People already know that bankruptcies, foreclosures, repossessions, and collections will hurt credit. And it’s no big secret that late payments are one of the causes of bad credit.
But I bet you don’t know about some of the things that hurt credit! Today’s blog is about the the dirty little secret that will hurt your credit score.
HURT CREDIT SECRET #1: Credit card companies often omit or inaccurately report credit card limits, and this causes your score to drop. About half of all consumers are missing at least one credit limit on their credit reports. And in other instances, credit card companies intentionally report a lower limit than you have.
Why does this hurt credit?
The credit-scoring systems place a lot of weight on something called a utilization rate. The utilization rate represents your credit card balance as a percentage of your limit. If your limit is $1000 and your balance is $300, you have a 30 percent utilization rate. If your balance increases to $500, your utilization rate would increase to 50 percent. In other words, you would be utilizing 50 percent of your available limit.
The credit-scoring formula responds more favorably to people who have a utilization rate that is no higher than 30 percent.
Now let’s imagine that you have a $300 balance on a credit card with a limit of $1000. Your utilization rate is 30 percent. Good news for your credit score, right?
Not so fast. If the credit card company is only reporting a $500 limit, you will appear to be carrying a 60 percent utilization rate. And this hurts your credit score.
There are a lot of theories as to why the credit card companies do this. One is that credit card companies buy lists of borrowers whose limits are, for example, more than $10,000. The companies then send credit card offers with enticing interest rates to the people on these lists. Their goal is to encourage borrowers to switch cards.
Your credit card company does not want your name on that list. They want to make sure that you remain a loyal customer. In an effort to keep you as a client, some experts say credit card companies report a lower credit limit than you actually have, or they do not report your limit at all.
This makes you less appealing to other credit card companies.
This might be good news for their client list, but it causes hurt credit.
Are you a victim of this scam? If so, take the following steps:
1. Pull your credit report from www.720ficoscore.com.
2. If the credit card companies are inaccurately reporting any credit limit of yours, immediately begin the process of correcting this mistake.
Author: Philip Tirone
Chimney Sweep Scams Sweeping The Country
This year like many others I’ve found an early winter and cold autumn nights. In an attempt to boycott the cold weather I refused to turn the heat on in my house until absolutely necessary. I was determined to make it through the month of October without doing so, yet, on the 30th it became so cold here in North Carolina that I cracked.
One alternative I wished that I had at my frost bitten fingertips was a fireplace. A real fireplace (not the fake, smelly, gas powered crap I have).
It’s that time of year when those lucky enough to posses such amazing fireplaces are getting them ready for the cold winter nights. Unpacking fleece blankets, chopping or buying fire wood, cleaning chimneys: the usual winter preparations.
However, this winter the Better Business Bureau (BBB) is warning consumers to be extra careful when choosing a chimney cleaner as they have received more than 380 complaints this year alone already compared to the 342 complaints received in all of 2010.
The BBB states in a recent press release about this matter:
In some cases, consumers have reported calls stating the town fire department recommends the resident’s chimney be cleaned. The calls go on to recommend a particular chimney sweep and endorse their services on behalf of the fire department. Though town fire departments do recommend having chimneys cleaned on an annual basis, they do not endorse any particular company or inspect chimneys. Many scam artists are targeting the elderly, making vague, unclear phone calls claiming they have done business in the past and it is time for their annual sweep.
Scam artists are also advertising at a much lower price than legitimate businesses. Typically, a professional chimney sweep will charge between $150 and $200 for the cleaning of one chimney shaft, whereas scam artists are charging as little as $50. BBB advises that if a price sounds too good to be true, it usually is.
Many scam artists use a low price tactic to get in your door, at which point they recommend additional work be done immediately, bullying the consumer into a much more expensive bill. If the price you are quoted is significantly lower than that of other businesses, it should be viewed as a red flag.
BBB suggests consumers do their homework before hiring a chimney sweep and inviting them into the home. Additionally, check with your local fire department and with the Chimney Safety Institute of America (csia.org).
BBB recommends using these helpful tips when hiring a chimney sweep:
Check out a chimney sweeping business at bbb.org. Always check with BBB for a trusted chimney sweeping business in your area. Are they an Accredited Business? Do they have any outstanding complaints?
Find out how long they have been in business. How long have they operated in your area? Find out if they offer current references, or if you know anyone who has used their services in the past.
Ask if they have a valid business liability insurance policy. In the event of an accident, this policy keeps your home and belongings safe.
Find out if any employees are certified through CSIA. Though this is not law, it is recommended by the fire department, and speaks to the qualifications of the individual or business you hire. CSIA is a national nonprofit agency with a certification program for chimney sweeps and certification is required of members of the National Chimney Sweeping Guild
Author: This article was contributed by GetOutOfDebt.org, a site that helps people find good credit card relief solutions to deal with tough money troubles.
Source: Chimney Sweep Scams Sweeping The Country
The Debt-to-Limit Scam, by 720 Credit Score
Have I told you how much I LOVE getting letters and emails from people who have been through my program?
I received some feedback a couple of weeks ago from a student who has called into my one-on-one Q&A session. She’d unexpectedly had her credit card limits reduced, which affected her debt-to-limit ratio, which in turn caused her how to save money on car repairs score to drop.
Credit card companies do this regularly—they promise you a big limit, and then a few years later, they lower your limit out of the blue. This hurts your credit score, which is in part based on the debt you carry as a percentage of a limit.
For instance, let’s say you have a $10,000 limit and a $1,500 balance. Your balance would be 15 percent of your limit, which would be looked upon favorably by the credit-scoring bureaus.
But if the credit card companies went and dropped your limit to $2,000, your balance of $1,500 would be 75 percent of your limit, which would be looked upon negatively by the credit-scoring bureaus.
It’s a scam!
Well, this happened to one of my clients, and I told her how to fight back. Then I got this letter (which I’m editing slightly so that you have the complete context):
“I had one card with a limit that had been lowered, and I decided to try for the second time to get it raised because they refused my request the first time. I called, and after spending 1.5 hours on the phone with five or so people (who by the way, got a little more patronizing with each one), they still would not do it.
“But … during the conversation, one of them mentioned something about calling the “Portfolio Risk Department.” After just five minutes on the phone with ONE person in the Portfolio Risk Department, they restored my full credit limit! Done!
“I never would have known to even try this if not for your fabulous program and awesome encouragement! Thank you so much once again!”
At times like this, I love my job more than usual. I’ve said it before: Your credit score is your financial reputation, and I’m tickled pink to help people fight back when their reputations are being tarnished!
With that in mind, let me know if you have any questions about rebuilding your score. From time-to-time, I answer them in my weekly email/blog. Leave a comment below, and I’ll try to answer it in the coming months.
Freedom Ratio Call – Follow up, by 720 Credit Score
Please listen to this call I recorded with the Freedom Ratio creator, Dave Fenton.
Give me your feedback below!
This guy is stuck …
Here is his problem..
- He has over $41,000 in credit card debt.
- He has other unsecured loans totaling $12,000.
- Although he hasn’t been late on his bills yet, he can’t seem to get caught up and doesn’t think he will ever dig himself out of this debt.
- When he puts his debt into a debt reduction calculator, it says that it will take him 21.6 years to pay everything off at his current pace.
(Can you say …. STUCK?)
He emailed me and asked for my advice… I explained to him his three options:
Option #1 – Continue to pay the bills for 21.6 years.
Option #2 – File for Bankruptcy
Option #3 – Negotiate his debt with his creditors.
Let’s review…:
Option #1 – Continue to pay, which needs no explanation. This client did call the credit card company and got his interest rates lowered, however, by following their payment plan; he will be paying for 21.6 years.
That is like being held hostage by your credit card company for 21.6 years. I say “held hostage” because I believe that.
Yes, he took out the debt, but to pay on $41,000 in credit card debt for 21.6 years… is a crazy thought and in my opinion, other options need to be looked at.
Option #2 –Bankruptcy. If he qualifies for a Chapter 7 bankruptcy, he will have no more debt, however, the bankruptcy will be on his credit report for 10 years.
He can easily repair his credit (to 720+) after the bankruptcy, which can be done in 1 ½ to 2 years.
There are two downsides to this option;
- The bankruptcy on his credit report. That will impact his ability to borrow for the next 2-3 years.
- Does he qualify for a Chapter 7 Bankruptcy? Believe it or not, many people cannot qualify for a bankruptcy because their income is too high.
If this is the case, he will have to file a Chapter 13 Bankruptcy. That means he will have to repay all his debt plus have a bankruptcy on his credit report.
Let’s move on to Option #3.
Option #3 – Renegotiate his credit card debt with the credit card company.
Here is what I know for sure:
- Your credit card company will not negotiate with you unless you stop paying your bills. They may tell you differently, but this is what I know to be true.
- Your credit card company will lie to you so you continue to pay. I’m sure this is not their “policy,” but when you combine eager employees looking to get their bonus with vulnerable debtor – this happens.
- Once delinquent, they will put your phone number into an auto dialing systems. This means you will get up to 8 calls per day trying to collect payment. … Ouch!
- If you understand how to negotiate with your credit card company (and I don’t), I hear from numerous clients that they will offer you a settlement somewhere between 15-40%. Meaning, if this gentleman did it right, he would pay off his credit card debt for between $7,950 – $21,200. You read that correctly, he would pay off $53,000 in debt for between $7,950 and $21,200.
- After you pay off your debt, our clients are getting back to a 720+ credit score in approximately 18-24 months.
The biggest problem with Option #3, is having the stomach to handle the negotiations… because it is very stressful and daunting. And, if you don’t know the proper way to negotiate, you will pay more than you should.
If this sounds like your situation, listen up.
I’m going to put together free information designed for those that have more than $20,000 in debt and would like to know and understand all their options.
If you want to be informed about this information, give me your name and email below!
Once I do the interviews or webinars, I’ll email them to you.
I know this is a long email… thanks for reading!
If you have debt over $20,000 and this post seems to be written for you, submit your name and email below. I’ll provide you additional free information that I hope will help you choose the right option for yourself.
Your Freedom Ratio, by 720 Credit Score
I consider myself a pretty financially savvy guy, but my CPA just introduced me to something that opened my eyes…
Dave observed that I will not truly be free until I no longer have to work to cover my overhead. If my passive income doesn’t cover my monthly expenses, I’m controlled by my need to make money.
I’ve heard this concept before, but he really opened my eyes in a different way.
What if I invested my money in such a way that it creates cash flow sufficient to cover my monthly expenses? Then my time will truly be my time. I could do whatever I wanted to do…
I could choose to work.
I could choose to kick back in Hawaii wearing a Speedo and eating bananas on the beach.
I could choose to become an avid stamp collector.
I could choose to make teeny, tiny little birds out of paper.
I could do whatever I wanted to do because I wouldn’t have to worry about monthly overhead.
Some of us have investments, but Dave made an important observation…
If your investments aren’t creating cash flow, then they don’t give you freedom over your day-to-day life. Instead, they exist as some far-off abstraction and may or may not fluctuate upward or downward when you finally need them.
The Freedom Ratio basically tells you what percent of overhead your passive income covers. So if your passive income is $150 a month and your expenses are $6,000 a month, your Freedom Ratio is 2.5 percent. In other words, your passive income covers 2.5 percent of your monthly expenses.
Once I looked at it this way, I started asking myself: What are the investments I can make that help my Freedom Ratio.
What am I spending money on that really doesn’t serve me?
See, if I can bring my monthly overhead down and in turn invest that saved money so that it produces cash flow, my Freedom Ratio will go up… which would make my life a lot easier.
Lily and I have created a plan to build our Freedom Ratio. Here is what it entails:
First, we went through our credit card bills and realized that we were spending money on things that made no long-term differences in our lives. So as a test, we have vowed to be “cash only” on day-to-day expenses. I’m really curious to see how much we are going to save.
We use the “envelope” system for our day-to-day expenses. Instead of putting anything on credit cards, we put cash into envelopes and we spend money based on the money we pre-planned for the week.
We started this week with three envelopes:
- Food
- Lily and kids
- Philip
Just this morning, Lily came to me and said, “I picked up your dry cleaning. You owe me $37 out of your envelope.”
I said,“$37 for dry cleaning! That’s a rip off.”
She said, “Philip, you had 17 shirts.”
I said, “Next time, I want to take it to a place that charges .99 cents per shirt.”
She said, “Great, you find that place and let me know.” 🙂
My point is this… we have NEVER had a conversation about the cost of dry cleaning, so I didn’t know it cost me that much money every time I wore a “dry clean” shirt instead of a washable shirt.
Now that I think about my money in terms of the Freedom Ratio, I’m going to work (and spend) smarter. It just makes sense.
At the end of the week, we will:
Take any leftover money and put it in our investment savings account, and then review the receipts and make a plan to spend even less money next week (if possible).
Like I said, this is Week One. I’ll let you know how it goes in future weeks.
What do you think?
What questions do you have?
Do you and your family want to do this with Lily and me?
If so, let’s do it!
Post any questions or comments you have, and by next week, I’ll record a conference call with the most asked questions and ideas.
I will teach you what I’ve learned… and at the same time, teach me what you have learned.
Let’s rock this idea and become free! Isn’t that what life is about?
Philip Tirone
P.S. David Fenton, my CPA and the creator of the Freedom Ratio, is a rock star. I’ll have him do a blog post in the future.
Information Interview with a Debt Negotiator
On this interview, you will learn:
— How I negotiated to save my family $240,000 in loan payments. It was a scary process, but it was also the best thing I’ve ever done!
— Why saying the wrong thing to your credit card or collection company could ruin your opportunity for debt settlement forever.
— How to stop the harassing phone calls, once and for all. You’ll learn exactly what to say when collectors call.
— Methods debt collectors use to ramp up your emotions and manipulate you into overpaying for your debt.
— Why you are just 30 to 90 days away from settling all your debt for 28¢ on the dollar. Yes, you read this right!
— Plus, much more…
Student Loans and Credit: 9 Things You Must Know!
What’s the relationship between student loans and credit scores? You might be surprised! In this article, we take a look at the nine things you should know about student loans so that you can build a great credit score.
Nine Things You Should Know About Student Loans and Credit
First a little background. Student loans are unsecured loans (without any collateral backing them) issued to help with the costs of tuition, books, board, and other school-related expenses. As with any other loan, your credit score is deeply impacted by your student loan. When you make your student loan payments on time, your credit score will improve. If your payments are late or if you skip a payment, your score will drop.
Student loans are a great way for young adults to begin the all-important task of showing lenders that they can handle debt. If lenders see that you can make payments on time and in full, your credit score will go up and you will be more likely to get larger loans in the future.
This is important because you will need credit upon graduating from college. Your first employer might run a credit check, assuming that your credit score is a good indication of whether you are responsible or not. And a landlord will definitely run your credit before renting a home to you.
With all this in mind, here are nine things you should know about student loans and credit.
Student Loans and Credit, Fact #1:
When you apply for a student loan, your credit might or might not be pulled. Some lenders do require a credit score, but others do not. If your credit score is pulled, a credit inquiry will be added to your credit report. This might cause your score to drop, but the impact will be minimal.
Student Loans and Credit, Fact #2:
About 30 percent of your credit score is determined by your outstanding debt: the ratio of how much you owe versus how much you have paid. The more you have paid and the less you owe, the better your score. If your payments are being deferred until you have graduated, or if you have deferred payments for another reason, the ratio will not be in your favor, and your score might drop. However, it will start to increase after about six months of timely payments.
Student Loans and Credit, Fact #3:
With this in mind, consider that students who are positioned to pay back their loans before graduating will enjoy a faster ride to good credit. Even though a lot of student loans do not require repayment until you have graduated, your credit score might be higher if you start repaying the loans immediately. Keep in mind that some employers will run a credit check when you apply for your first post-college job, so having a high credit score could behoove you.
Some people have speculated that if borrowers pay back their student loans too fast, they will lose credit points (presumably because the maximum interest on the loan will not be accrued if the loan is paid off early). I think this is a bogus claim. The exact details of credit-scoring formula have not been released, so I cannot definitely confirm this theory one way or another, but I seriously doubt its accuracy. Credit-scoring bureaus are not interested with your creditor’s ability to earn the most interest, but rather with your ability to repay your loan on time. The bureaus want to know that you will pay your debts on time. Paying your student loans sooner rather than later is a wise thing to do because your debt-to-principal ratio will drop and your score should increase.
Student Loans and Credit, Fact #4:
Before you leave college, avail yourself of the opportunity to receive exit counseling, a service most schools offer to prepare their students to repay federal student loans. This counseling can provide you valuable information about your rights and responsibilities and the terms and conditions of your loans.
Student Loans and Credit, Fact #5:
Once you begin repaying your loan, never miss a payment. Here’s something you might not know about student loans and credit: 35 percent of your total credit score will be drawn from your payment history on credit cards and loans.
Student Loans and Credit, Fact #6:
If you cannot make a payment, ask for forbearance, a short-term agreement that allows you to make smaller payments, or no payments at all. Otherwise, you will harm your credit score. Keep in mind that if you do not make payments, interest will continue to accrue and the amount due will grow larger.
Student Loans and Credit, Fact #7:
Keep in touch with your lender. If you are struggling with your payments, never wait until the lender approaches you or until a delinquency notice is logged on your record. Instead, initiate communication with your lender. Talk about forbearance or student loan consolidation.
Student Loans and Credit, Fact #8:
Student loans can never be discharged during bankruptcy.
Student Loans and Credit, Fact #9:
Making regular payments on your student loans is a great way for young adults to begin building their credit score, setting the foundation for better loan terms and lower interest rates on future loans, and saving bundles over the course of a lifetime. But this isn’t enough. As you move on after school, you should try to incorporate different types of credit into your finances while keeping current on your payments. The mix of credit you have makes up 10 percent of your score. The credit scoring bureaus want to see that you can handle a variety of types of loans—from credit cards to student loans to car loans.
Now that you know the nine important facts about student loans and credit, be sure you learn the 35 facts the banks don’t want you to know! These money-saving tips and insider secrets about credit scores can help you save a bundle and position yourself for success.
Free Government Grants, Diet Pills and Credit, Oh My!
Looking for free government grants endorsed by President Obama and Vice President Biden? Dietary supplements supported by scientific research and endorsed by Oprah? How about exclusive credit offers? Keep looking.
The Federal Trade Commission (FTC) has halted an operation called, the “Grant Connect” program, that allegedly deceived and mislead consumers about bogus products and services with unsubstantiated claims.
The complaint lists Juliette Kimoto and Johnnie Smith, amongst others, behind the “Grant Connect” program. As part of an agreement with the FTC several defendants have agreed not to market products and serviced similar to those they sold and pitched to consumers previously. Settlements also impose an almost $30 million judgments against them.
Allegedly “Grant Connect” programs used pictures of political figures and celebrities to make it appear that they endorsed their products they were selling. They used pictures of President Obama, Vice President Biden, and the American flag to bolster claims that their bogus government grants service was affiliated with the U.S. government. They promoted their dietary supplement by falsely claiming that it was endorsed by Oprah Winfrey and supported by scientific research, and failed to adequately disclose that their credit offers were merely memberships to a costly shopping club.
The FTC claims that the defendants failed to disclose to consumers that purchased their products that they would be enrolled in continuity plans and charged high monthly fees for mostly unrelated products along with using fake testimonials to promote products.
The first settlement order announced October 17, bans defendant Johnnie Smith from marketing or selling grant-related products or services, credit-related products, work-at-home business opportunities, weight-loss related dietary supplements, and other products or services using a negative-option or continuity program in which consumers are billed automatically until they decide to cancel.
Smith also is banned from assisting anyone else selling these programs or products and from taking customer payments using pre-approved electronic fund transfers. Finally, Smith is banned from using testimonials to sell products or services, and is subject to the monetary judgment, under which he will pay $45,000.
The second settlement order bans Juliette Kimoto and four companies she owned from: selling grant-related products or services, credit-related products, or work-at-home business opportunities; selling products or services with a continuity or negative-option program; taking consumer payments by pre-authorized electronic funds transfer; assisting others engaged in these activities; and using testimonials.
The second settlement order also bans the four companies from marketing dietary supplements claimed to assist in weight loss or other specified outcomes, and prohibits Juliette Kimoto from making misleading health claims related to dietary supplements. The order also requires Juliette Kimoto to pay more than $90,000 and to turn over various personal assets, including jewelry, a piano, and a 1967 Chevy Camaro, along with all the cash and other assets held by the entities she owned. The total value of the cash and assets turned over by Juliette Kimoto and the companies she owned exceeds $220,000
Author: This article was contributed by GetOutOfDebt.org, a site that helps people find good debt relief solutions to deal with tough money troubles.
Source: Free Government Grants, Diet Pills and Credit, Oh My!
How Is a Credit Score Calculated?
How is a credit score calculated? This is a question I’m asked often, and the answer is not a simple one. In fact, there are a lot of people who sell something they call a “credit score,” but they are actually selling garbage. This blog clarifies the players, how they work together, and what you can do to make sure that you get your hands on your true credit score.
How Is a Credit Score Calculated? The Players
Let’s start with the three main players:
1. Your creditors,
2. The credit-reporting bureaus, and
3. The credit-scoring formula.
Your creditors are those banks, lending institutions, people, and entities that report to the three credit-reporting bureaus. They consist of:
- Banks and lending institutions that have granted you with a loan or a credit card, or that have considered a loan or credit card application.
- People, entities, or companies that are pursuing you for unpaid debt. If you fail to pay a bill or debt, a creditor will attempt to collect this debt. For instance, you might have a tax lien or a judgment against you. In either case, a creditor will attempt to collect the unpaid money. If you fail to pay a bill, it will be turned over to a collection agency, which will attempt to collect the debt.
It is important to note that the following companies do not report information to the credit-reporting bureaus, unless you fail to pay them bills, in which case they will be turned over for collection and reported to the credit-reporting bureaus:
- Utility companies
- Cell phone companies
- Landlords
Alimony and child support payments are also not reported to the bureaus, unless you fail to pay.
Now let’s talk about the three credit-reporting bureaus: Equifax, TransUnion, and Experian. Your creditors report information to one, two, or all of the credit-reporting bureaus. For instance, your Visa credit card company might report your payment history to Experian and Equifax. A bank that provided you with a small line of credit might report only to TransUnion, whereas your mortgage lender would most likely report to all three.
The credit-reporting bureaus do two primary things:
1. They collect information from your creditors.
2. They report your credit score by applying a credit-scoring formula.
So that brings us to the credit-scoring formula. Your credit score is computed using an intricate formula that considers a variety of factors.
Here is where it gets confusing. The credit-reporting bureaus apply a different credit-scoring formula depending on who is asking for your credit score.
Let’s say that you apply for a rental unit. The landlord is concerned primarily with your history of mortgage payments, as well as any evictions you might have on your record. Now let’s imagine that you also apply for a car loan. The bank considering your car loan is concerned with your history of installment payments and whether you have any repossessions on your record.
Equifax, Experian, and TransUnion know that the landlord and the car company are interested in different things, so they apply a different credit-scoring formula depending on who is asking for your credit score.
Important to note is this: 90 percent of all lenders use a credit-scoring formula called a FICO Score. None of them use something called the Consumer Score. We will discuss this in detail later. Just remember this: Of all the credit scores you can buy, the FICO score is the most important. A consumer score is the least important.
Before we get into that, let’s talk about how the players work together.
How Is a Credit Score Calculated? How the Players Work Together to Determine Your Credit Score
In summary, your creditors report to one, two, or all three of the credit-reporting bureaus. When a person or lender inquires into your credit score, the credit-reporting bureaus determine which credit-scoring formula is most appropriate. They apply the formula, and then report your credit score.
Because not all creditors report to all of the credit-reporting bureaus, the three bureaus do not have identical information. Therefore, if a bank pulls your credit score from the three credit-reporting bureaus, the bank might end up with three different credit scores. Experian might give you a 650 score, TransUnion might determine that your score is 672, and Equifax might determine that your score is 714.
The banker would ignore the high score and the low score, and just take a look at the score that falls in the middle. In this case, the bank would consider the score provided by TransUnion (672) to be your credit score.
How Is a Credit Score Calculated? Getting Your Hands on the Right Score
Remember a few paragraphs ago, when I told you to remember that the FICO score is the most important score, and that the Consumer Score is worthless? Let’s talk about this now.
As I’ve mentioned, the credit-reporting bureaus have a lot of different formulae they can apply to determine your score. They chose the formula based on who is asking for your credit score.
If you pull your own credit report and buy your credit score, most often, the Consumer Score will be applied. This is a generic credit score that no lender, landlord, or employer will ever use. Only the consumer sees a Consumer Score.
In this way, the Consumer Score is worthless. And unfortunately, it is often a lot higher than a FICO score. This means that if you buy your credit score from most places online, you will receive a Consumer Score that gives you an artificial sense of security about your credit score.
Almost all lenders use a FICO score. If you buy your credit score, make sure it is a FICO score so you have an accurate idea of where you stand. A consumer can buy FICO scores from both Equifax and TransUnion at www.720FICOScore.
However, Experian does not sell FICO scores to consumers. If you want to see all three scores, a lender will have to pull your credit score. The benefit of this is that you have all three scores. You can ignore the high score and the low score, knowing that the middle score is the credit score a lender would use to determine your interest rates.
The downside of getting your credit score from a lender is that a hard credit inquiry will be added to your credit report.
How Is a Credit Score Calculated? The Difference Between Credit Scores and Credit Reports
In considering the question, “How is a credit score calculated?” I have spent a lot of time talking about credit scores. I want to make an important note: There’s a difference between a credit score and a credit report. A credit score is the three-digit number that predicts your likelihood of paying your bills on time. A credit report is a listing of all the information that was considered in your credit score.
Once a year, you can get a free annual credit report. If you want to look at your credit report so that you can identify errors, go ahead and download your free annual credit report. However, you should never, never buy a credit score from www.annualcreditreport.com as this site sells consumer scores only. Remember that the only place to get a FICO score is from FICO itself or from your lender.
This concludes my lesson in “How is a credit score calculated?” I know this is a complicated subject, so if you have any questions, be sure to leave them in the comments!
