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Understanding Credit Scores

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ReScore Solutions can assist in improving the worst credit scores and even improving healthy credit scores.  Higher credit scores means paying less in interest rates.  Lower credit scores will result in higher insurance premiums and higher interest rates.   approved for credit card

FICO, or Fair Isaac Corporation, has been the leader in credit scoring since the 1950s. The FICO score is used by more than 90% of lenders and is considered the industry standard. Your score will range from 300 to 850, the higher the better. It is calculated as follows:

FICO Scores
How credit scores are calculated

Have you ever been turned down for a loan or an apartment lease and wondered why? It could be due to your credit history. Let’s face it–our credit says a lot about who we are. It is our financial report card, and can affect many aspects of our lives.  If you are experiencing being turned down and high interest rates call us today.  We can help you rebuild your credit and raise your credit scores.

HOW DOES CREDIT WORK

When you apply for credit (say a loan or a credit card), the lender has to decide if you are a good candidate for receiving the loan. The lender’s decision is based heavily on your credit history. They have to assess the level of risk involved if they are to extend credit to you. If you have displayed a poor repayment history, it is less likely that you will be approved for the loan or a line of credit.

The data available through the credit reporting agency that’s been selected to calculate your score (Equifax, Experian or TransUnion) will determine that three-digit number, whether that data is right or wrong. That’s why it is so important to review your credit reports; at a minimum get your free credit reports from all three bureaus once a year look them over to determine if all of the accounts are yours, any late payments that aren’t accurate, liens or judgments that aren’t yours or updated as paid.

One of my former clients did not realize that he had a judgment on his credit reports that was not his.  Mr. Smith’s daughter had provided his name as an emergency contact for the apartment she ;had previously rented.  She defaulted on the apartment rent and was sued and she paid the judgment through a payroll garnishment.

Although this had been taken care of the apartment management placed the judgment on Mr. Smith’s credit reports.  It was illegal and had affected his chances of getting a loan.  We were able to take care of this and had it removed within 35 days or less.

Since the three agencies don’t share information with each other, you’ll want to check all three. After all, you never know which reporting agency a lender will use to obtain your score, so you want all of them to be as accurate as possible.

Better FICO scores
Rebuilding your credit without the high fees and interest rates.

FREE CREDIT SCORES

In an effort to obtain your credit score for free, you may have signed up with Credit Karma or Credit Sesame. But then you applied for a credit card or car loan and realized your FICO score was different than the free score. Why is this?

Both Credit Karma and Credit Sesame calculate your credit score based on proprietary scores from two of the major credit reporting bureaus. However, this is not the same thing as a FICO score. Instead of using the FICO algorithm, the bureaus use their own algorithm for free scores.

Does Checking Your Own Credit Lower Credit Scores

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Checking Your Own Credit Does Not Affect Your Credit Score
Your credit scores are determined by formulas that assess your creditworthiness. Lenders evaluate the risk of extending credit to you in part by using credit scores, which measures your credit risk — namely, how likely it is that you’ll pay them back and pay on time. Credit scores constantly adjust as the information in your credit report changes. You’ll benefit from knowing your Experian, Transunion, and Equifax credit scores and keeping track of changes and setbacks.
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A credit score is an additional service that can be requested when getting your credit report. Along with your credit score you will know what factors influence your risk.
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Credit reports have mistatkes
Repair your credit reports and scores. We provide free credit report review.

SOURCE:  Experian website

I DO and Bad Credit

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birmingham red bride100dpiIt’s been so exciting planning the Special Day!  You had a beautiful wedding, the guest celebrated with you, the cake was eaten, the limo whisk you off for the beginning of a relaxing honeymoon, but wait…what about your credit!

After the honeymoon the real fun begins-starting your life together. From a financial standpoint, that involves exciting stuff like buying a home and trading in your sports car for a minivan (okay, maybe not everyone thinks minivans are exciting).

Your FICO scores are a big part of many of your financial decisions now that you are a couple.  Here are a few important facts regarding your FICO scores.

  • You both have individual FICO scores.  You do not have a joint score.
  • When applying for a loan and stating both incomes, the lender will only look at your individual scores when evaluating your loan application.
  • Joint accounts, such as  credit cards or auto loans will affect both of your scores

pink-house-hi When applying for a home loan lenders look at the three FICO scores from Experian, Equifax and TransUnion and your middle score is the score that your approval is based on.

Let’s say that Bob and Sue are married.

  • Bob has poor credit and Sue has good credit.
  • Bob makes more money than Sue.
  • Sue’s income qualifies for a 100K home and Bob’s income qualifies for 300K home, but they want to purchase a home for 375K.
  • Bob would not qualify for a loan because of his low scores.
  • Sue’s credit would qualify her for any home providing that her income is sufficient, but all that she can purchase is a 100K home.
  • Sue can NOT use his just his credit and just her scores.
  • Bob can not use just her credit and just his income.

So what can Bob and Sue do so that they can purchase the home of their dreams?

Call reScore Solutions!  We can evaluate Bob’s credit reports at no charge and identify the accounts, collections and overall credit to be repaired, deleted or paid.  We can save you money using our techniques in getting your credit scores lender-ready.

Watch video by clicking link below and see how Bob get’s started on getting his credit back on track.

http://www.kirkpatrickassoc.com/Services.html

Marriage and credit score myths.

  1. Our credit reports will merge together when we get married.   NO
  2. Marriage will lower my credit scores.  NO
  3. When I change my last name my credit history will be erased or deleted.  NO
  4. My spouses poor credit will hurt my credit scores.  NO
  5. I will automatically become a joint user or authorized user of my spouse’s accounts. NO
  6. You will be responsible for your spouse’s previous debt.  NO
  7. Being unemployed while raising children will damage my credit score.  NO
  8. Having a good job improves my credit score.
  9. My spouse filed Bankruptcy and now my credit will be ruined too.  NO
  10. Since we are married, any loans or accounts that we get must be a joint account.  NO
  11. Whew!!  I don’t have to worry about my spouse’s credit.  NO.  This will affect you when you want to purchase a home or other large purchase that both incomes will be needed to qualify.  If you are a co-signor on any accounts or loans with your spouse, you are equally responsible for those obligations as your significant other. Any mishaps, such as a missed payment, will reflect poorly on both of your credit reports.  

So while you were reading the credit score myths, Bob’s credit was repaired and his credit scores are improved.

Being that Bob’s credit is repaired they can now buy the home that they need.  Bob and Sue are now happy and recommend reScore Solutions to their friends and lived happily ever after.happy couple glad their credit is repaired

 

7 Ways To Deal With Bad Credit When Renting

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Renting a home with bad credit

Bad credit can trigger all sorts of issues when trying to get a mortgage, purchase a car or get a credit card.  But even if you’re just looking for an apartment or house to rent, your credit history can pose problems.

Most landlords check credit reports of potential renters to determine the probability of receiving the rent payments.  This can pose a problem when you may have a repossession, charge-offs, foreclosure, late payments or a Bankruptcy listed on your credit report.  When your credit is damaged, you may have a tough time qualifying for that home or apartment that you and your family need.

At reScore Solutions, we understand that many people have fallen on hard times due to job loss, health problems, or having to close a business.  Bad credit can happen even when we do our best to pay our bills on time.

Call us so for a free no-obligation credit report evaluation.  While you are trying to get your life back on track, we can get your credit scores back up and running.

We specialize in getting your credit reports lender-ready so that you will be approved for a home.   Understanding the ins and outs of lending we know what it takes to get your credit reports repaired and credit scores to the specification of your lender.

credit_report
Raise your credit scores to qualify for loans and credit cards.

What should you do if your credit history is less-than-stellar? Here are seven ways you can overcome your bad credit and still get that rental you’re looking for:

     1.  Be honest and show that you  have been making progress.  

Sometimes bad credit isn’t a reflection of poor money management.  Be upfront with a potential landlord before your credit is pulled.  Don’t make excuses and blame others. Landlords have heard all of the blame games.  If you are able to show a valid reason why your bills were not paid on time, such as divorce, health, job loss; but also show that it was a temporary situation and show how you have been able to get back on your financial feet, you may have a better chance of getting approved.

     2.  Find a guarantor or co-signer     

Ask a trusted friend or relative with good credit to co-sign the rental application with you.  While you may be the only one living in the home or apartment, your co-signer will be financially responsible if you do not pay your rent.  This may give the potential landlord the extra security that he needs to feel comfortable with renting to you.

Of course, you really don’t want your co-signer having to pay your rent, so be sure that you not over obligate yourself to a rent amount that you can’t comfortably afford.

rental agreement
Co-signer for rental agreement

     3.  Pay in advance or increase your security deposit

Bad credit and especially a consistent bad credit history makes a landlord nervous because it indicates that your actions in the past may be repeated, such as defaulting on the rent payments or not paying on time.  By paying a month or more in advance or offering a two-month security deposit, you can possibly alleviate their concerns. Not only does this show your commitment, it also provides them with extra cash that can cover some of the losses and damages, should you skip out on the rent. (Which, of course, you won’t.)

     4.  Get a roommate

Willing to share your space such as kitchen, living room?  If so, a roommate may be a great solution.  If the landlord will allow just one person to sign the lease, see if your roommate is willing to sign it solo. (Alternately, try to move-in with a roommate who’s mid-lease.) This way, the person on the lease is the one with more solid credit.

The other benefit to having a roommate is sharing the utilities.  Saving money will help you to pay down your debts and helping to repair your credit.

     5.  Show solid income and offer to pay via direct deposit

Even if your credit is a little weak, your landlord may feel better if you can show that you have history with a full-time job with good pay.

When applying for an apartment, have proof of income ready, such as recent pay stubs, tax returns and a letter from your employer verifying your employment status and income. Offering to have your rent automatically deducted from your bank account can also help.

     6.  Be willing to pay a little more

Some landlords, even if you are renting from a property management company may charge additional “risk” fees for shaky credit and poor credit scores.  You may want to step up and pay more if you really love the home or have to move in a hurry.

If you are dealing with an individual, you may want to negotiate to pay a higher amount so that your application is not denied.

pay more for renting with bad credit.jpg
Lower credit scores mean higher interest and rental payments.

     7.  Letters of recommendation

Just as your would provide a letter of recommendation for a job, provide one for a potential landlord too.  Ask for letters from current and previous employers, current and previous landlords, and even past roommates who can vouch for your character. Even if your previous landlords were only for short-term arrangements, their endorsement can hold weight.

Children, Chores & Allowance

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We love our children, and of course we want them to have all that they need…and much that they really don’t need.  Do you find yourself at the crossroads of another meltdown with your child at the checkout because of something that they have eyed and can’t live without?  Of course you have!  We all have!  But there may be help in teaching them to curb these emotional attachments for things that they won’t remember five minutes after they arrive home.

Teach children money management.
Children and money.

Get creative and help your children earn money and teach good money management, which in return will help them to make wiser purchases.

Help make earning money fun.  The following Here is a list of chores your young child can accomplish with minimal help:

  • Picking up toys
  • Feeding the family pet
  • Collecting household garbage/ recycling to be taken out by adult
  • Setting the dinner table
  • Sweeping
  • Cleaning toilets
  • Tidying their bedroom

Pitfalls when it comes to chores.

  • Don’t insist on perfection.
    • Your child is not in the military.  They are children and still learning.  Challenge children to excel, but don’t scold.
  • Don’t delay.
    • You may think that your child is too young. They may be more capable than you think.
  • Don’t be stingy with praise.
    • Get that praise going right away! Don’t wait until the chore is done. Praise and encourage the child while the chore is in progress. You want to build positive momentum, especially with young kids.
  • Don’t be inconsistent.
    • Be regular and don’t allow for putting off for another day.

HAVE A PAY CHART

Have a chart posted where your child can visible see it so that they see how much they earn with each job.  Pay weekly and help your child to spend the money on items that they have made a list of.  This will assist in keeping them focused instead of spending on impulsive items.

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Tweens Teens and Credit Cards

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Is your teen ready for a credit or debit card?  Financial education should begin as a very young age.  Don’t wait for your child to go away to college to learn about money management, credit and budgeting.  He or she should have a good concept about this before they pack their bags.  By all means, don’t arm your children with credit cards and no idea on how to handle it.  Understanding how credit works will help them avoid the trap of revolving credit.  Credit card companies are in the business of making money and keeping you in debt.

What to teach your teen:

  • What is a credit score.
  • How does credit affect me.
  • How do I keep tabs on my credit.
  • How do I protect my credit.
  • How to stay out of debt.
  • Don’t charge for items that you don’t have the money to pay for.
  • Don’t buy what you don’t need.  Credit means debt.  Debt means money that you will have to pay someone until you pay it off.
  • Help your child learn to save for what they want.  This is important to start at a very early age.
  • Teach and assist your child to set a standard for automatic saving.  Like 1/3 allowance and 1/2 of all birthday gifts.
Teaching your tween and teen responsible credit and budgeting.
Teaching your tween and teen responsible credit and budgeting.

As our children are growing up it is imperative that we teach them to be responsible with their finances.  Your teenager is more mobile and you may find that it’s important that they have access to funds in case of emergency or otherwise.  There are  options and a parent needs to consider if their child is responsible enough to be in control of a credit or debit card.  Let’s look over some of the different options to help in making a decision.

 

 

1.  Prepaid cards are a hybrid breed.  Just because it is called a prepaid credit card and works like a credit card does not make it a credit card.  These are cards that are reloadable and works like a debit card.  You choose the amount that you want to load on the card, use it like a debit card and it deducts the amount from your balance.  You can then reload and continue to use.  Being that these cards are associated with major credit card networks, American Express, Visa, Mastercard, these prepaid cards can be used anywhere the major credit cards can be used, whether it’s to purchase groceries, shopping at the mall, paying bills, or online shopping.  This card is ideal for tweens and teens.  No worry for over-drafting checking accounts or being accessed over-the-limit fees with credit cards.  Prepaid cards are an alternative to banks.  There are millions of people that do not want to use banks or traditional credit.  Although these cards are not connected to a checking account, it still allows you to things that require a credit card, such as rent a car or book a hotel room.  With many teens with a part-time job, cards even come with a checking and routing number so that a teen could have their check directly deposited onto the card.  Many prepaid cards offer features to be able to access funds at an ATM.  You also have the option of loading their allowance on the card.  Prepaid fees.  Be prepared to be charged with fees with a prepaid card. Each prepaid card comes with it’s own fee structure. Be sure and find a card that best fits your needs.  You are protected.  Prepaid cards offer the same theft and loss protection that major credit cards offer.  Which makes this a pretty safe bet.

Children and credit cards. How to stay out of debt.
Children and credit cards. How to stay out of debt.

2.  Store card / major credit card.  While credit cards have a credit limit and you are able to use the card until the limit is exhausted.  Credit card companies may extend additional credit at a cost of an over-the-limit fee.  Eve with a credit card, it is important to keep tabs on your spending.  With interest rates charges it may become very difficult to get out of debt.  No one wants to head off to college in credit card debt and parents should not be left to clean up their teens out of control spending.  Choosing between a store card or credit card may be a challenge when trusting your tween or teen to spend sensible and not send you soaring into uneeded debt.  If you feel that your teen has not shown financial responsibility with their money and allowance, then you may want to rethink handing them a card to carry on a full-time basis.  You may choose to allow them to use the major credit card on a temporary basis and for particular purposes and allowing the to view the invoices and pay the payments.  Also educated them to understand the reality of charging and paying with money they earn from their job or allowance.  Although there are fees for reloadable prepaid cards, there are over-the-limit fees for many credit cards.  Just being charged one $39 over-the-limit fee is a large amount compared to prepaid card fees.

Teens learn from their parents money management.  By gradually graduating their freedom to using your credit cards you will be able to build good spending habits and trust.

So while there are differences in choosing a card, education and holding your teen responsible for their spending is the answer.   

 

 

Got the Monday Blues? ( a tribute to my friend Lisa Crouse)

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That’s right, today is Wednesday, but believe it or not millions of people have a “Monday phobia”.  It’s brought on by many reasons.  Difficult to cover all those reasons since I really don’t know them all, but I do know that people dread waking up, getting up and/or going to their workplace on MONDAYS!!  It’s a drag and many people would rather have the hangover they had the prior week-end than to have to face the reality of the week or the so-called “rat race”.

Many people just hate to work.  Me, on the other hand, I love to work.  I’ve even worked for a company for free. Yes, you heard it right..  I asked to intern.  I wanted to learn more and I showed up 3 to 4 days a week, working approximately 20 hours a week.  But, that’s another story.

I just don’t understand, for the most part, why so many people don’t enjoy their jobs or better yet, any job.  Seems like having too much idle time would get mundane after a week or so. Or, at least it does for me.  But that’s another story. So back to Wednesday.  It’s HUMP DAY.  You know, that day you have been waiting for, that shouts that the week-end is so near.  Not really sure why the week-end is supposed to be so much better than Monday through Friday, but for many people it’s the time they can mentally check out, party with their friends, lay on the couch and watch television, recover from the hang-over headache, kids sports, just dedicated time with family and for all the other activities there is Mastercard. So while I do understand that the week-ends or our days off from work, play a significant importance in our life and thus creating memories, I believe that our society misses the importance that work plays in the fabric of our beings and who we are.  Even when one enjoys their career I still can’t help but notice they regularly anticipate those two days they don’t have to be employed.

You may be wondering what has caused the bee in my bonnet.  Well that bee has been there many years.  Back to the reason at hand.  My good friend, Lisa Crouse, was laid to rest yesterday, May 12, 2015 less than one month after her 50th birthday.  She and I are the same age and met through mutual friends in 2004.  Although she lived in Gulf Shores, Alabama and I live in east of Birmingham, Alabama, we were able to meet up a couple of times when I was in her area and they visited Birmingham on a regular basis as part of the Jeremiah Castille Foundation as ministry partners. Lisa had a beautiful spirit, a dedicated and wonderful husband, Drew Crouse, and two talented and beautiful grown daughters.  She gave so much and I am blessed to have not only have known her, but more than that, we were friends. I can’t help but to believe that she would love and cherish another Monday here among us, with her husband, her children, church friends, and at the very least, just to get to do a job.  Monday’s would mean the world to Lisa, Drew and their family and friends.  Wow!  All the plans they would be making for a wonderful Monday. They would not be dreading Monday’s.  In fact, their last week-end was her spent in the hospital, fighting for her life.

If there is one thing I could encourage you to do is love life, love people and love each day of the week.  Each day is a gift, given to us by our heavenly Father.  Think of each day of the week as a “The Parable of the Talents” in Matthew 25. Although that was speaking of money, let’s equate it to days of the week.  Each one of us have been blessed with so many years, weeks and days in our life.  Some have been blessed with years, some with weeks and some with days, while many only receive hours or seconds.  Regardless, it’s what we do with it that matters.

Lisa blessed others.  She was given 50 years, 9 days, 4 hours and 55 minutes.  During that time, she loved God, her husband, her children and her family and friends. I will be forever affected with her infectious laugh and smile. Remember, that when you aren’t looking forward to next week there is an alternative escape route, but for most people, you would not choose it.  Love life, love God!  Find a way to be re-energized.  The reality of it is your perspective regarding life.  When you minutes are over and your funeral is finished, what will the Master say to you.  “Well done?” or “Depart from me”?

The life of Lisa Crouse
The life of Lisa Crouse

lisa letter  A note written by Lisa Crouse.