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Top Ten Questions and Answers you need to know about Credit…

1. Q: What are the best/worst credit scores?

        A: The best score is an 850, the worst a 300. Higher scores indicate lower credit risk. Anything below 680 makes it difficult to obtain higher LTV (Loan to Value) mortgages.

2. Q: When does a BK (Bankruptcy) not affect my credit score?

A: Bankruptcies will stay on your credit report for 7-10 years, however, usually after two years of maintaining new payments and credit accounts, scores will begin to improve.

3. Q: What is considered a late payment?

A: A late payment is any delinquent payment made on a trade line 30 days from the due date. Keep in mind late payments hurt your scores and a 60 day late made just a month ago will affect a score more than a 90 day late from five years ago.

4. Q: Would closing my accounts improve my score?

A: No. Absolutely not. Do not get this confused. Having too many OPEN accounts can hurt your score. But once you have opened the account you have done the damage. You can’t repair it by shutting down the account.

5. Q: What information is in my credit report?

A: A credit report is the equivalent of your financial report card. It details credit history, credit types, amount of times you use these credit types, amount of time your accounts have been opened, and if you pay your bills on time. Also employment information, your list of creditors, and any BK’s, judgments, or liens.

6. Q: Should I pay all these collections?

A: That depends on the last activity date of the collection. Recent, say within the last 24 months, collections demand the most consideration for payoff. Many times you can negotiate a payoff amount with the collection company – but – get the payoff in writing! Keep in mind, that derogatory collection accounts fall off your credit report in 7 years from the last activity date. Contacting the collector may just renew your activity date and the clock starts all over again.

7. Q: I had two people pull my credit over the last week. Why were their scores different?

A: There are a number of factors that go into your credit report. Each credit bureau may, or may not, receive the same information at the same time. New information can influence your report at any time. Just remember, your credit report is a “snapshot” in time with inevitable updates and changes.

8. Q: How can I establish credit?

A: Credit is based upon a person’s ability to pay an obligation. Borrow money for almost any reason and you are on the road to establishing credit. However, to be certain it will help with your credit report, ask the lender if they report to the bureaus. This is important since some lenders do not report, but most do. Typical accounts that report are home mortgages, auto and other installment loans and revolving accounts, like credit cards. The real key here is to make sure the credit you establish is good, so make payments on time!

9. Q: I had a bankruptcy and am having a hard time getting credit. Any ideas?

A: You may have to start slow. Inquire at your bank or check with credit card companies for high interest or prepaid credit. Look into department stores for low limit accounts. You may try to piggyback on an account with a relative. Contact a credit repair company for more specific recommendations.

10. Q: Why is the credit score so important? I have good income…

A: Good income is an important factor in your ability to pay, but many people with good income tend to spend more, or let’s just say, to their limit or beyond. The basics of your credit score show your ability, and even more importantly, the responsibility you place on your current and past obligations. Pay on time, all the time, and you won’t have to worry about your credit score.