Learning Center
Vision Credit Services provides personal credit consulting services to help clients safely build and maintain good credit. An integral part of this service is our ability to educate our clients. We are committed to sharing as much information as we can, to ensure our clients are educated consumers who understand their credit. This section of our website is dedicated to provide useful and valuable information that will benefit our clients daily living. We encourage you to submit questions or testimonials about your success in restoring your credit.
What Is Credit and Why Should I Care?
10 Ways to Save Money During the Month
Rebuilding Credit - Everyone Can Do It
Do You Give Too Much Information?
Rebuilding Credit: It’s Not Too Late
The Credit Bureaus — Who Are They?
Knock Knock, It’s The Debt Collector!
What Is Credit and Why Should I Care?
- Compares information in your credit report to the performance of consumers who have similar credit characteristics.
- Examines many credit characteristics, including your payment history, the number and kind of accounts you have, the number and frequency of late payments, and any collections or bankruptcies.
A credit-scoring model is developed by using several criteria, including some of the following:
- Selecting a large sampling of customers
- Analyzing the data in their credit reports to determine which factors relate to creditworthiness
- Assigning a degree of importance to each of the factors, based on how accurate a predictor it is in determining who will repay their loan on time
Who cares about my credit score?
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Bank & Lenders
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Landlords
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Employers
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Retail Companies
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Insurance Companies
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Cell Phone Companies
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Utility Companies
What is a "good" credit score?
There are several types of credit scores available. Typically, the higher the score, the better. Each lender decides what credit score range it considers to be a good credit risk or a poor credit risk. For this reason, the lender is the best source to explain what your credit score means in relation to the final credit decision. After all, they determine the criteria used to extend credit. The credit score is only one component of information evaluated by lenders.
What factors influence my credit score?
Various factors determine your credit score, including the following:
- Payment history
- Outstanding debt
- Length of credit history
- Severity and frequency of derogatory credit information such as bankruptcies, charge-offs, and collections
- The amount of credit used compared to the credit available
How does my credit score affect me?
Your credit score is an important indicator of your financial health. Lenders use credit scores to determine:
- Whether or not you are a good candidate for a loan
- What type of interest rate you will pay
- Be informed of the most up-to-date information in your credit history
- Correct any inaccuracies, to make sure that your credit data is a true depiction of your credit record and increasing your chances of receiving credit under the best possible terms
Why does my credit score change from time to time?
The credit bureaus calculate your credit score based on the information contained in your credit file. As your credit history changes, your credit score will also change. Some creditors only report information to certain bureaus and not to others, which will also cause the changes in the scores. In addition to the reporting variations, the information reported whether good or bad will impact your score. For instance, if you pay down a revolving account, your score may increase. However, on the other hand, if you are more than 30 days late, you may have a decrease in your score. Remember activity, whether good or bad, has an affect on your credit score, so stay committed to the good stuff!
When do the bureaus update credit scores?
As a general rule, credit scores are updated on a monthly basis for the preceding month and should be available to view after the first of the month. The score provided is based on the information in your credit report for the previous month. It is also important to note that your score may be different at each of the three main credit reporting agencies. The credit score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the three credit reporting agencies are different, it's probably because the information those agencies have on you differs. Although creditors report once a month to the bureaus, information can be updated at any time during the month through either Rapid Rescore or by contacting the bureaus directly. Rapid Rescore is a process by which verifiable information is updated with the bureaus within 3-5 business days. This is a great program for clients that need to have their scores improved quickly and cannot wait until the next reporting cycle.
Who are the Credit Bureaus?
- Equifax - Beacon Score Model
- Experian - Fair Isaac Model Score
- TransUnion - Fico Classic Score Model
The Bureau's Mistake
The credit bureaus are repositories and do not actually own debt. Therefore, the information is provided by the reporting creditor and can be inaccurate. According to PIRG Public Information Research Group, the following mistakes have been found on consumer credit reports:
- 29% of credit reports contain serious errors, false delinquencies, or accounts that did not belong to the consumer
- 41% of credit reports contain demographic information that was misspelled, outdated or incorrect
- 20% of credit reports were missing major credit, loan, mortgage or other information to demonstrate the credit worthiness of the consumer
- 26% of credit reports contain accounts that were closed by the consumer but incorrectly listed as open (or) “closed by credit grantor”
- Altogether, 70% of credit reports contain errors or mistakes
10 Ways to Save Money During the Month
- Cash in all your unused items. We all have things we’ve bought that we either no longer use or we never had a use for in the first place. Get these sold online, in classifieds or at yard sales. Do not buy more things that you will never use.
- Join a library and never have to buy a book again. Read all the best sellers for nothing.
- Cut out the takeaways and pizza deliveries. Make your own food it is cheaper and is fun.
- Always bargain. Everything has a price, but it is not always the one you see on the label. If you don't ask you don't get.
- Why always buy new? Second hand is a fraction of the cost and in many cases just as good.
- Unless your car will benefit do not buy "premium fuel". Buy gas from a discount membership store like Sam’s and Safeway.. Coordinate your fill up with the weekly specials!
- Use online comparison sites for utilities and insurance and keep checking for the best rates. Check into alternative energy available for Pepco and BGE users right on their websites.
- Try generic brands instead of branded products. They are not always better, but many times they are certainly no worse for very much less money.
- Get the best phone package you can and keep changing to keep current don't tie in too long as the market is always making new best deals. Get a pre-paid phone if you need help managing your bills.
- Think what your big ticket expenditure is. If it is the mortgage, check that you are on the best deal you can be. If it is a car, do you really need it to be new? Can you afford a 30% dip in value simply for taking it off the lot?
5 Ways to Raise Credit Score
If you are looking to improve your credit score quickly, now is the time to get started. Give us a call. We’ll review your credit and find out exactly where you stand and where you need to get to. In the meantime, here are some great strategies you can utilize right away to give your score a little boost.
1. Create Some Balance: While paying down installment debt (car, school, mortgage, etc.) will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely; do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work.
2. Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing.
3. Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don’t report your information to all three credit companies – this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you’re in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.
4. Protect Your Interests: Your credit is calculated based solely on the information available to your creditors. If you have a HELOC, make sure it’s listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it’s important to monitor your credit every four to six months.
5. Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, dispute directly with the credit bureaus in writing. DO NOT DISPUTE ONLINE
Rebuilding Credit - Everyone Can Do It
The following are a few Do’s and Don'ts when it comes to rebuilding your credit:
1) Three months prior to securing your mortgage, DON'T apply for, close, or pay off any collections, charge-offs, loans, or other kinds of credit without speaking to your mortgage professional first. Any one of these actions, as innocent as they might seem, could seriously affect your credit score, adding significant costs to your mortgage should your score suddenly drop.
2) If you have any credit card accounts with excellent credit histories, DO use them - but use them strategically. Keep your balances below 30% of their limits for 3-6 months prior to entering into a loan transaction, and use them only for small purchases that you can easily pay off completely at the end of the month. Remember, creditors like to see evidence of stability, so the goal is to keep the good reports coming month to month without falling into the same financial traps that led to credit challenges in the past.
3) If you don't have a credit card, DO get a secured card immediately. This is a great way to rebuild or establish credit quickly. Because this account is secured by funds that you deposit (typically between $250 and $500) you're not seen as a great risk to the card issuer because of your initial investment. Again, use this card strategically to build a strong credit history. Pay your bill on time every month and maintain a low balance. A few good resources for secured card are Industrial Bank and Public Savings Bank.
For some, opening a credit account with a co-signer could be a better alternative, but it's important to note that both you and your co-signer are equally responsible for any activity on this type of account, good or bad, so this strategy could backfire in the end if you or your co-signer makes poor decisions. DON'T mistake "authorized user" for a co-signed account.
4) Finally, DO monitor your credit. If you’re not sure how to read or understand your report, ask for help.
Do You give Too Much Information?
Avoid falling prey to what are known as phishing scams, both over phone and through email. In a phishing scam, identity thieves pretend to be someone from your bank or credit institutions and simply ask you for your personal information. If someone contacts you and requests any personal information, don’t give it to them. A financial institution or large company will rarely use email to obtain this kind of information. In fact, your bank and your creditors already have your information from when you originally opened the account. Verify who is requesting the data and why, and then call the institution yourself. One extra phone call could save you a lot of trouble and money.
Remember, identity theft affects over 9 million people per year. Contact me to learn more about how to protect yourself from ALL types of identity theft.
Charged Off Account - How to Fix Bad Credit
When creditors are not successful to collect the owed money after a number of attempts then they would consider that specific account as a loss or charged off account. At this point of time, creditors discontinue contacting you for the collections. You might think that creditor will not contact you again in future for recovering the owed amounts, as creditor has stopped contacting you. If you consider it this way, you are entirely misjudging the whole scenario because creditors often sell charge-off accounts to collection agencies, even after the declaration of charged-off accounts.
Collection agencies use their own ways to recover the credits where creditors have been failed in the past to collect from consumers. The first object you need to check is the statute of limitations (SOL) for your state. If you find statute of limitations (SOL) period has expired then collection agency do not have any rights to sue you for collection of charged-off debts.
If charged-off account is more than seven years old then according to the regulations of Fair Credit Reporting Act, credit bureaus will remove charged-off account from your credit report. After this period, collection agency cannot enter the information again. If you find credit bureaus have not erased the charged-off accounts, even seven years period has passed, send them a request to remove it immediately. In case, collection agency contacts you for collections at this moment of time you have the right to take legal action against them.
A number of people think that paying collection agencies would aid in the elimination of charged-off accounts. However, it is completely incorrect, because if you begin paying them again, it will not be of any assist in the removal - instead it would renew the debt. You can allow it go for some years to get to the end where debts would expire but in the situations where you find it tough to sit and wait for years then you might hire any credit repair agency for your assistance in solving your problems.
Rebuilding Credit: It’s Not Too Late
Have you been putting off looking at your credit report? Have you looked at it, but had no idea what it means? A lot of people have made mistakes managing their finances or were subject to unforeseen, unwelcomed or other negative changes in your lives, such as death, loss of job, or change in marital status. In any case, it’s time to remove the label of victim and replace it with victory!
Your past does’t dictate your future. Don’t ignore or avoid the situation. Set yourself to learn more about your credit profile and the necessary steps to restore it. One of the most common myths is that negative information must remain on your report for 7 years and some cases 10 years for public records (bankruptcy, lien, or judgment). The reality is negative information must be removed after 7 or 10 years, but it doesn’t mean that the information cannot be removed sooner. The law relates to the removal of negative information not the retention. Therefore, you don’t wait to begin restoring your credit.
Get started today by getting a copy of your credit report. The Fair and Accurate Credit Transactions Act (FACTA) allows consumers to receive a free credit report once a year from Equifax, Experian® and TransUnion®. The only place you can receive this free copy is at www.annualcreditreport.com. In addition, if you are denied credit, you can request a copy from the bureau that provided information used for the denial. Although you are entitled to receive a copy of your credit report, it will not include your scores. A credit score is a numeric number ranging from 300 to 850 and is calculated based on information provided to the three bureaus by creditors. A credit score is used to determine the level of risk, which is directly associated with the content on your credit report. According to statistics, 70% of all the information on consumer’s credit reports is inaccurate. As a result, there is a high probability of inconsistent and inaccurate information on your credit, so it is important to look at your report from all three bureaus.
The Fair Credit Reporting Act (FCRA) protects consumers from reporting errors and provides the opportunity to dispute the account directly with the bureaus. According to the FCRA, all inaccurate, incomplete and unverifiable accounts must be deleted. The last adjective is probably the most important, unverifiable. This part of the law makes it possible for credit restoration to be legal. Although negative information must be deleted after 7 years, the law provides the opportunity to have the information removed sooner if the original creditor can no longer verify the account or if it is inaccurately reported. Disputing according to the law is the only way to ensure information is legally removed from your credit report.
Get started today by asking yourself, “how much is your name worth?” If you don’t like the answer, contact us today for a free assessment to get started on your journey to good credit.
Good Credit: Do You Need It?
A good credit rating is critical in today's economy. Whether you are purchasing, refinancing a home or even applying for a job, your credit profile may be the key to unlock your dreams. Improving your credit is giving yourself a new lease on some of the very important aspects in your life. If you are one of the many with concerns about your credit report, here are several tips on how to get started on your path to restoration:
1. Check your credit report at least annually. Make sure you have accounts in good standing as well a blend of credit. The only place to get one free is at www.annualcreditreport.com, but you can only get one every 12 months. However, there are several online monitoring services for consumers that also give you access to your credit report, such as www.truecredit.com and www.mycreditkeeper.com.
2. Get new credit. If you need a credit card, ask someone you trust with good credit to add you to their account as an authorized user. This will boost your score, but make sure they don’t overcharge or be late, which will affect both of your credit. In addition to authorized user, there are other accounts that can help build credit if this is not an option. These accounts include prepaid credit cards and a line of credit. The key to establishing new credit is to make sure that the account is reported to the credit bureaus.
3. Do your research and be aware of your rights. There are laws to help you clean up your credit, such as the Fair Credit Reporting Act. Remember, if an account is inaccurate, incomplete or unverifiable then it must be removed. The last is usually the most common element that supports the dispute process.
While there may be several variations of thoughts and opinions amongst the financial industry experts, the majority agree that it is essential to obtain a credit score of at least 700. With the scoring models ranging from 300-850, a 700 score will position you for more favorable financing. It’s not an impossible feat, but you need to get started now as credit restoration can take up to six months or more to achieve the most effective results.
The Credit Bureaus — Who Are They?
Many people believe that the credit bureaus are non-profit organizations formed to help consumers. Well, I hate to tell you that is simply not the truth. As a matter of fact, they are very profitable companies. The credit bureaus are not hired by the creditors; they collect data about YOU from your creditors and resell that information back to creditors and others, such as lenders, banks, insurance companies and employers. The three major credit bureaus are Equifax, Experian® and TransUnion®. There’s actually another bureau called Innovis. However, this bureau is not considered one of the main reporting bureaus.
Equifax, Experian® and TransUnion® are repositories and not an original creditor. For this reason, 79% of the information reported is inaccurate according to Public Information Research Group (PIRG) in Washington, D.C. Some of the errors include:
- 29% - serious errors, false delinquencies, or accounts that did not belong to the consumer.
- 41% - demographic information that was misspelled, outdated or incorrect.
- 20% - missing major credit, loan, mortgage or other information to demonstrate the credit worthiness of the consumer.
- 26% - accounts that were closed by the consumer but incorrectly listed as open (or) “closed by credit grantor”.
Reviewing your credit reported regularly, at least once a year, is an important step to know what’s being said about you. Although you didn’t ask or authorize the bureaus to share your information, you do have the right to make sure the information is accurate, complete and verifiable. Remember, if they can’t prove it then they must remove it.
Knock Knock, It’s The Debt Collector!
Most of us have had some type of bad experience with debt collectors or know someone else who has. I've shared in the past that consumers have legal rights against unlawful debt practices. You need to know your rights and how to use them in order for them to help you.
In the July 2010 report, "Repairing a Broken System," the U.S. Federal Trade Commission said, "The system for resolving disputes about consumer debts is broken." While at one time, the telephone was the primary tool utilized by debt agencies, major industry debt buyers are now focusing on litigation and the justice system as means of collecting debts. Using this systemic process, the collectors may skip consumer communication and proceed directly to litigation.
In the July 2010 report, "The Debt Machine," the National Consumer Law Center, a consumer advocacy organization, said, "Lenders, debt buyers and other creditors have learned how to use small claims and other low-level courts as a low-cost machine for turning claims into judgments against consumers who have fallen behind on payments."
Jeff Lippman, an attorney with Weinstock, Friedman & Friedman, P.A., believes the problems for consumers are three fold: fear, ignorance and inaction. "People get nervous when they receive a collection letter. This can quickly turn to fear when they are confronted with the prospect of a lawsuit. This may lead to paralysis and inaction," he said. "If they would only face the problem, armed with the right information and assistance, they would have a much better opportunity of resolving or challenging the issue," Lippman said.
Take control of the situation by hiring your attorney for less than $1 per day!
