Tag Archives: Credit Score

7 Persistent Credit Report Myths

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There are myriad myths and misconceptions about a gamut of different topics, but few are as persistent as these 7 credit report myths that live on to this day. Worse still is that the whole subject is technical, which makes these persistent myths about it all the more impressive and annoying at the same time – they just will not go away.

Perhaps what keeps them alive is that most of them are preconceived misconceptions. They are mistaken assumptions that can easily be made by anyone, regardless of how long they have been around. Do you still believe in some of these credit score myths and misconceptions?

Myth#1 – Checking Your Credit Report & Score Can Lower Your Score

To become financially savvy and in control, you need accurate data from reliable sources. Checking your credit report and score is a recommended way to do just that; personal inquiries into your credit standing – these are called “soft inquiries” – do not reflect on the credit report and do not impact your credit score. In fact it is highly recommended that you keep a close watch on your score if it goes south, so you can monitor the progress of your finances and assert control based on what you observe. You can obtain a free credit report once an year and this will not damage your score in any way. It is your right to examine them.

Myth#2 – There are Quick Fixes that You Can Use for Bad Credit

Just as a bad or ailing credit score is the result of a long period of shabby financial handling for one reason or other, you cannot use a ‘quick fix’ to just miraculously get rid of it. Money matters are serious issues and no sleight of hand can relinquish your low credit score just like that. You have to work on your finances for a long time to get your credit score back up to par, and even then you might not be able to borrow the way you would if your record was spotless to begin with.

Myth#3 – Credit Repair Companies Can Fix Your Credit Score for You

This is a variant of the “quick fix” myth and is more of a misconception.  Credit repair companies do exist, and the reputable ones do a good job of helping you fix your credit score. That is what this misconception misses: the companies help YOU fix your credit score. They do NOT do it for you. They are advisors and counselors and financial abettors, no more, no less. For some people, they can easily learn how to fix their bad credit and do it on their own. For others, there are credit repair companies.

Myth#4 – You Have Only One Credit Score

There are three main credit monitoring and reporting bureaus that keep track of your credit score: Equifax, Transunion, and Experian (plus Innovis in the US).  If you only had one credit score, there would be no need for three bureaus. These three organizations have similar methods of calculating your credit score, but have differences that set one apart from another. One bank or creditor might get reports from one of these three while another bank or creditor gets reports from another, though usually they check records of all three to get a better picture of your financial status.

Myth#5 – You Do Not Have to Worry About Credit Scores If You Do Not Use Credit

You can live without credit, but can you live without renting your apartment, applying for insurance, or getting a job? Your credit score is a reflection of your financial capabilities and responsibility in handling an important aspect of your life. Anyone (landlord, insurance company, potential employer) who needs to understand how you handle your finances for “permissible purposes” can get a copy of your credit report (at times with your permission) and base transaction decisions on that.

Myth#6 – Your Good Credit Offsets Bad Credit

Bad credit history will not look good just because you are currently successfully handling your finances well. Banks and financial organizations that check your credit report do so to see how much of a risk you bring to a business transaction. If there is still existing bad credit history on your report, your good history will not offset it, though your current good standing will make a significant impact on the overall decision. It might not seem fair, but there are many reasons you might have gotten bad credit before such as economic situations beyond your control. These factors must also be considered as possible risks.

Myth#7 – Some Items Last Forever in Your Credit Report

Foreclosures and bankruptcies have a huge impact on your credit score, but they will not reflect on credit reports forever.  Such items can last in reports for as long as 7 to 10 years – which is a very long time for bad credit to affect your finances – but they will be shed off after that allotted time to reflect new financial transactions of import. Since your good credit does not offset bad credit, clearing up this misconception should be good news for you: that lien or bankruptcy from years away will eventually wash off, and you can work towards making your report a clean slate until then.

Obviously, it is quite simple to make the erroneous assumption that if you do not use credit your credit score will not matter that much or that you have only one credit score. It is even just a figment of fairness to assume that good credit offsets bad credit. What is important is going through the effort of clearing up what is credit report myth and correcting misconceptions. After all, you can get problems with your credit if you continue to believe in these credit score myths.

Credit Score Not Essential To Obtain Student Loans

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Attending college is very important in today’s society.  If you want to find a high-paying job, you need to show employers that you are a dedicated individual that took time to get their degree.  Pursuing a degree can be challenging and expensive if you do not have money set aside to pay for your tuition.  While most two-year and four-year institutions offer federal financial aid packages, these awards are not nearly enough to pay for your housing expenses, books, and tuition.  If you have reviewed your financial aid package and you know you need more money to make it through school, it is time learn about student loans.  There are several types of student loans out there.  Learn which ones you might qualify for and live comfortably through school.

Credit Score and Student Loans

If you do not need a large sum of money, you may want to start with Federal loans.  Federal loans are the safest and most practical choice for adult students and students who are just exiting high school.  Unlike conventional loans offered by private lenders, federal loan interest rates do not change over time and the interest charged is not determined by your credit score.  There are currently three types of Federal loans available to undergraduate and graduate students:

Start With Federal Loans

Perkins and Subsidized Stafford Loans -  If your school offers subsidized loans and you qualify for this type of loan it is the best option for you.  If you qualify for these student loans, the government will pay for the interest that accrues while you are in school.  The Perkins Loan interest rate is fixed at 5 percent when you are out of school and the Stafford loan is fixed at 6.8 percent or less depending on the market.  You will appreciate that the government pays the interest because you will save thousands of dollars so you can pay off your student debt faster when you are employed.

Unsubsidized Stafford Loans -  These loans are the next best option if you do not qualify for the subsidized loans or your school does not offer the prior option.  Unsubsidized Stafford Loans are available to anyone regardless of their income or credit rating.  The interest will build up while you are in school at fixed interest rates that are listed on your loan contract.  You do not have to start making payments to your loan until 6 months after you leave school.

PLUS Loans -  If you are a graduate student or you are a dependent, you may qualify for a PLUS loan through the federal government.  PLUS loans have have an interest rate of 8.5 percent but they are easier to qualify for than private student loans and have higher loan limits than the others.

Qualifying for Private Loans When Federal Loans Are Not Enough

The loan limits for first and second year students cap off at $3500 per year when you apply without a parent.  The limits will rise to $4500 for students with 24 credits or more behind their belt.  While these funds will help you in a time of need, they may not be enough to eliminate the need to work through college.  This is where private loans come into play.  Private loans are loans that are offered by lending institutions and banks who are making a profit off of the interest you pay.  These alternative loans are much riskier than federal loans and do not offer as much protection as a federal loan.  If you start at a time where interest rates are low, it is possible for your interest rates to rise while you are in school.  Make sure you always apply for federal loans first and then get the additional funds you need through an alternative loan.

If you are attending a state university or a private school, the last thing you want to do is balance work and school.  Put all of your focus on schooling by applying for student loans to pay for your cost of living so you can succeed in school.  Make sure you apply for scholarships and grants before you apply for money that must be repaid.  Follow the tips above and choose the safest loan package that will help you get through school.

Your Credit Score Determines Personal Loan Options

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Many people take personal loans in order to meet financial requirements. Other times, these loans are sought as an investment tool or to help start up a new business. The loans can be obtained from banks and other lending institutions such as credit unions. They can be given in any amount but are often limited to a few thousand dollars.

There are two types of personal loans. They are secured an unsecured. A secured loan is a loan that is taken with some collateral put up against the amount of the loan such as a car or home. These loans can often be acquired at good rates because the lender knows they will receive property in lieu of payment if the borrower fails to meet the agreements of the loan. Failure to meet the loan requirements will cause the borrower to forfeit the property that was put up as security for the loan. An unsecured loan uses no such measures and they are more difficult to receive if you have bad, poor or no credit. This is because the borrower leaves the lender with nothing if they default on the loan. These loans are usually only given to clients that have a good credit history and good credit score.

Your credit score is determined by a number of different factors including your credit history. The number of open credit lines that you have comes into play along with your ability to meet your existing loan requirements. Lenders check your free credit report to see if you pay your bills on time and if you have any unpaid loans in your history. They will also check to see how much you have borrowed against your existing lines of credit.

There are many ways to help and improve your credit score. The number one way to help and improve your credit score is to meet all of your financial requirements, in full, in a timely and consistent manner. No factor is greater than if you pay your bills on time each and every month in full. Another way to increase your credit score is to pay down any existing debt that you may already have. You should have no more than 50% of the limit on any given card at any time if you wish to increase your credit score.

If you find yourself having difficulty obtaining a personal loan because of lack of credit history there are some ways to help this situation. The best move is to apply for a secure credit card. This can be issued to you by your bank. The bank will ask how much you would like to secure the card for and the average amount to start is from 300 to 500 dollars. The amount that you deposit into the account will be your credit limit. Then you will need to use the card each month for necessities and pay off the amount in full, on time, each month. This is the best way to improve your credit score in order to qualify for personal loans.

Auto Loans For Bad Credit Scores

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Having a bad credit score does not automatically disqualify you from getting auto loans.  There are still numerous lenders out there that are willing and able to assist you with this major purchase in spite of your existing debt.  Learning how to properly screen the different offers that are available to you, however, will ensure that you secure fundingwhich is wholly beneficial to both your short and long-term financial well-being.

Remove Emotions From The Shopping Process

Many people lock into auto loan agreements that do not reflect their best interests simply because their momentary elation at being approved clouds their better judgment.  It is important to remember that being approved for a poorly designed loan may actually be worse than receiving no loan at all.  When you eliminate your emotions from the shopping process, however, you can actually select a loan option that will ultimately improve your credit by supplying you with a truly feasible repayment plan and sufficient funds for securing a durable and reliable form of transportation.

Perform A Quick Clean-Up Of Your Credit Report

You may not have the money to pay down all of your debt right now but you can still make significant improvements to your credit report.  People who maintain low credit scores rarely take the time to review their reports thoroughly.  Some of the dings that are present on these reports may actually be due to reporting errors such as charges that have been misreported, duplicate recordings and failures to update accounts that have been paid in full.  Simply taking the time to review your three credit reports will allow you to identify any charges that can be cleared up by making phone calls or sending letters.  In this fashion, you have the ability to give your credit score a significant boost in a relatively short period of time and without having to spend any money. You can get a free credit report once an year, but you may need to pay to see your credit scores.

Start Searching For Auto Loans Online

The best place to get started on your journey to find financing for your automobile purchase is the internet.  You can access a range of different offers that are provided by both local lenders and lenders in other areas.  There are additionally, many different sites that will allow you to make side by side comparisons of different offers.  These sites help people to secure loans for bad credit consumers that do not have high interest rates, pre-payment penalties and other negative features that serve to drive their value down.  It is important that consumers make careful considerations of both loan costs and loan features in order to find the best deals.

Appeal To Local Dealerships For In-House Funding

There are numerous funding opportunities that fall outside of more conventional loan offers.  Automobile shoppers can often use these to secure the vehicles that they want and need, however, these funding options are very rarely effective for rebuilding good credit.  One such opportunity, auto loans that come directly from dealerships, are often made available to consumers with poor credit scores, but with sufficient income for justifying the purchase.  Smaller dealerships that really want to sell cars will often offer in-house financing to these consumers.  This is commonly offered based upon the applicant’s current income, rather than his or her credit score.  These loans are, more often than not, smaller than the loan amounts of more conventional auto loans, however, they are generally also far more flexible in nature and easier to repay.