Credit Repair ??? Essential Credit Score Facts

Who are the credit bureaus?

And yet there may be nothing that has such a profound influence on your financial life. There is no government charter or anything of the sort. they are nothing but big business.

It???s not true ??? There is a common misconception that the credit bureaus are in some way connected to the government. We speak to people about their credit all day long. I have managed a national credit repair business since 1989.

There are three credit bureaus that matter. They are Experian, Equifax, and TransUnion. Their business is to gather credit data about you and sell it to potential creditors to determine your credit worthiness.

There is a fourth bureau called Innovis that you may hear of occasionally. Innovis is a major compiler of credit data which is used for pre-screening those unsolicited credit card offers we all get in the mail. Mortgage giants Fannie Mae and Freddie Mac contributed to the rise of Innovis in 2001 by demanding that all of their mortgage servicers report borrowers??? pay histories to Innovis. I suspect that we will all hear more about Innovis in the future, but for the moment it has no direct impact on your life.

What is a credit score?

At the moment all three bureaus use a single scoring model called the FICO score. FICO is an acronym for the developer of the score, Fair Isaac and Co. The three bureaus have branded the FICO model for their own marketing so you may hear it called different names. Equifax calls it a BEACON score, TransUnion calls it an EMPIRICA score, and Experian (who seems to lack imagination) calls it the EXPERIAN/Fair Isaac Risk Model.

Why are your three scores different?

Your scores with each bureau are different because each bureau gathers information from a slightly different mix of creditors. If you were to look carefully at your three reports you will notice that some accounts are missing on each bureau. Timing also plays a roll. A recent change in your credit may be picked up sooner at one bureau than another.

What???s included in your score?

As the manager of a Florida mortgage company serving the states of Florida, Georgia, Massachusetts and Virginia and a national credit repair company I spend a lot of time analyzing credit reports. Everyone wants to know what they should do to improve their credit scores. The exact method for calculating your credit score is a secret. But Fair Isaac offers a fair amount of information about the essentials. There is a lot of information on your report. And not all categories of information carry the same weight in the score calculation.

Your payment history is the big ingredient. This category includes the obvious installment and revolving debt payments. It also includes public records and collections. The age of any derogatory item in this category diminishes its impact on your score. Fair Isaac indicates that his category makes up 35% of your score.

The balances you owe make up the next category. Different weights are given to revolving versus installment balances. The relationship between the balance and the credit limit on your revolving accounts is a big factor. And the relationship between the current balance and the original balance on installment loans is taken into consideration as well. Fair Isaac indicates that this category makes up 30% of your score.

The length of your credit history is a factor as well. New credit will have a negative impact on your score, and those accounts that you have kept alive and healthy for years have a good impact. This category makes up 15% of your score.

Your new credit and your recent credit inquiries are a factor. If you have new credit or have had your credit run recently you have increased your debt load, or you are about to. Either way you will lose a few points on this one. Fair Isaac weighs this at 10% of your score.

Fair Isaac won???t say exactly what the perfect mix is, but in our experience the key is to build and maintain a well managed balance of accounts, make your payments on time, and try to keep those revolving balances down. There is some ideal mix of mortgage, installment, retail store cards, revolving accounts, and consumer debt that Fair Isaac will reward. This is a bit more mysterious.

The type of your credit is the last ingredient and the final 10% of the calculation.

All Rights Reserved. All Content. Kemish.

2007 James W. Copyright ??

Credit Repair And The American Dream

What Are Your Dreams?

Credit repair expert Jim Kemish explains how to make your dream of home ownership come true. It?s part of the American Dream. Everyone wants to own a home. The quality of your credit will determine the affordability of your monthly mortgage payment.

A Great Investment

Home ownership has always been considered an integral part of the American Dream. Over the last fifty years those that were able to realize this dream have experienced a great financial benefit. Home ownership, in fact, has contributed more to the wealth of the individual than any other investment. But there is another side to home ownership; it is also the most significant financial obligation that most people will ever undertake. If managed properly home ownership can be a source of great pleasure. If mismanaged, the results can be devastating.

Better Rate More Choice

I have helped people repair and restore their credit reports since 1989. The most common concern amongst our customers has always been the impact that their credit report will have on the mortgage application process. The relationship between your credit and your mortgage is simple; the better your credit, the lower your interest rate and the more choice you will have among mortgage programs.

The Potential of Credit Repair

If you have had credit issues in the past it is essential to your financial life that you have a very clear understanding of how credit repair can help get you back on solid financial ground again. To understand the potential of credit repair there is a myth that needs to be dispelled. This myth is that you are the only one who can repair your own credit. This is a line that was originally promulgated by the credit bureaus and is now parroted by others.

Can You Do it Yourself?

The motivation of the credit bureaus to sell the do-it-yourself campaign was obvious to those of us in the credit repair business. The credit bureaus are well aware of the fact that the vast majority of individuals that undertake the effort to repair their own credit do not have the time or tenacity to understand the system. And without a proper understanding most people will quit out of frustration, or give up believing that they have done everything that can be done. Either way, the credit bureaus will save time and money.

The Role of the Credit Repair Professional

All professions provide the benefit of a mastery of their own field. Although it is certainly true that you could repair your own credit, it is equally true that you could make your own clothes or repair your own car. The economy thrives on the diversity of expertise that is offered in the marketplace. Those that do not have the time or energy to do the extensive research needed to do a job properly can hire someone else to do the work for them. A credit repair professional offers the benefit of his experience in dealing with the three credit bureaus, creditors, and collection agencies. He should also have an in depth understanding of everything that can have an impact on your credit score.

Improving Your Credit Scores

Would you like to purchase a home or refinance to a lower interest rate? The mortgage that you are able to obtain will be entirely dependant on the content of your credit report. As a credit repair professional I speak to people daily who have been told that they either cannot qualify for a mortgage due to their credit, or only qualify for a very expensive sub-prime mortgage. In our examination of their credit reports we often discover that there are a significant number of errors that are depressing their credit scores dramatically.

Putting Your Credit to Work for You

Much of the misreported information that appears on credit reports goes unrecognized. Items such as duplicate accounts, understated high credit limits, and misstated account opening dates are often ignored because they are not derogatory per se. These items along with the obvious erroneous derogatory information can all be cleaned up. And the results can make the difference between an affordable mortgage and a stressful monthly payment.

Choose Carefully

And, in making the decision you should remember the potential impact that your credit works just as hard for you. If you do not feel up to the task you should hire someone to get the job done for you. If you have the time and inclination to learn credit repair yourself you should make the effort. The American Dream is achievable and it depends on your credit.

All Rights Reserved. All Content. Kemish. 2007 James W.

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