Repair Credit Score

Archive for January, 2009

Your credit score or credit rating is a number between about 300 and 850 that summarizes your credit worthiness. Knowing What Is a Good Credit Score and how a credit score is calculated or derived can help you build your credit and improve your credit score. Whenever an item is added or deleted from your Credit Report, your credit score often changes. You can keep track of your credit score using the free online FICO Score. Below are some basic frequently asked questions about credit score and How to Improve Credit Score.

What is the difference between a FICO Score and a credit score?

Your FICO Score is simply your credit score. You often hear people refer to a FICO Score as your credit score. This is because Fair Isaac and Company developed it.

What credit score is a good credit score?

A good credit score starts around 680, but the higher the credit score, the better. Your credit score directly impacts loans and credit you apply for in the future. See What Is a Good Credit Score for more information on what a good credit score is and check out the Credit Score Chart and FICO Score Chart for Credit Score Analysis and comparison.

Why is having a good Credit Score Important?

Banks, creditors, and lenders almost always pull your credit score to determine whether you should be qualified for a loan and how much interest rates to charge you. Below are examples why having a good credit score is important.

• You may not qualify for a loan if your credit score is not high enough, and
• You may be charged a higher interest rate because of your credit score.

How much does it cost to obtain a copy of my credit score?

You may have to pay an extra fee to receive your credit score when ordering your Credit Report. Your credit score is not included in the free annual report. It is possible to order just your credit score, from companies such as FICO. See Free Credit Score for some information of where to get a Free Credit Score. FICO offers several packages that allow you to track your credit score throughout a year. FICO also offers an interesting simulator that lets you see how certain actions can potentially affect your credit score. All of this costs money however. Most of the time, it is sufficient to see your credit score once a year when you order your credit reports. See Credit Scoring to learn how your credit score is calculated.

What is credit repair?

Credit repair is the action of cleaning up your Credit Report, removing delinquencies, and ultimately improving your Credit Score or FICO Score.

Can credit repair be done?

Yes. Some credit repair companies do help people repair Credit Score and improve their credit reports. These credit repair companies repair credit scores by removing derogatories on your credit reports. The credit system is quite predictable and there are ways to remove certain items on your Credit Report quickly. Some of these items that can be removed from your Credit Report include late payments, delinquencies, foreclosures, and bankruptcy. However, there are many credit repair companies out there using fraudulent techniques to repair your credit and repair your Credit Score. You have to watch out for them, see How to Rebuild Credit.

How can I repair my Credit Score and Credit Report?

By removing derogatories, you will see your Credit Score go up. Your Credit Report will look healthier as a result.

How do I remove derogatories from my Credit Report?

You can remove derogatories from your Credit Report in several ways. In most cases, you can remove derogatories from your Credit Report by negotiating with your creditors and asking (nicely or harshly) to remove those items they are responsible for from your Credit Report. You can also dispute your Credit Report with the credit bureau.

If everything on my credit report is true, how can I repair my Credit Score?

If you have gone through some rough times such as foreclosure, bankruptcy, or many late payments and delinquencies, they are likely to show up on your credit report. Your Credit Score will most likely drop to a low Credit Score range. If this is the case, don't panic. There are still ways to improve your credit report and repair your Credit Score. Some people have successfully removed legitimate foreclosure and bankruptcy removed from their credit report in less than 45 days!

• Credit Report Errors
• Credit Report Error Correction
• Credit Report Dispute
• Do it Yourself Credit Repair
• Adding a Statement to Credit Report
• Credit File Stability
• Identity Theft
• Ways to Repair Credit
• Suing Credit Agency
• Bad Credit Repair Techniques
• Credit Repair Services
• Bad Credit Home Loan Foreclosure
• Repairing Credit after Divorce

Question: Why should I NOT declare bankruptcy?

I'm $100,000s in debt, mostly due to a job loss due to a medical condition and the associated medical bills. I got a huge tax refund and used it all to pay off my debt, increasing my Credit Score from 530 to 610. I've tried really hard to get a job, but I have got no offers. So I can't pay my bills again and my score dropped back down to 570. Equifax's credit simulator says that if I declare bankruptcy my score will drop to about 450.

Answer: Let me give you the same advice I give to anyone asking this question.

Pretend you live in Oz....where all creditors are good and sweet and willing to work with you. They all agree to waive any future interest and late fees....and reduce your debt by 30%. So you now owe $70,000.

Then you sit down and make a very strict budget....no more entertainment or dining out....no more Starbucks. You cancel your cable tv ad cell phones, scrimp like crazy on utilities, and learn to use coupons at the store.

After doing all this, can you come up with $1200 a month over the next 5 years?

Without a job....probably not.

OK, now wake up from you dream. These creditors are not going to waive anything, and you might get a few to cut 30% off your debt. And it's extremely unlikely they will agree to wait 5 years for you to pay them back.

I the next few months you are going to be bombarded by harassing collectors, lawsuits, and threats of property seizures and bank account garnishments.

Or you file for bankruptcy.

You don't have a job, so I'm going to bet you qualify for Chapter 7. Hopefully, after all of the unsecured debts are erased you will have some funds left over to pay your mortgage and/or car payments. If not, you will probably lose them...but you are already on the verge of losing them anyway.

Yes, your credit will be in the toilet for a few years. But if you educate yourself on how to restore your credit, and visit sites like http://www.lifeafterbakruptcy.com you will be in decent shape in a few years.

Bankruptcy is not easy, but it's certainly better then dealing with creditors threats for the next several years.

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