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Your Credit Score May Go Up July 1 – Here’s Why You May Have More to Celebrate Soon

Rachel — Thu, 29 Jun 2017 07:02:44 +0000

Your Credit Score May Go Up July 1 – Here’s Why You May Have More to Celebrate Soon Rachel Thu, 06/29/2017 - 03:02

Some credit items will be purged Saturday
Image Source: StockSnap.io

On Saturday, July 1, many Americans will get a pre-Independence Day reason to celebrate when their credit score goes up without them changing a thing they’re doing. Both FICO and VantageScore have estimated that up to 20 million consumers will get a boost this weekend from a radical shift in the way some items are reported to the credit bureaus.

Do You Have a Civil Judgment on Your Credit Report?

As of Saturday, if you have a civil judgment on your credit report, it should be stripped off which could improve your credit score. A civil judgment is a court order demanding you pay money as a result of a lawsuit. This can come if you’re sued by a creditor over an unpaid debt. For instance, a credit card issuer might take you to court for an unpaid balance.

The reason many civil judgments are issued is that the consumer doesn’t show up to court. For many, they’re scared to go to court or don’t realize what will happen if they don’t appear. Even if you don’t have the money to pay the debt, showing up to court and telling that to the judge might help you out. If you didn’t show, the creditor got a default judgment.

The rationale in stripping off civil judgments is because they’re often erroneously reported to a creditor’s report. In some cases, the wrong person is sued, or there’s an error in the lawsuit itself. The debt action might have been time barred, the consumer might not have been notified, or the litigator didn’t have the right to file the suit. These will be removed across the board.

Do You Owe a Tax Lien? You Might Get Relief

More than 60% of tax liens are estimated to be removed from consumer credit reports as of Saturday, July 1. A tax lien is an encumbrance on an asset due to a tax debt that prevents you from selling the property without settling the tax obligation. This can come from property taxes, federal income tax, or North Carolina state income tax.

Not all tax liens will be removed as a part of this effort by the credit bureaus to clean up inaccurate reporting that has unfairly damaged some consumers’ credit scores. If your credit score is lower than it should be, you’ve likely paid more for some credit score-sensitive services like utilities or insurance. A lower score will push interest rates higher on credit cards and loans or trigger denials.

Consumers that have been fighting to get errors corrected related to these types of items should check their credit report after Saturday to see if their tax liens or civil judgments are gone from their report. This can be a big morale boost if you’ve been stressed about these negative items and their impact on your credit score – and your finances.

How Much Will Your Credit Score Improve?

The prediction of credit score improvement varies by which credit score calculating entity made the prediction. Representatives from VantageScore estimated that consumers with these items on their credit report could expect a 10-point boost, on average, after the Saturday, July 1 purge. FICO estimates are better with an estimated boost of up to 20-points.

The higher your credit score, the less likely that you have negative items like this lingering on your credit report, so the less likely this shift in reporting will impact your score. However, for those with poor credit scores, the odds of a lift are much higher with those with scores less than 500 most likely to benefit.

More credit report changes are coming soon as well. Credit bureaus will require enhanced levels of debtor identification before they allow debt collectors to record collection accounts because of the high rate of errors. Medical debt collections less than six months old will stop reporting. Plus, medical collection accounts that were paid by insurance will be removed.

These are all steps in the right direction. If you’re rebuilding your credit score because you’re coming out of bankruptcy, Credit Score Keys can help. Contact us today to find out more. Call 919-495-2365 for a free consultation today.

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7 Shocking Things That Won’t Affect Your FICO Credit Score

Rachel — Thu, 10 Nov 2016 08:48:47 +0000

7 Shocking Things That Won’t Affect Your FICO Credit Score Rachel Thu, 11/10/2016 - 03:48

Shocking things that don't touch your credit score.
Image Source: StockSnap.io

Some life events seem major to you, but, because the credit bureaus couldn’t care less about them, they won’t affect your credit score. Some of these surprising things are positive and some are negative in terms of your quality of life, financial status, and well-being, yet they don’t actually raise or lower your credit score. Take a look at these seven things you won't have to worry about affecting your credit score.

#1 Paying Your Bills On Time

We often mention that paying your bills on time is the first step towards re-establishing your credit. This is the foundation for financial responsibility, but a lot of the bills you pay won’t affect your FICO score whether you pay them on-time or late. Typically, utilities, rent, and medical bills can all be paid late without affecting your credit score. Paying them on time also won’t help your score.

#2 Earning A High Income

Earning a good wage makes it easier to pay your bills on time and keep your credit card balances low. However, simply earning a high salary won’t boost your score. In fact, some high earners have lower credit scores than middle or low-income earners because they overspend, carry too-large balances on their credit scores, or aren’t financially responsible despite their high wages.

#3 Criminal Activity, Arrest, Or Even Jail

This might surprise you, but being arrested for a crime won’t affect your credit—no matter the crime. Any criminal record is not reflected on your credit report and therefore not factored into your score. Even if you go to jail, your credit can remain in tip-top shape so long as your bills get paid while you’re in the pokey.

#4 Paying Or Filing Your Income Taxes Late

Income taxes can be troublesome for people who have their withholdings set too low or who might be self-employed and don’t set aside enough income to pay their quarterly or annual taxes. However, filing your incomes taxes late, paying late, or filing taxes when you’re unable to pay the amount due won’t immediately impact your credit score. If it goes into collections or a lien, that’s another matter.

#5 Checking Your Own Credit

Most people know that when they apply for a loan, credit card, or other financing, the potential lender or creditor runs a credit check. This is called an inquiry or a “hard pull.” These reflect on your credit report, and having too many hard pulls can drop your credit score for a while. Eventually, these inquiries lose their impact on your score and drop off your report. But checking your own score doesn’t hurt.

#6 Where You Get Your Income

If you lose your job or have financial strife and wind up on unemployment or taking some form of public assistance, that won’t affect your credit score so long as you pay the bills that report to the three credit bureaus. For those that rely on alimony and child support to get by rather than income from a job, that doesn’t matter either. Pay your debts, don’t overextend, and you’ll be fine.

#7 Getting Married Or Divorced

These are major life events that don’t impact your credit. Even if you marry someone with very good or very bad credit, your score won’t rise or fall. Marriage only impacts you if you finance something together. Divorce itself won’t impact your score, but it could mess with your ability to service debt. Marriage or divorce seem like big deals to you but will not directly affect your credit score.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys for a free consultation at our Raleigh, North Carolina offices. Call 919-495-2365 now for more information.

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How to Read Your Credit Report— 5 Top Things to Watch For and Get Fixed ASAP

Rachel — Thu, 01 Sep 2016 07:05:50 +0000

How to Read Your Credit Report— 5 Top Things to Watch For and Get Fixed ASAP Rachel Thu, 09/01/2016 - 03:05

Understanding your credit report is critical
Image Source - Flickr User Tony Webster

Most people are concerned with their credit score and focus strictly on the three-digit number, but there is far more to your credit profile than just the math that drives that number. It’s also important not to confuse your credit report with your credit score. The score is based on information on your report, so you have to start with your report to improve your credit score. Here’s what to look for and fix.

#1 Public Records

One of the most important sections of your credit report is the public records section. This is where you will see if you have been sued, if there are any judgments against you, or any liens. This is important information. Filing bankruptcy may help wipe out some of these issues.
It’s important to know what public records exist on you related to your debts so that you can approach them practically and ensure you don’t end up with liens on your home or other assets. If you do find public records, these should be addressed as soon as you can.

#2 Adverse Accounts

This section contains accounts that are in collection or severely delinquent. These are items that, if they are not addressed via debt settlement or bankruptcy, could lead to public records and a lien on your home or bank account. These are seriously overdue debts.
If the debts are unsecured debts like credit cards and medical bills, they can be wiped out in bankruptcy. This is also where debt collectors will add an item onto your credit report if they have been retained to collect a debt, meaning you can have two items on your report for one debt.

#3 Unknown Accounts

Below the adverse accounts section is a list of your other accounts that are in good standing. It’s good to check this to make sure that the balances due agree with your own record keeping and that your completed payments are on display, but this is also an area to check for fraud.
Look for accounts that are unknown to you—this can indicate that someone has opened an unauthorized account in your name due to identity theft. It will start in this section and then move into adverse accounts once the fraudster runs up debt and fails to pay.

#4 Unknown Inquiries

This section is where identity theft may first be detected. Someone trying to use your identity to get credit will trigger an inquiry when they apply for the credit. If you see any inquiries you don’t recognize, you should follow up on them.
Pre-approved offers and other soft credit checks should not trigger an inquiry. The only inquiries you should see is for credit you applied for—nothing else. You can also freeze your credit report if you see illegitimate inquiries to ensure no more credit accounts are opened.

#5 Inaccurate information

Other info on your credit report includes your name, social security number, address, employment information, other names used, and all your credit accounts. You should go through all of this information to look for inconsistency and inaccuracies.
If you find anything incorrect, you can request that it be fixed. However, you may have to provide documentation, such as proof of an address change, to substantiate what you’re trying to get changed. Once your report is clear and correct, you can lock it, then only unlock it when you seek new credit.

Always pull all three reports and check them regularly

One thing to know is that just pulling one of the three full credit bureau reports is not enough. Often, each report will contain different information. Request all three, go through them thoroughly, make all the corrections that need to be made, and then go into maintenance mode.
That means you should check all three reports at least twice a year, and you may want to sign up for a monitoring service so that anytime your credit reports change, you’ll be notified. This can alert you early on to an error or identity theft so you can protect your credit.

To find out more about improving your credit score after bankruptcy, contact Credit Score Keys. We help North Carolina bankruptcy filers rebuild their credit and get back on the road to financial success. Call 919-495-2365 to get started today.

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Changes to FICO Credit Score Calculation Can Benefit Those Dealing with Medical Debt

Rachel — Thu, 18 Aug 2016 07:04:26 +0000

Changes to FICO Credit Score Calculation Can Benefit Those Dealing with Medical Debt Rachel Thu, 08/18/2016 - 03:04

FICO score changes may impact the effect of your medical debt on your credit
Image Source: Flickr CC User Jay Gorman

The purpose of a credit score is to help potential creditors and lenders assess whether you’re a good risk for a loan, credit card, or other debt. Your credit score should reflect your financial behavior. But when it comes to medical bills, your FICO score sometimes puts you in a worse light than you deserve. Fortunately, new credit score models may change some aspects of your financial track record – including medical debt.

New Scores Will Reduce the Impact of Medical Bills

Before the new FICO scoring models were developed, all bills weighed similarly on your credit report. Leaving a credit card bill unpaid could affect you in the same way that an unpaid doctor bill would – but medical debt is often not an accurate assessment of your financial behavior. Even those with health insurance (a greater percentage now thanks to the Affordable Care Act) can still be stuck with unmanageable out-of-pocket costs through no fault of their own. In fact, roughly 20% of US workers (those out of school and pre-retirement) have medical debt they cannot afford to pay.
And some cases, medical bills may linger because the consumer is working with their physician or insurance company to get a billing issue corrected for an expense that insurance should have covered. In other cases, the medical provider might not send their statement to the patient in a timely manner – or the insurer could mishandle the bill. Under the old FICO scoring model, all this would have negatively impacted your credit score.

How FICO 9 Calculations Change the Weight of Medical Bills

The FICO 9 score lessens the impact of medical debts in collection on your credit score. You may not realize this, but when one of your debts goes bad and your creditor turns it over for debt collection, this event triggers a second entry on your credit score. You may end up with two entries for a single debt – one from the creditor and one from the debt collection agency. In some cases, that means the effect on your credit score can be doubled.
But with FICO 9, medical debt collections will carry lesser weight. If medical bills are your only negative items, you may see a credit score increase of 25 points or more from nothing more than this change in the calculation. However, it’s important to know that not every creditor or lender will use this new scoring model. The FICO score is a subscription service, and creditors can subscribe to whichever version of the score they prefer.

Who Will Be Affected by the New Scoring Model?

Veterans, in particular, may be harder hit by medical bills if they rely on the VA for their medical care. If the VA is slow about processing a service payment for medical treatment for a veteran, the veteran may end up with a collections agency pursuing them for debts the VA should have paid. That doesn’t seem fair, but it’s the harsh reality. But with this new scoring model, the effect of the VA’s late payment habits would not affect a veteran’s credit score as much.
Do you have medical bills you can’t pay? If you’re overwhelmed with doctors' bills and can’t dig your way out, Chapter 7 bankruptcy offers the chance to have all your medical bills completely discharged within weeks of filing. This can be life changing. Then, after you file bankruptcy and clear your financial slate, you can get a fresh start by working to improve your credit score.

To find out more about rebuilding credit after bankruptcy, contact Credit Score Keys today. We help North Carolina consumers bounce back after bankruptcy and get the credit they deserve. Call 919-495-2365 today for a free consultation about improving your credit score after bankruptcy.

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5 Tips to Help Seniors Targeted by Debt Collectors

master — Wed, 03 Dec 2014 18:24:32 +0000

5 Tips to Help Seniors Targeted by Debt Collectors master Wed, 12/03/2014 - 13:24

The watchdog agency, Consumer Financial Protection Bureau (CFPB), reports that shady or illegal debt collection tactics are their top complaint category and one of the groups most affected by bad debt collecting behavior is seniors. Now, more than ever, seniors are carrying increasing debt loads into retirement and these can be tough to juggle on a fixed income. If you're an older American, are struggling to pay your bills and are being harassed by debt collectors, here's what you need to know to protect yourself.

#1 Demand proof of the debt
If you get a phone call requesting payment of a debt that you don't recognize, it's your right to demand that the collector provide proof of the debt. Often, you may get letters saying a debt is owed and an amount but not the original creditor's name. You should not cave in and pay what the caller or letter-sender is demanding. Ask for the name and address of who they think you owe. If the debt collector refuses to provide this information, ask for their company name, address and phone number. If they refuse to provide this, ask them to not call you again and end the call. Write down whatever you remember from the call and if they continue to harass you, report them to the North Carolina Department of Justice (or the DOJ wherever you live).

#2 Push back if the amount or debt is not legitimate
If you recognize the creditor name, but the amount is off or the debt is not yours or for an account you previously paid in full, you need to push back. Contact the creditor directly and ask for a statement of account showing all your charges, payments and balances. The debt collector may not have this on hand or won't provide it, so contacting the original creditor makes sense. If the debt is not yours, ask the creditor to show you proof that you signed for this debt via a signed contract or agreements. If you previously paid off the account, you may need to get bank statements to substantiate your claim. The bottom line is you should not pay a debt you don't rightly owe.

#3 Don't take any abuse or harassment
If you are contacted by a debt collector that's abusive, curses at you or makes threats of jail or other illegal threats, you don't have to put up with it. First, tell them to stop the behavior. If they don't, tell them to stop calling. If they keep calling, tell them you're going to report them. Send the debt collection agency a letter, if you have their address, write and ask them to stop contacting you via phone and to only communicate by letter. If the harassing calls don't stop, report the agency to both the NC DOJ (or the DOJ in your state) and the CFPB. You don't have to put up with the abuse and should not. It may be scary to confront them, but you can end it.

#4 Know your legal rights
There are some debts you don't have to pay. For instance, if your spouse had a debt that you are not a co-debtor on and they passed away, you usually will not have to pay it. If you're living on Social Security or veteran's benefits, these are usually exempt from collections unless you owe Federal taxes or student loans. Also, if a debt is over a certain age, the creditor may have no legal teeth to go after you. For instance, if you have a credit card you haven't made a payment on in years, the statute of limitations may have expired so the creditor can't take you to court and sue for a judgment to try and get a lien on an asset.

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