Frequently Asked Questions By Borrowers
Where does my credit information come from?
The credit comes from the credit grantor – credit card companies, auto and home lenders and retail stores. Information is also obtained from court records which may include bankruptcy filings, tax liens and judgments.
What is a credit score?
A credit score is a numerical representation of your statistical likelihood to repay credit that is extended to you. Scores range from 350-850.
The credit score comes from a propriety model developed by Fair, Isaac & Company (FICO®). The model takes all the detail account information from your report and processes it with different weights and scoring factors, resulting in the score.
What is calculated into a score?
Details such as on time and late payments, how late the payments are, how many accounts are open, the proportion of balances to credit limits on revolving accounts, whether there are collections, bankruptcies, judgments, liens, and how new accounts are.
Your score is a “snapshot” at a specific moment. Your scores can change with new actions and with the passage of time. For example, the farther in the past derogatory information occurs, the less impact it has on the credit score.
I ordered a copy of my credit report directly from the bureaus and the score is different (higher/lower) than the score on the credit report obtained by my broker. Why is that?
The scores on the credit report obtained by the bureaus contains person credit scores as opposed to the mortgage credit scores obtained by your broker. Every industry (auto, mortgage, credit cards) use different score models to calculate scores, so within each industry your scores can vary. Personal scores uses its own model.
How long do accounts (negative and positive) stay on my report?
- Accts paid as agreed remain for up to 10 years.
- Accts not paid as agreed remain for 7 years.
- Remain for 7 years from the original inception date of the collection
- Chapters 7 & 11 remain for 10 years from the date filed.
- Chapter 13 –open or dismissed – remains for 7 years from the date filed.
- Unpaid tax liens remain indefinitely.
- Paid tax liens and judgments remain for up to 7 years from the release date.
Why do Experian, Equifax and Trans Union sometimes have different information?
Creditors voluntarily provide information to the credit bureaus and are not required to report information to all three. Some companies do not report to the bureaus at all. The bureaus all report information on a national basis, but some creditors favor reporting to the bureau closest geographically or through some other preference. Because of this, occasionally information will vary from one bureaus report to the next.
The balances on some of the accounts on the credit report I received are incorrect as I have recently paid things down/off. How can I correct this?
Credit grantors supply information on a periodic basic, so the balance shown may not be the balance you know it is today. If the balance reported was correct at sometime during the date it was reported, it is not necessary to dispute that balance. The new balance will be reported the next time the credit grantor reports to the bureaus.
I pay my bills on time every month and have no late pays or collections. Why does my credit score seem low?
Even with a perfect payment history, there can be other factors that will lower your score. Revolving accounts that have high balances in proportion to their credit limits (for example a credit card with a high limit of $3500 and a balance of $3000). This can activate a negative factor that can drop your score. Keeping balances on credit cards at or below 50% of the high credit is always optimal and even more so at below 30%.
Too many revolving debts can also have a negative effect on your score. The optimal amount is three. Two major credit cards (Visa, Mastercard) and one minor credit card such as a department store card.
Any new debt, can, at the onset also have a negative impact on your score until you establish up to a year of good payment history on it.
I have several accounts on my credit report that were included in my divorce decree and belong to my ex-spouse, but they are still on my credit report. How do I get rid of them?
A divorce decree does not supersede an original contract with a creditor and does not release you from legal responsibility on the accounts. You must contact each creditor individually and seek their legal binding release of your obligation. Only after that can your credit history be updated accordingly.
I have no credit (or only negative credit) and I can’t get any credit card or finance company to approve me. How can I start to establish credit?
Apply for a secured credit card. This is a credit card that is secured by a savings account the equals the limit of the credit card. The savings account is help by the bank through which you get your secured credit card. After a year or so of exhibiting a good payment history, most companies will change your secured credit card into an unsecured one.
I have a collection account appearing on my credit report that I need to pay. Should I pay the collection agency or the original creditor?
Always first contact the collection agency that is reporting on the credit report and try to negotiate a settlement with them. If they are no longer collecting on the account, find out if they have returned it to the original creditor or sold it to another agency. If the company is no longer collecting for the account, they should no longer be reporting on your credit report. You should request a letter from them saying they are going to remove their entry from your credit report as they are no longer collecting on the account. You should also request they report the line as deleted to the bureaus. If they fail to do this, you have the letter as backup and can send it to the bureaus yourself.
Will paying off a collection remove it from my credit report?
No, paying off a collection account will not remove it from your report. Unless it was filed in error a paid collection account will remain on your credit report for 7 years.
I have tried to contact a collection agency that appears on my credit report so I can pay it, but they are out of business. How can I take care of this?
If the collection agency reporting on your credit report is out of business, you will need to dispute this item directly through each bureau that is reporting it. If, in their investigation they conclude that the company is out of business they will remove it from your report.
There are debts on my credit report that do not belong to me. What should I do?
If you have accounts on your report that you feel are not yours, you may be a victim of fraud or identity theft, or you could have a mixed file. (Your file has been mixed with someone else’s file). You should contact the creditor immediately and also contact all three bureaus (Equifax, Experian, Trans Union) for more information on what actions to take.
I have inquiries on my credit report that I did not authorize. How can I get them removed?
Companies are not supposed to make inquiries into your credit without your permission. If there is an inquiry you do not recognize, you should first contact the company who posted the inquiry for clarification. If after speaking with the company who posted the inquiry you feel they did so without your permission, you may dispute the inquiry through Advantage Credit or through the bureaus. If the inquiry was made through Advantage Credit, Inc. and you would like to initiate a dispute, Click Here
Why is my credit report mixed with my relatives or others with similar names?
The bureaus do not rely solely on a consumer’s social security number to match the credit file. They also look at the name and address. This is where “junior” and “senior” files often get mixed.
For borrowers who share their homes with extended family, it is very possible for their credit to get mixed because the names will match (or be similar) and the addresses will match.
If this is the case, you need to contact each credit bureaus that is reporting the incorrect information to have it corrected.
How can I ensure I will not be or have not been a victim of credit fraud or identity theft?
Order a copy of your credit report once a year from each bureau and go over it carefully for mistakes and debts that might not belong to you. You can also put a fraud alert on your file by contacting each bureau.
A few other tips on protecting yourself:
The next time you order checks, have only your initials (instead of your first name) and last name put on them. If someone takes your checkbook, they will not know if you sign your checks with just your initials or your first name, but your bank will know.
When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the “For” line. Instead, just put the last four numbers. The credit card company knows the rest of the number, and anyone who might be handling your check as it passes through all the check processing channels won’t have access to it.
Put your work phone number on your checks instead of your home phone. If you have a PO Box, use that instead of your home address. If you do not have a PO Box, use your work address. Do not have your SS# printed on your checks.
Make a copy (front and back) of all your credit cards, licenses, etc., and keep the photocopy in a safe place. It is also a good idea to have a photocopy of your passport.
If you have had your credit cards stolen the first thing you need to do is cancel them and let the creditors know that it has been stolen. You then need to file a police report in the jurisdiction where they were stolen. This proves to credit providers that you were diligent, and this is the first step toward an investigation. You then need to contact the 3 bureaus to place a fraud alert on your credit report.
How can I improve my credit?
These are basic steps to take to improve your credit.
- Make your monthly payments on time.
- Keep balances on revolving accounts low.
- Don’t apply for new credit unless it’s absolutely necessary.