Freaking Stupid Credit

Live forum: http://forum.freeipodguide.com/viewtopic.php?t=78547

Investopedia

08-03-2009 10:31:53

I signed up with MyFico for a free trial for Equifax credit report.

I realized that this is only 1/3 credit reporting agencies, but how does everyone else compare your score from equifax to your rounded out score? Last time I checked my credit it was a couple points from excellent, and now from Equifax it's just over 630, which is worse then 79% of America!

I can't find anywhere to go to get all 3 for free, so just curious if people find that some of the 3 credit agencies will be bad but others will be good to average out a higher score?

dmorris68

08-03-2009 13:04:27

I could have sworn that I've seen some free trial offers for a merged 3-bureau report.

All 3 credit bureaus have historically used their own custom scoring criteria, so you can really only judge them against their own scale. One might say their 680 is average, while another says their 720 is average. Don't try to compare a score from one with a scale from another. Also, not all bureaus have the same info, so scores can vary as well.

These days all three have mostly converged towards a FICO standard. They're not quite exactly there, because their contracts with FICO specify slightly different scoring criteria, but they're closer than they used to be. In the past I've seen greater than 100 points difference between my scores between bureaus, but lately they're much closer.

Different creditors use different agencies, and some creditors use more than one based on things like geographic location, so there's really no guarantee which one they'll hit when you apply for credit.

SkatingCrippled

08-03-2009 16:34:08

I know that my Experian score is about 34 points higher than my Fico. But yeah, each agency goes by their own criteria.

slambam

08-03-2009 18:10:18

f-r-e-e that spells free, credit report dot com baby...

But seriously, I'm 99% sure that you are legally entitled to a free copy for your credit report every 12 months, and I know freecreditreport.com gives it to you for free. Myself, for the best one I would recommend annualcreditreport.com.

dmorris68

08-03-2009 18:37:51

[quote90a6153b4f="slambam"]f-r-e-e that spells free, credit report dot com baby...

But seriously, I'm 99% sure that you are legally entitled to a free copy for your credit report every 12 months, and I know freecreditreport.com gives it to you for free. Myself, for the best one I would recommend annualcreditreport.com.[/quote90a6153b4f]
Yes, but the law applies only to the report itself, not the score. Some of the incentivized offers may include the score in a free report, but otherwise you must typically pay extra to get the score.

theysayjump

08-03-2009 18:44:41

https//www.creditkarma.com is pretty good but I'm not sure how reliable it is or how accurate it is. Says my Credit Score is 700 and has been steadily going up for the few months that I've been using it.

TravMan162

08-03-2009 19:33:20

Is anyone here actually knowledgeable in the ways of credit?

I.E. Some say having a car loan and making the monthly payments improves your score, yet some say it does not.

Some say it is bad to have lots of credit cards, but some say it is not.

Some say to make small charges on your card and then pay it off each month to improve your credit, but some say it does not work.

How does it actually work?

doylnea

08-03-2009 20:08:22

www.myfico.com is the best estimator of your actual credit score in my experience.

FW has some seriously long discussions about myfico in their Finance forum.

x323smostwantedx

08-03-2009 23:53:16

[quotea59dfd5bb7="TravMan162"]Is anyone here actually knowledgeable in the ways of credit?

I.E. Some say having a car loan and making the monthly payments improves your score, yet some say it does not.

Some say it is bad to have lots of credit cards, but some say it is not.

Some say to make small charges on your card and then pay it off each month to improve your credit, but some say it does not work.

How does it actually work?[/quotea59dfd5bb7]
Good info here http//forum.freeipodguide.com/viewtopic.php?t=44133 D

Edit NVM, I just noticed u posted in that thread, my bad oops

dmorris68

09-03-2009 15:04:02

[quote6edc559ab7="TravMan162"]Is anyone here actually knowledgeable in the ways of credit?[/quote6edc559ab7]
I like to think so. Not a financial expert by any means, but I spent years following consumer credit law while working on improving my credit history after some poor decisions in my youth.

I'm also thinking we had a member who was a loan officer who had responded to some credit questions in the past, but I'm not sure it was this forum.

[quote6edc559ab7="TravMan162"]I.E. Some say having a car loan and making the monthly payments improves your score, yet some say it does not.[/quote6edc559ab7]
If your lender reports to a credit bureau (not just when you're late or in default) then a car loan is considered a "good" or low-risk form of credit because it's secured by collateral property (as opposed to credit cards and other such unsecured revolving accounts). However making payments over time is the only thing that will really improve your score. It won't improve on a monthly or regular short-term basis. Because it is a fixed term loan and not an open-ended credit line, you don't get the benefit of increasing your available credit while paying down the balance (this ratio is a major contributor to your score). However the older the debt, and the more time that has passed with a clean payment history, then the greater its weight.

OTOH it can also depend on the type or class of lender, or at least it used to. FICO and other scoring agencies keep their exact algorithms secret, so I'm not sure if this carries as much weight as it used to. But in the past, a loan from a high-risk lender like most local finance companies or buy-here/pay-here used car dealers would be scored lower than one from a more reputable, high-profile lender. Again, not sure that has as much impact these days.

[quote6edc559ab7="TravMan162"]Some say it is bad to have lots of credit cards, but some say it is not.[/quote6edc559ab7]
Lots of liunusedli credit cards, or lightly used ones, is generally okay, and will in fact usually help your score. One of the biggest components of your score is the ratio of available credit to used credit. A high credit line with a low balance is ideal. OTOH maintaining a balance of 50% or higher of your credit line will start hurting your score instead of helping it. So the issue isn't the number of credit cards you have, but how you use them.

[quote6edc559ab7="TravMan162"]Some say to make small charges on your card and then pay it off each month to improve your credit, but some say it does not work.[/quote6edc559ab7]
Yeah, here there are a couple of schools of thought. In my experience, it really depends on how the person's credit history is being used. From a strict scoring perspective, where the computer scans your history and assigns a score without human intervention, there is likely not a substantial difference in paying the balance each month versus carrying a lismallli balance. However many lenders only use the score as a screening tool, and do a more in-depth analysis of your credit history. These lenders often want to see HOW you've used your credit, rather than seeing a bunch of unused accounts. Some would prefer to see you demonstrate that you can borrow some money and pay it back reliably over time. Especially revolving account/CC lenders, because if you pay your balance each month, they don't make as much money off you. It really depends on the lender though, so there isn't one answer that applies across the board.

Given the myriad of lenders, credit bureaus, and scoring algorithms, there is no easy answer. Scoring mechanisms were invented and semi-standardized so as to make the process of judging someone's credit easier, but there are still enough variables involved to make it an inexact science. Two people with virtually identical credit profiles can be scored quite differently between bureaus and lenders. All you can really do is strive to obey the fundamental rules of responsible credit usage, and you will be okay with any of them. It's when you get on the borderline that decisions can really go either way, depending on who is looking at you.

I posted this in the thread linked to above, so I'll quote it here. It's basically a summary of the major criteria that scorers like FICO use

[quote6edc559ab7="dmorris68"]There are several factors that go into computing your score, but the most common & important are
[list6edc559ab7][li6edc559ab7] Derogatory information (slow pays, charge-offs, bankruptices, judgements). Speaks for itself, and will have significant negative impact on your score.
[li6edc559ab7] Ratio of limits to balances. Lots of available credit without much of it being used is great for your score. Maxing out your accounts is bad for your score.
[li6edc559ab7] Number and variety of accounts established. Having only revolving debt (credit cards) will lower your score. Open-ended revolving debt is considered a "bad" form of credit, while "good" forms of credit are real-estate loans like mortgage and auto loans, or department store loans with a fixed term. It's good to have CC credit, just not excessive, and it should be offset with "good" forms of credit when possible.
[li6edc559ab7] Length of time with established credit. As you get older, your credit score will improve even if your financial or credit situation remains the same. You won't reach the highest scores until you've had 10-15 years of solid credit history.
[li6edc559ab7] Inquiries. These are the credit checks performed when you apply for new credit, lease, insurance, job, etc. Routine checks done by yourself or creditors you already have an account with don't count against you, but checks for new credit do. More than 3-4 inquiries in a 2-year period is considered bad and will lower your score. However the algorithms do recognize and detect for "rate shopping" when shopping for a house, car, insurance, etc., so that numerous inquiries for such a loan in a short period of time will be lumped together and counted as a single inquiry.[/listu6edc559ab7][/quote6edc559ab7]

TravMan162

09-03-2009 22:12:17

wow.

that was a hell of a response. See, the reason I asked all those questions is because my house was in the midst of a short sale but it fell through and now if we don't get a bite in the next week, we head into foreclosure.

Now, being that before this happened, I had a tremendous credit score for my age and Nicole really ruined that for me, I was looking for the best way to get it back up again when either the short sale or the foreclosure hits.

I appreciate all the information and I'm going to save that so I can refer back to it.

If I ever see you, I'm buying you a beer.

JordanE

13-03-2009 15:46:30

[quote72b95b0e7e="theysayjump"]https//www.creditkarma.com is pretty good but I'm not sure how reliable it is or how accurate it is. Says my Credit Score is 700 and has been steadily going up for the few months that I've been using it.[/quote72b95b0e7e]


It gave me a score of 7 points lower than freecreditreport.com (paid service) So in my case atleast, I would say that it is probably a pretty good way of checking your credit score, sense it will likely give you a lower, rather than higher score then you actually have.

my credit score is 749 which I believe is pretty solid for someone of my age. This was done by having a cell phone contract, as well as a credit card with a $2,000 limit that I pay off to zero each month.

nobody2000

23-03-2009 18:30:03

The best way to build your score is as follows (I was told this by a US bankruptcy judge).

The best way is to first establish a credit card and keep up with the balance. PAY IT IN FULL!!! This can be acheived by not using the card!

Now, after owning the card for 3 or so months, run a small balance, and make the MINIMUM PAYMENT for 2 or 3 months. Then finally pay it off in full.

This shows that you have active and good credit and the companies love this. They will throw some points your way. Rinse and repeat.

manOFice

23-03-2009 20:30:34

[quotebcddfebe32="nobody2000"]The best way to build your score is as follows (I was told this by a US bankruptcy judge).

The best way is to first establish a credit card and keep up with the balance. PAY IT IN FULL!!! This can be acheived by not using the card!

Now, after owning the card for 3 or so months, run a small balance, and make the MINIMUM PAYMENT for 2 or 3 months. Then finally pay it off in full.

This shows that you have active and good credit and the companies love this. They will throw some points your way. Rinse and repeat.[/quotebcddfebe32]

Sure it all starts out like that, then people want to buy stuff... and they say what the hell i'll just use my card and pay it in full, opps time to pay in a full and I can't pay it in full...then it goes down hill from there. Of course this obviously isn't the case with most people but credit is so easily abused...and gets you in debt like you won't believe