively
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