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For those of us who are or have taken a Personal Loan or Car Loan or other types of loans, our credit scores determined the terms of our loans and whether we were approved at all for the loan.  Considering all the different credit reporting companies out there, have you ever wondered what is the perfect credit score?  Or wonder what to focus on to improve the credit score? I found this interesting article below from Experian’s blog that addresses some of these points and more.  You may click on this link to read it directly from Experian, https://www.experian.com/blogs/ask-experian/what-is-a-perfect-credit-score/.

A perfect credit score is the highest score you can achieve within a credit scoring system. Its numerical value can vary, depending on which credit scoring system is used, but it remains the holy grail for those seeking the best of the best scores.

Credit scores use statistical analysis of your credit history to forecast the likelihood you'll fail to repay a loan. The higher your score, the lower your odds of failure. A perfect score indicates you are part of an elite group with the lowest possible odds of failing to pay your bills. It tells lenders you are a highly desirable borrower and can give you access to loans with the lowest interest rates and fees as well as credit card issuers' most enticing bonus and incentive offers.

The Perfect Credit Score May Vary

Ask most people what constitutes a perfect credit score, and you'll likely hear 850. That's correct with respect to the generic FICO® Score used in most lending decisions, but it's not always the right answer to the question.

The generic FICO Score has a score range of 300 to 850, so a perfect score on that scale is, of course, 850. The same is true of the most recent scoring models from FICO competitor VantageScore®: Its VantageScore 3.0 and 4.0 models also use a 300 to 850 scale. So while FICO and VantageScore use different mathematical formulas to measure your creditworthiness (and their scores are not generally interchangeable), 850 is a perfect score on both companies' generic scores.

But many, many scoring models exist, with different score ranges and measures of perfection that differ with their numerical scales. For instance, the first two versions of the VantageScore model, VantageScore 1.0 and 2.0, use a scale of 501 to 990, so 990 is their perfect ideal.

FICO also offers specialized industry scores, the FICO Auto Score (fine-tuned to predict failure or success at repaying a car loan) and the FICO Bankcard Score (tailored to predict chances of failing to pay credit card bills). Each score is calculated differently, but both share a score range of 250 to 900, so perfection for each is a score of 900.

How Credit Scores Are Calculated

Generic credit scores, such as the VantageScore, the FICO Score, and the FICO Auto and Bankcard scores derived from the generic FICO Score, are based on credit history data compiled in your credit reports at the three national credit bureaus (Experian, Equifax, and TransUnion).

Credit score providers use sophisticated software called credit scoring models to analyze your credit report contents. Each model works differently, but all of them compare the credit decisions summarized in your credit report against behaviors that have been linked historically to the inability to pay loans. Based on the appearance (or absence) of those credit scoring factors in your history, their frequency and how recently they occurred, the scoring model assigns you a three-digit score that summarizes your risk of failure to repay.

What to Focus on When It Comes to Your Credit Score

If a lender provides you with a credit score when you've applied for a loan, or if you obtain a free FICO Score from Experian, the score will come with a report, based on your unique credit history, that indicates the top credit scoring factors benefiting your credit score and the top factors preventing it from being higher than it is. You can use this personalized information to help focus your efforts as you work toward a better credit score.

The report will detail which factors matter most to you, but the following factors, listed in order of influence, play a large part in determining everyone's credit scores:

  • Payment history.Paying your bills on time is the single biggest factor that promotes a good credit score. Late or missed payments can harm your score, and delinquent accounts—those 90 days or more past due—can hurt it even more. According to FICO, payment history accounts for as much as 35% of your FICO Score.
  • Credit usage rate.You probably know your credit score will suffer if you max out your credit cards by letting your outstanding balances climb close to your borrowing limits. That's the impact of credit usage, or what lenders and credit scoring pros refer to as credit utilization ratio. You can calculate yours by adding up the balances on your revolving credit accounts (such as credit cards) and dividing the result by your total credit limit. If you owe $4,000 on your credit cards and have a total credit limit of $10,000, for instance, your credit utilization rate would be 40%. A maxed-out card has a usage rate of 100%. Experts recommend keeping your utilization ratio below 30% to avoid lowering your credit scores. Credit usage is responsible for about 30% of your FICO Score.
  • Length of credit history.Lenders like borrowers with solid track records of managing credit, so credit scores generally improve as your credit history ages. If you're a new credit user, there's really nothing you can do to speed up that process, but making timely payments and good credit decisions will position you to get the maximum benefit as you gain experience. Length of credit history can constitute up to 15% of your FICO Score.
  • Total debt and credit.The FICO Score tends to favor a variety of credit, including both installment loans (those with fixed monthly payments, such as mortgages and student loans) and revolving credit (accounts such as credit cards that let you borrow within a specific credit limit and repay in variable amounts over time). Credit mix contributes about 10% of your FICO Score.
  • Recent applications.When you apply for credit, you trigger activity known as a hard inquiry, in which the lender seeks your credit score (and, often, your credit report). Hard inquiries typically cause your credit scores to decrease temporarily. If you keep making timely payments, your scores typically recover quickly. (When you check your own credit, the result is a soft inquiry, which does not affect your credit score.) Recent credit applications can account for up to 10% of your FICO Score.
  • Public Information.If bankruptcies, foreclosures, vehicle repossessions, and other public records appear on your credit report, they can have severe negative effects on your credit score. Their impact will fade with time, but they can remain on your credit reports for years (a Chapter 13 bankruptcy remains for a full decade) and may make it difficult for you to get new credit during that interval.

Benefits of Perfect Credit

A perfect credit score is an admirable (if lofty) goal and one that's achievable with lots of dedication and patience. But as a practical matter, lenders consider any exceptional FICO Score—that's a score of 800 or greater on the 300 to 850 scale—a mark of excellent credit. Achieving a score in that range is likely to give you the same advantages as a perfect score, including:

  • Access to a wide range of loan products.If you have an exceptional FICO Score, you'll likely find lenders competing for your business, with attractive loan and credit card offers. You'll also probably have multiple low-interest options when applying for a car loan or mortgage.
  • Higher borrowing limits.With an exceptional credit score, you can expect new credit card offers to include generous spending limits, and you should feel comfortable asking the lenders you have accounts with to increase your limits as necessary. Higher limits make larger purchases possible, and also mean you can carry larger short-term balances without exceeding the 30% usage rate experts warn can hurt your credit score.
  • Excellent rate shopping.It's always smart to apply to multiple lenders when seeking credit to be sure you get the lowest interest rates and fees you qualify for, but it's especially advantageous when you have an exceptional credit score because lenders will likely extend you the best deals they offer. One percentage point less on a mortgage loan can save you tens of thousands of dollars over the life of the loan, so that can mean major savings.
  • The most rewarding credit cards.In addition to credit cards with rates and fees, an exceptional FICO Score can help you qualify for cards with cash back offers, travel points and other types of incentives and bonuses. Card issuers reserve their most appealing offers for borrowers with top-notch credit, and these cards can help you save big on air travel, lodging, car rentals and purchases at your favorite retailers, and more.
  • Insurance discounts.Some auto insurance companies factor in credit scores when determining monthly premiums. You can't be denied coverage based on a low credit score, but an exceptional score could help you save on premiums.
  • More housing options.Landlords often use credit scores to screen tenants and gauge their financial trustworthiness. An exceptional credit score could increase your chances of getting into a house or apartment and spare you from having to pay a higher security deposit.
  • Security deposit savings.If you are a new customer, a utility company may look at your credit report to get a sense of how likely you are to pay your bills on time. An exceptional credit score reduces your odds of needing to pay a security deposit when you sign up for service.

How to Get an Excellent Credit Score

You likely have dozens, if not hundreds, of credit scores, all with somewhat different criteria for excellence. Achieving perfection on all of them is likely impossible. But fortunately, decisions that lead to score improvements under any scoring system will tend to boost scores under all of them.

There are no magic formulas that will give you an exceptional credit score overnight, but by focusing on the factors that contribute to your credit score—with particular attention to any specific factors called out in your credit score report—can help you make steady progress toward credit scoring excellence, and even perfection.

Hope everyone is had a relaxing holiday season.  :) Below, is a blog from The Phoenix Group, https://thephenixgroup.com.  It has some good pointers to keep in mind if you happen to be unlucky enough to come across debt collectors who don't work within the rules.

If you’ve ever dealt with bill collectors and debt collectors, then you know how stressful it is. Most debt collectors are polite and offer reasonable options to help you take care of your obligations. However, there are those who are not courteous or professional, and they can make your life a living hell. Especially, when it hits your credit report & makes it difficult to do credit repair

debt collectionDebt collectors do have restrictions and are subject to the Fair Debt Collection Practices Act (FDCPA). This act requires that they engage in fair practices when attempting to collect a debt. Still, there are those debt collectors that walk a fine line between what’s acceptable and what’s not.

The FDCPA was passed in 1977, and the idea was to protect consumers against unscrupulous and unfair debt collection practices. Since this act's passing, most of the violations and bad practices have stopped, but there are still companies, such as Transworld Systems, that employ tactics that make life rough for consumers.

Transworld received countless complaints regarding their debt collection practices and have been in trouble with the Federal Trade Commission. Here are a few things to watch out for when dealing with a debt collectors such as Transworld Systems.

Outright Harassment

According to FDCPA, debt collectors cannot leave robocalls or send unsolicited text messages. They can’t use foul language. If they send you mail, the envelope can’t contain information about debt collection that could embarrass you. Lastly, debt collectors can’t repeatedly call you.

Threatening Violence

Debt collectors can’t threaten a consumer with violence nor can they pretend to be law enforcement, a government agency or have the authority they don’t have.

Unreasonable Correspondence

Debt collectors can’t call you at unreasonable times. For example, if you wish not to be called at work, they must abide by that. Also, debt collectors can’t call before 8 a.m. or after 9 p.m., or after the regular working hours of the consumer, if they’re not on a standard 9-5 schedule.

Ignoring Request For Proof dect collection final notice

If a debt collector is contacting you, they’re legally bound to provide you with the proof of that debt should you request it. They must send this request to you in writing, and it must contain all of the details regarding the debt and the collection agency assigned to your case. If you see any inaccuracies, you have the right to dispute them.

Mislead You

A debt collector can’t agree to do something for you and then not follow through. For example: If they tell you they’re going to clear your debt with the credit reporting agencies if you settle up, then they must follow through with that. If they do make a promise, make sure to get it in writing.

Document Everything

When dealing with debt collection agencies such as Transworld Systems, it’s vital you get everything in writing. Avoid discussing these matters with their agents over the phone in favor of a paper trail that can be used as proof should you need it. This is essential when doing credit restoration as well.

 

All of us have experienced this scenario:  You get in your vehicle and there is that insidious “Check Engine” light telling you for the past week that some costly expense is bound to happen soon.  Don’t you just hate that “Check Engine” light?  We all know it is there to help.  But, one can’t help but to feel like “That light has it in for me.  This is personal.”

Your First Impulse?

My first reaction in such cases is to feel irritation.  You can mentally see the domino effect: take vehicle to mechanic, get charged just to have the vehicle checked, have the car technician approach you with a grin and a repair estimate, and then you think “How much? Mercy!”.  But you need your vehicle and are compelled to have the vehicle checked and repaired.  At times the repairs can wait until you save some money saved and other times it needs to becar engine light taken care of ASAP.  Some of us will have the funds or the credit card to pay for the repairs, but, some of us won’t.  For those who don’t have the funds or the credit cards to pay for the repairs, the first impulse may be to get a Personal Loan instead of asking a friend or relative for help or getting a loan from your employer.  The reasons vary.  Maybe asking friend or relative for some financial help feels embarrassing.  However, there a good reasons for you to consider other options before getting into a debt.

Personal Loan Vs Family or Friend’s help or An Employer Loan

If no family or friend can offer some small financial help, a Personal Loan may be the way to go.  And to some of us, we just don’t want relatives or friends knowing our financial woes.  However, keep in mind that a Personal Loan will be a negative onto your monthly budget as most personal loans are paid in installments over several months.  Furthermore, you will be paying back, not only the amount borrowed, but also origination fees and interest among other fees.  This means less spending money for fun stuff.  Also, you would have to follow a somewhat rigid payment schedule with possibilities of getting late fees if not paid on time.  And the loan may be reported to your credit. 

LOANS CHAINIf you are lucky enough to be able to borrow some funds from family or friends or even an employer, you will still need to repay it.  Consider the benefits: the repayment arrangement may be easier on your budget; you will most likely not be charged a late fee if you are a little late on the payments; and if you are dealing with someone who likes you as a person, having to repay interest or other fees won’t be required.

The choice to get a Personal Loan or borrow from other sources is totally personal.  Both have the plus and minuses.  However, at a time when we see more people getting into more and more debt, we are hoping these few points will help some to make the best personal financial decisions. 

As a side note, for those who are interested in ideas to improve their credit, you may want to visit this link for Top 20 Credit Repair Blogs, https://blog.feedspot.com/credit_repair_blogs/

Hello.  Hope everyone is having a relaxing holiday season.  Below, is a blog from The Phoenix Group, https://thephenixgroup.com, that has some interesting points for those looking for ways to improve their credit.

Millions of Americans deal with an incredible amount of debt. As of March 2018, American household debt alone reached $13.21 trillion. As the amount of debt rises throughout the country, credit scores are bound to sink. Which makes credit repair a must for some people. If you’re one of the unlucky individuals that are dealing with a sinking credit score, you’re not alone. Here are a couple situations that might have destroyed your credit score, along with millions of other Americans. credit repair with calculator

Foreclosure is one of the most prominent situations that significantly lower credit scores. Over two million homeowners have dealt with this unfortunate event since 2009. Also, you may have been one of the millions of individuals that claimed bankruptcy since 2009. There are also many other small situations many of us deal with, like delayed payment of a bill, that negatively impact your credit score. But, with the recession of 2007 to 2009 behind us, as a country, we are better equipped to repair our credit scores than we were ten years ago. If you’re looking to rebuild your credit score, then read on to learn more.

Monitor Your Credit Score

First off, the most important thing that you can do is be aware. Get a free copy of your credit score and analyze it. If you find any inaccuracies in your report, resolves those issues ASAP with the three most prominent credit monitoring bureaus: TransUnion, Experian, and Equifax. Then, once everything looks accurate, monitor it as much as possible.

Make Payments on Time

Over a third of your credit score is measured by how often you make payments on time. Even if you’ve had a spotty past with your payments, focus on making sure you get every future payment out on time. Each timely payment will positively affect your credit score.

Get Current on Delinquencies  erase bad credit

A third of your credit score surround your debt to credit ratio, so it’s incredibly important that you get current on those delinquent accounts.

Avoid Closing Accounts

When you close accounts, you damage your credit in two different ways. 15% of your credit is based on how old your credit history is, so the older your account is the more credit history they have to take from. When you close an account, you wipe out all the credit history the account is linked to.

Also with closing revolving accounts, it makes your debt to credit ratio smaller. Make sure that all your accounts, even those with minimal balances, are still getting used. If they’re not, your credit company might close it before you do.

Diversify Your Credit

Be sure to have a couple credit lines through your accounts. Relying on one credit line (i.e. credit cards) will do you more harm than good.

Always Pay Down Your Debt

Paying more than the minimum payment on your debt will inevitably help your debt to credit ratio. The less debt you have compared to your credit, the higher your credit score will be.

Think Before You Take On New Debt

Taking on too much new debt too quickly will negatively affect your credit score. For example, taking on three new credit cards in three months is probably not a good idea. excellent credit score

Being aware of your credit score and monitoring it is the first step to achieving your goals. By doing things such as paying down your debt, making payments on time, and getting current on your delinquencies will help your credit score in no time. Following these steps will help start building credit again for you & your future!

If you are looking for other tips to repair your credit, you may try this link with Top 20 Credit Repair Blogs, https://blog.feedspot.com/credit_repair_blogs/

Personal Loans are typically closed ended loans with a specific first payment date and maturity date.  If all payments are made on time, then the term will end as scheduled and everyone is happy.  As an attempt to keep making payments on time,  many people with Personal Loans opt to have payments debited automatically from their bank accounts on payment due dates.  To the borrowers’ benefit, having the payments debited automatically makes it less likely that an account will accrue late fees for non-payment within that due date grace period.  However, what happens after a payment is dishonored by the bank but I keep making all future payments.  It’s just one little missed payment.  How bad can the consequences be, right? debt on chalk board

What if I don’t make up the one missed payment but pay all future payments?

When a debit or payment is returned by the bank, most vendors will charge a Non-Sufficient Funds fee.  This is in addition to what the bank will charge the owner of the account.  So think to yourself two NSF fees.  As future regular payments hit the account and clear, that NSF fee will be paid first and late fees will begin to accrue with every payment.  The NSF fee and late fees will be paid first from the regular payments and whatever is left will be applied to interest and then principal. I know what you’re thinking, “so, I get charged one NSF fee and one late fee.”  To that, I have to answer “brace yourself.”  As time goes on, if future payments clear, by the end of the term, that single payment that came back NSF will have caused extra interest and many late fees to accrue with EACH payment.  Imagine if you missed the 10th payment on a 24 month loan schedule.  That translates into additional late fees for each of the future 14 payments.  At the end of the term, there will also be a principal balance due.  Remember, as mentioned above, that fees get paid first and what’s left over is used to pay down the principal.  This means the loan will not be paid in full as scheduled.  Also, keep in mind that the missed Insufficient funds check articlepayment may affect your credit score as it may show the account as being constantly one payment behind.

 

I got it!  What if I make up the missed payment but not the NSF or late fees?

Even with an extra full payment made to make up the one missed installment, if you do not also pay the extra NSF Fee and late fees, this will still cause extra interest to accrue by the end of the term.  But, the good news is that no more late fees should accrue.  Also, the credit report will show that the account is current on payments.  But, towards the end of the term, not only will there be a principal balance, there will also be extra interest accrued.  The loan will not be paid in full as scheduled.

Alright, bottom line it for me.

The best way to deal with a missed payment is to immediately make up the payment with the NSF fee before a late fee accrues.  This will save a significant amount of money towards the end.  If that’s not possible, try appealing to the lender’s need to keep a good customer and ask to have some of those fees reduced or waived.  This will work particularly if you have a good payment history.  After all, you have other choices.  If all you did was miss one payment, there will be other lenders who may refinance your loan.  Another option is to save up a little bit of cash.  As soon as there is enough to make up the missed payment, pay it.  At least that will reduce the damage at little, even if few late fees have accrued.  However, the longer you let an account stay behind, the more disappointed and surprised you’ll be towards the end of the loan. credit score pic

As a side note, if you are interested in tips on how to repair your credit check out this link with top 20 credit repair blogs, https://blog.feedspot.com/credit_repair_blogs/

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