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July 23, 2010

How Long Do Late Payments Stay on My Credit Report?

Filed under: Finance — Tags: 12 Months, Car Loans, Car Payments, Consumers, Couple Of Days, Credit Card Company, Credit Cards, Credit Rating, Credit Report, Creditor, Interest Rate, Late Payments, Personal Loans, Score, Secured Loans — admin @ 9:18 pm

Tony Banks asked:

Late payments do affect your credit rating but what most consumers don’t know is that it also depends on how late your payment is made to the creditor. To start with, late payments that are made to creditors but are no later than 30 days late are not reported to the credit bureaus. So for instance, you have a credit card payment that is due on the 1st of January and you are not able to make the payment until the 27th of January.

This is considered late with the credit card company but will not show up on your credit report as a late payment. It will not show on your credit report until you are more than 30days late and it will show as a “1-time 30day late payment”.

These types of late payments usually affect your score and can have a lasting effect for about 12 months. The same goes with other types of accounts such as car payments, mortgage payments, personal loans as well as secured loans.

Even if the payment is a couple of days late, the best thing is to try and make sure it does not go beyond the 30-day point. It is also important to note that these late payments can cause your interest rate to rise on your credit cards.

This may be the case even if you are only 1 day late as opposed to 20 days late. This will vary depending on the credit card company you are dealing with. You want to check with the your creditor to find out their exact policy.

Joan

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April 23, 2010

The Credit Score Rating Scale Explained

Filed under: Finance — Tags: Bad Credit, Consumers, Credit Cards, Credit Reporting Agency, Credit Scores, Denial, Financial History, High Score, Lending Institutions, Loans, Measurement, Mortgages, Predi, Score Changes, Score Factors — admin @ 4:52 am

JP Burkhart asked:

Many people are unaware of what a credit score actually means. In fact, a survey of 1,000 Americans taken in September 2004 demonstrated that only one third of people knew that a credit score was a measurement of how likely a person is to pay off a loan. Having a good credit score is necessary when it comes to applying for loans for cars, mortgages, and credit cards. Furthermore, having a bad credit score can lead to denial of basics such as a phone line in your home. Therefore, it is important for consumers to understand how a credit scores affects them and how it is determined in the first place.

Calculating the Credit Score

In essence, a credit score tracks how well a person incurs debt and how good that person is at paying the bills on time. Businesses, including lending institutions, look for a high score with potential customers because the higher a person’s credit score, the more likely that person is to be responsible with finances and the more that person can be trusted to pay back debts.

A credit score may vary from one credit-reporting agency to the next since they do not all necessarily receive the same information from businesses. Some businesses report to all three of the major reporting agencies, while others may only report to one or two. In addition, the statistical pool used by each agency may vary slightly, leading to a different credit score. All of the agencies, however, utilize the same software when it comes to determining credit scores. Fair Isaac and Company (FICO) develops this software and, therefore, the credit score is often referred to as the FICO score.

Score Factors

A person’s credit score is not static. It changes all the time. Every time a bill is paid on time or late it is reflected on the credit score. In addition, each time a person takes out a new loan or applies for a new credit card, the credit score changes. This is because the credit score is based on the person’s financial history and attempts to make a prediction at how responsible the person will be in the future.

The final score is highly objective and based on statistical data. Points are gained based on specific factors such as late payments, payment history, outstanding debt, and the length of time an account has been open. All of this information is compared to the statistics of people with similar profiles to determine a final credit score.

Rick

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February 15, 2010

How To Analyze Your Debt and Credit Reports

Filed under: Finance — Tags: Auto Loans, Banks, Consumers, Credit Card Debt, Credit Loans, Credit Reporting Agencies, Credit Reports, Credit Score, Credit Unions, Family Member, Lenders, Mortgage Debt, Personal Debts, Private Agreement, Relationship — admin @ 5:16 pm

Peter Kenny asked:

Most consumers realize that there is a relationship between their debt and their credit reports. The truth is there are several relationships between a consumer’s debt and his or her credit reports and ultimately the credit score that is calculated using the credit reports. Knowing more about how these issues relate to each other can be an important part in keeping credit scores high.

First, it should be understood that not all debt has to be recorded on credit reports. If, for instance, you borrowed money from a family member or friend and made a private agreement to pay it back, that debt is more than likely not on your report. The same may be true if you pay a merchant on what is commonly known as a tab. Many consumers simply assume that the credit reporting agencies know everything and that is not exactly true.

Consumers should understand, however, that the credit reporting agencies do know a lot about your current and past credit. Some might argue that they know too much. A legitimate argument could be made on that front.

In general, a credit report will contain information on the debt that you currently owe. This will include your credit card debt, home mortgage debt, personal debts that were taken out through banks and credit unions, and auto loans. It will also include a summary of how much you earn. The amount of debt that you currently have when compared to the amount of income that you currently have is used to determine your debt-to-income ratio. This is a number that lenders often use when they are deciding whether or not to extend you credit.

Each lender will determine what the cut off number is for debt-to-income which makes it impossible for a consumer to know exactly what the upper level is for any particular loan. You can ask a particular lender what their cut off is but do not be surprised if they refuse to tell you. For some reason, lenders like to keep this number a secret.

Another reason you may find it difficult getting this number is that this debt-to-income number is just one of many factors that lenders use when determining creditworthiness of a consumer. That leads to this.

Credit reports will also contain information on how well and timely you have paid your bills. As important to some lenders, and more important to other lenders, is how well you pay your bills. Your credit reports will have this information, including information on late payments and any actions that lenders had to take in order to get their money. It almost goes without saying that the later a bill was paid the more negative it looks to future lenders. This is also used when computing overall credit scores. A couple of late payments in the past may not have much effect on your score, but several late payments will certain raise eyebrows.

On a more positive note, debt that you have paid off in the past will also be a part of the credit report. One of the best ways to know exactly what is on your reports is to order a copy from each of the major reporting agencies. You can do this online.

Heather

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