Credit Scoring... the Good, the Bad and the Ugly
Most anyone who has obtained a home mortgage in the past 5 years or so has heard about credit scoring. How many of you have been told "your scores are great", or "if your score were 10 points higher, your rate would be better by 1/4 point"? Probably most of you.
We in the industry started to become aware of "scoring models", as they are called, as early as 1994. The use of scoring models in the mortgage industry came about as the major secondary market players, known as Fannie Mae and Freebie Mac, started to develop automated underwriting systems. They had been in use for a long time for auto lenders and credit card issuers.
The early creators of the automated underwriting systems felt that, if someone could go to a Mercedes dealership at 10 am and drive off the showroom floor an hour later with a $100,000 car (still more expensive than homes are in many parts of the country), they ought to be able to obtain a home loan the same way. The logic in this should be obvious... after all, cars are rolling stock, so they can disappear, they depreciate and usually people don't live in them. Houses are attached to a foundation, they usually appreciate and people usually live in them. Using that logic, the industry should be able to make the home buying process easier for everyone.
This theory sounds good, but it is only in the last year that we have seen some relief from the mountains of paper that go into loan files, and it is because the scoring models have become more refined. Still, there is progress yet to be made and the industry is grinding slowly in that direction. Scoring models figure prominently in the future of how people obtain home mortgages.
Most people know that most creditors use credit report agencies for obtaining information on a person when they have applied for any type of financing. However, there are actually two levels of credit reporting agencies. There are three major repositories of credit and background information. They are Equifax, Experian and TransUnion. When someone obtains credit, the creditor reports the payment history to these repositories. This is usually done monthly but may be done on an irregular basis. These repositories simply accept the information as it comes in electronically and they DO NOT check the accuracy of the information.
The credit repositories and other agencies also maintain other background information on every person in the country who has a Social Security number or other identifying information. The other agencies may include the Department of Motor Vehicles, the Medical Information Board, the FBI, local law enforcement agencies, the county recorders for each county (public records repositories), etc. Even the mortgage industry has a central repository for borrowers and lenders who may have been involved in fraudulent activities in the making of mortgage loans.
Thursday, August 7, 2008
Thursday, July 24, 2008
5 Easy Tips to Repair Credit Score
The thought of the process that is required to repair your credit report is overwhelming for most people. There is a lot of information available about the subject. Some of it is good while other tips can get you into a bigger mess. It is best to get professional services from a specialist rather than trying to repair your report yourself. It will be less stressful and you are likely to get better results.
Here are the five simple steps that will help you to raise your score and ultimately to improve your credibility without all the anxiety.
Step One: Order your free reports
Annually, you can get free reports from each of the three major credit bureaus. Also, if your application was denied because of your report, you should receive an adverse notice from the creditor which entitles you to a free report from the agency that provided your report for review.
To order all three reports online, you can go to www.annualcreditreport.com. You are entitled to one free report from each agency every year.
Step Two: Identify discrepancies
Identify discrepancies in your report. Don't spend a lot of time on this, because your counselor will review the whole document. Just mark things that you know should not be there.
Step Three: Provide your reports to a legitimate counselor for a free consultation
Counselors that specialize in repair should offer a free consultation. They will want to review the reports to see if it is possible for them to repair your credit report for you.
Step Four: Contract for services
If you are comfortable with the terms and warranty offered by the counselor, contract for repair services. Make sure that a warranty is offered and written into the contract.
Step Five: Communicate with your counselor
Your counselor will tell you exactly what they are doing. This may include negotiating with collection agencies to work out settlements and filing disputes with the bureaus. If an agreement is made to settle accounts, you will have to comply with the agreement. If disputes are filed, you will receive updates of the status of the disputes from the bureaus. You will need to promptly provide such reports to your counselor.
For more great tips and information, check out www.freecreditprovide.com.
Here are the five simple steps that will help you to raise your score and ultimately to improve your credibility without all the anxiety.
Step One: Order your free reports
Annually, you can get free reports from each of the three major credit bureaus. Also, if your application was denied because of your report, you should receive an adverse notice from the creditor which entitles you to a free report from the agency that provided your report for review.
To order all three reports online, you can go to www.annualcreditreport.com. You are entitled to one free report from each agency every year.
Step Two: Identify discrepancies
Identify discrepancies in your report. Don't spend a lot of time on this, because your counselor will review the whole document. Just mark things that you know should not be there.
Step Three: Provide your reports to a legitimate counselor for a free consultation
Counselors that specialize in repair should offer a free consultation. They will want to review the reports to see if it is possible for them to repair your credit report for you.
Step Four: Contract for services
If you are comfortable with the terms and warranty offered by the counselor, contract for repair services. Make sure that a warranty is offered and written into the contract.
Step Five: Communicate with your counselor
Your counselor will tell you exactly what they are doing. This may include negotiating with collection agencies to work out settlements and filing disputes with the bureaus. If an agreement is made to settle accounts, you will have to comply with the agreement. If disputes are filed, you will receive updates of the status of the disputes from the bureaus. You will need to promptly provide such reports to your counselor.
For more great tips and information, check out www.freecreditprovide.com.
Wednesday, July 23, 2008
Government Credit Repair Facts
Credit Repair: Self Help May Be Best
You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:
* “Credit problems? No problem!”
* “We can erase your bad credit — 100% guaranteed.”
* “Create a new credit identity — legally.”
* “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
This brochure explains how you can improve your creditworthiness and gives legitimate resources for low or no-cost help.
The Scam
Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.
The Warning Signs
If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:
* companies that want you to pay for credit repair services before they provide any services.
* companies that do not tell you your legal rights and what you can do for yourself for free.
* companies that recommend that you not contact a credit reporting company directly.
* companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
* companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
For more government information on how to repair your credit score click here!
You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:
* “Credit problems? No problem!”
* “We can erase your bad credit — 100% guaranteed.”
* “Create a new credit identity — legally.”
* “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
Do yourself a favor and save some money, too. Don’t believe these statements. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.
This brochure explains how you can improve your creditworthiness and gives legitimate resources for low or no-cost help.
The Scam
Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in fees, these companies do nothing to improve your credit report; most simply vanish with your money.
The Warning Signs
If you decide to respond to a credit repair offer, look for these tell-tale signs of a scam:
* companies that want you to pay for credit repair services before they provide any services.
* companies that do not tell you your legal rights and what you can do for yourself for free.
* companies that recommend that you not contact a credit reporting company directly.
* companies that suggest that you try to invent a “new” credit identity — and then, a new credit report — by applying for an Employer Identification Number to use instead of your Social Security number.
* companies that advise you to dispute all information in your credit report or take any action that seems illegal, like creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution.
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to lie on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
For more government information on how to repair your credit score click here!
Tuesday, July 22, 2008
Free Credit Repair Tips!
One of the first things you need to do, whether you filed bankruptcy or just need to rebuild your credit, is to set out a plan to rebuild your credit, as well as how you will use your borrowing abilities in the future. Without a good plan of attack on your financing and borrowing usage, you will run the risk of being in financial trouble again within a few years or so. Don't become a repeat statistic. Plan now, for protection later.
You have two options when it comes to repairing your credit ...
* hire someone, preferably an attorney who knows the credit laws;
* do-it-yourself using a good quality guide and your 3-in-1 credit report;
Whichever way you decide to go, here are just a few tips to keep you on track:
* Don't fall for scams that tell you to create a new credit file ... that's credit fraud if you do it, and can make you subject to legal repercussions;
* Do read the Fair Credit Reporting Act so you have an idea of your rights while you go through the credit repair process;
* Get yourself organized and committed to the process, there is no overnight fix;
* If you use an online service, you want to know what the fees will be, monthly or "as you go" is best, and you want to be able to cancel at anytime;
* Always act in a cooperative and professional manner when dealing with creditors or collection agencies;
* Don't make threats, however subtle, if you can't back them up.
There is a great eBook where you can repair your credit score and it's all for free. Click here for more information about the free eBook.
You have two options when it comes to repairing your credit ...
* hire someone, preferably an attorney who knows the credit laws;
* do-it-yourself using a good quality guide and your 3-in-1 credit report;
Whichever way you decide to go, here are just a few tips to keep you on track:
* Don't fall for scams that tell you to create a new credit file ... that's credit fraud if you do it, and can make you subject to legal repercussions;
* Do read the Fair Credit Reporting Act so you have an idea of your rights while you go through the credit repair process;
* Get yourself organized and committed to the process, there is no overnight fix;
* If you use an online service, you want to know what the fees will be, monthly or "as you go" is best, and you want to be able to cancel at anytime;
* Always act in a cooperative and professional manner when dealing with creditors or collection agencies;
* Don't make threats, however subtle, if you can't back them up.
There is a great eBook where you can repair your credit score and it's all for free. Click here for more information about the free eBook.
Free Credit Provide Blog!
Welcome to the Free Credit Provide blog. We are here to provide you with tips and information on how to repair your credit score for free.
Come everyday for a new tip and new information that you could easily use to repair your credit score!
Come everyday for a new tip and new information that you could easily use to repair your credit score!
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