| We are all aware of how the credit crisis and | | | | your mortgage payments. If at all possible, it would be |
| recession has caused damage to some important | | | | a good idea to refinance to an adjustable rate |
| nation economic indicators including home prices, stock | | | | mortgage and take advantage of the lower rates that |
| market indexes and retail sales. They have also | | | | are currently available on fixed loans. |
| affected a lot of people's credit score as well. This is | | | | Get Debt Relief from a Credit Counselor |
| due to layoffs, reduced credit lights and much tighter | | | | Entering into a "partial payment agreement" with a |
| credit standards. All of this has caused consumers to | | | | debt relief firm will negatively affect your credit score |
| take advantage of loan-modification programs and | | | | since it will be reported to the credit bureaus. So, if you |
| lenders to be more willing to negotiate problematic | | | | are struggling with your finances, try to get them back |
| debt. In the mean time, FICO has also introduced a | | | | on track just as soon as possible. While your credit will |
| new scoring method which is known as FICO 08. This | | | | take a hit at first here, it will gradually improve as you |
| new scoring method can raise or lower your credit | | | | demonstrate that you are a responsible borrower. This |
| score by as much as 50 points. | | | | is something that a credit counselor will be able to help |
| Here is what you need to know about how today's | | | | you with. They can set up a five year repayment plan, |
| credit events can either help or harm your credit score. | | | | with favorable terms, for you. Whenever you choose |
| Some of these things may even surprise you, which is | | | | to go this route, make sure that you stick with a |
| why it is important to know how to protect your credit | | | | reputable, nonprofit agency that employs counselors |
| rating in today's economy. | | | | who are both trained and certified. Make sure that the |
| Your Credit Limit Is Reduced By Your Card Issuer | | | | counselors are also members of either the Association |
| This will not affect your credit as much as you might | | | | of Independent Consumer Credit Counseling Agencies |
| fear. In fact, studies have shown that there was little to | | | | or the National Foundation for Credit Counseling. You |
| no impact on credit scores for this. These same | | | | will also want to check on the agency's standing with |
| studies have actually shown that the median score for | | | | the Better Business Bureau. |
| these people actually rose a few points. So, while you | | | | Get a "Goodwill Correction" From a Lender |
| don't have to worry about this too much, you will want | | | | This is a positive thing since FICO doesn't track any |
| to pay attention to it next time. | | | | changes on your credit file. Therefore, if a creditor |
| Rate Hikes Cause You to Close Your Credit Card | | | | removes a negative item today, the scoring model will |
| This can hurt you somewhat if you have a large credit | | | | never know that it ever existed. So, it will never hurt to |
| line and a low balance because the scoring model no | | | | ask a lender to remove something that is negative |
| longer includes the vast, unused credit that you had | | | | from your credit report. You should definitely try it if it is |
| from this account. However, if you still have a sizable | | | | the only black mark on your otherwise great credit |
| balance on this account, the negative effect will be | | | | report and you have a longstanding relationship with |
| smaller. For this reason you should keep your account | | | | that creditor. Studies actually show that 50% of those |
| open and only use it sparingly, especially if this is your | | | | who ask for a goodwill correction will actually get it. |
| oldest account. The reason behind this is the fact that | | | | Since this is something that you can do for yourself, it |
| the scoring model only knows your earliest credit | | | | can be done for free. |
| experience. So, since these closed accounts will | | | | Paying Your Loans While Falling Behind On Other Bills |
| eventually be dropped from your report, the length of | | | | This will hurt your credit score because the FICO |
| your credit history isn't going to be apparent and you | | | | model doesn't weigh the different types of delinquency |
| could be hurt by this. | | | | any differently from one another. Here it is important to |
| Paying Down or Paying Off Credit Balances | | | | understand that even those bills that aren't generally |
| This is one of the most effective ways in which to | | | | reported to the credit bureau may eventually show up |
| improve your credit rating because it will help your | | | | on your credit report if it is sent to a collection agency. |
| score by reducing your total credit use. It is important | | | | For this reason, you should never blow off any |
| to make sure that you don't do away with all of your | | | | creditors. Instead, once you find that you are unable to |
| credit though because it is still important to show some | | | | manage all of your bills, make sure that you call the |
| activity. If you are trying to improve your credit score, | | | | creditor before you are late so that you can make |
| then make sure to pay off your balance as soon as | | | | payment arrangements with them. |
| possible. You also need to remember that there can | | | | Adding an Explanation to Your Credit Report as to |
| be a lag between the time when a lender cashes your | | | | Why You've Defaulted |
| check and when they report your payment to the | | | | This will not have any impact whatsoever on your |
| credit bureau. | | | | credit score since lenders don't even bother looking at |
| Getting a Mortgage Modification or Short-Selling Your | | | | the special comments field on a person's credit report. |
| Home | | | | Since this information can't be coded, the FICO 08 |
| This will probably negatively affect your credit score | | | | won't look at this either. Even if your file gets flagged, |
| but it depends upon how the lender reports the | | | | the FICO model won't adjust your score. However, if |
| transaction. If you have a modified loan agreement, | | | | you happen to become a victim of identity theft, make |
| then your lender will agree to accept a lower amount | | | | sure that you immediately place a security freeze on |
| of money than what you had originally agreed to | | | | your credit report with all three credit bureaus. You will |
| repay. More than likely this will not damage your credit | | | | also need to file a police report and then begin the |
| report if you already have other bad marks on your | | | | process of removing any fraudulent information from |
| credit report. If this is your only issue and you get it | | | | your credit report. |
| marked as "paid as agreed," then the scoring model | | | | Becoming an "Authorized User" On another Person's |
| will never even know about it. However, if a loan | | | | Credit Card |
| modification or short sale is reported as "partial | | | | If this is a scam, then there is no benefit. However if |
| payment," "deferred payment" or "not paid as agreed," | | | | you are legitimately authorized to use your spouse's |
| then your credit score may suffer a lot of damage | | | | account, there is some benefit. This is important to |
| even if this is the only thing wrong. For this reason, you | | | | understand because the old FICO scoring model |
| should always know for sure how this will be reported | | | | couldn't tell the difference here. Thus you would get |
| before entering into the special payment plan. Of | | | | points for a good credit history regardless as to |
| course, if you really need the help, you should take the | | | | whether or not it was actually a scam. FICO 08 can |
| deal even if it will hurt your credit score because the | | | | discern this though so you don't want to misrepresent |
| impact this has will eventually fade. | | | | your credit profile. |
| Being Rejected For a Loan Several Times | | | | Singing Up For A Loan That Will Make Your Payments |
| This is only a small negative since the scoring model | | | | While Unemployed |
| doesn't know if you have been denied credit. All it will | | | | This isn't negative. In fact, it may actually be positive |
| see is the prospective lender's inquiries. However, if | | | | because loans that are covered by credit insurance |
| there are too many inquiries, this will be seen as risky | | | | aren't reported to the credit bureaus. For this reason, |
| credit-seeking behavior unless you are loan shopping | | | | the FICO scoring model isn't going to penalize you as |
| and all inquiries are made within 14 to 30 days as | | | | long as the safeguard kicks in and your bill gets paid on |
| these will be considered as just one inquiry. | | | | time. It will actually only see "paid on time," which is a |
| Nevertheless it is still a good idea to apply for credit so | | | | plus. So, if credit insurance makes you feel better, go |
| that you will know what the loan officer's credit | | | | for it as long as you don't have to pay any extra for it. |
| standards are as well as what your prospects for | | | | Just make sure that you read the fine print in order to |
| approval are. If it is questionable whether you will | | | | be sure that the loopholes won't give you a false |
| qualify, then you should find a more lenient lender to | | | | sense of security. |
| apply with instead. | | | | Not Returning a Public Library Book Several Years |
| Having a Sub Prime or Adjustable-Rate Mortgage on | | | | Ago |
| Your Credit Report | | | | This isn't an issue because FICO 08 doesn't even look |
| This won't affect your score in any way because the | | | | at any collection items that are under $100. It is also |
| underwriting terms of the loan, or anything that may | | | | more forgiving of any isolated, minor delinquencies that |
| expose you as a big risk, will not be given to the credit | | | | you may have. Nevertheless, you should still do your |
| bureaus. They also won't be figured into your FICO | | | | best to always return your library books on time. |
| score. Nevertheless, you will want to continue making | | | | |