The Cost Is High If You Don't Get Help Fixing Credit Score Issues Continued

The Effects Your Credit Report and Credit Score Can Have On Your Ability To Reach Goals


In the last section we discussed what lenders look for when reviewing your credit report.  We learned that organizations have access to your complete and total credit history, which contains information about every agreement that you presently have or have ever had that involves finances.

As these potential lenders review your credit report, they are looking at the way you handle your finances by looking at how well you pay your bills on time and how much outstanding debt you currently owe on these accounts.

Ok, so why are all of these things so important for these organizations to spend time reviewing your credit history when they are considering entering into a financial agreement with you. Lenders use this information from these reports to determine the type of credit they are willing to offer.  For example, if you were to apply for a credit card with an organization like Sears, after reviewing your credit history and credit score, they would use that information to determine the Annual Percentage Rate (APR) they would be willing to apply to your credit account.  Another aspect of your potential account that would be affected by your credit history and credit score, would be your credit limit.

This is just the tip of the iceberg when it comes to the importance of getting help fixing credit score issues.

I encourage you to check back as often as possible to learn more about your credit history and credit score, and how organizations look at them to determine the terms and conditions of your agreements with them.  I will continue to research and update this site with meaningful and helpful information that will assist the ordinary person, like yourself, to better understand the importance of getting help fixing credit score issues.

The Cost Is High If You Don't Get Help Fixing Credit Score Issues

You may be asking yourself how great could the cost be if I don't get help fixing credit score issues.  The following will briefly begin to explain the basis for the reasoning behind the cost that millions of individuals, just like you and I, find themselves in a position that causes them to find help fixing credit score issues.

Why Do Lenders Look At Credit Scores?

Your credit score is more than just a number, and the credit report that contains your credit score provides private information to those organizations that you rely on to help you achieve various goals.  Unfortunately we do not always realize how much can be revealed about us by looking at our credit report.  

The main thing that the credit report is going to show these orginizations is your credit history.  When you hear 'credit history', it is referring to a list every creditor, or lender, that you have ever entered into any type of contract with in your whole entire life. If this seems a little exhausting, that's because it is extremely extensive and detailed.  The report will not only show every contract you have ever had with anyone, ranging from a sears credit card to your telephone service, but it will show these organizations whether or not you pay your bills on time and how much you owe to creditors.

Introduction: Help Fixing Credit Score Issues

What is a credit score?  Why is it so important to get help fixing credit score issues?  How can you make sure your credit score is something that will help to meet the needs in your life, and not something that keeps you from doing the things in life that are not only necessary, but also those things that bring fulfillment to your life?  These are all questions that most individuals have asked themselves at some point in their lives.  Well, congratulations your search for the answers to those questions has come to an end.  Welcome to an amazing resource that will help individuals with various lifestyles and financial situations, (just like yours) to find out how to rebuild and maintain a desirable credit score, and to get the help fixing credit score issues that prevent millions of ordinary people from achieve their goals every year.  Each week there will be a new resource of information that will help to develop your understanding of a credit score and the importance of ensuring that your score is in good standing,.  This site will also help you to better understand the steps that need to be taken to rebuild any prior damages made to your credit score.

Why Is It So Important To Get Help Fixing Credit Score Issues?

When you have a problem with your computer, washing machine, or car, the first thing to do is call someone to help with the problem.  Most of us are not experts in these areas, but more than likely we know who to call when a problem occurs.  Unfortunately, when we are trying to get help fixing credit score issues its not as easy. 

The importance of getting help fixing credit score issues that you can be facing when dealing with finding a way to fix any problem that you might have regarding your credit score.  This site is here to help the ordinary person, just like you, to know what to do, where to look, and who to talk to about these issues.  The following information is from an issue of USA Today, and will begin a series on this site that will help you when trying to answer some of these difficult questions.  Let’s start by reading a the following scenario regarding a credit issue that many ordinary people face.

As seen in USA TODAY, November 28, 2007

By Byron Acohido And Jon Swartz

SEATTLE —

·      Like many consumers, Wendy Temple’s first step shopping for a mortgage was to go online to get a sense of where she stood as a prospective borrower.

·      Temple, an accountant, surfed to TrueCred- it.com, a popular website owned by Tran- sUnion, one of the Big Three credit bu- reaus. There she purchased her TransRisk credit score, TransUnion’s assessment of her credit worthiness. Temple thought her score — 608 — was just high enough for her to qualify to buy a $207,000 home in a gated community in Holiday, Fla.

·      “I was so excited,” says Temple, who signed a purchase agreement with her fiance. But not for long. The mortgage company, it turned out, judged Temple, 33, differently. It looked at her FICO score, the assessment widely used by lenders, based on a for- mula supplied by Fair Isaac. Temple’s FICO score was nearly 100 points lower than her TransRisk score. “Needless to say, we had to back out of our contract,” she says.

·      Temple didn’t know that TransUnion and the other bureaus are trying to wrest con- trol of the credit-scoring market from Fair Isaac. She had no way of knowing the com- peting scores differed. But who can blame her? Confusion awaits any consumer who dares tread online in search of a credit score, personal finance experts say. “It’s one of the biggest rip-offs you can find,” says credit consultant John Ulzheimer, au- thor of You’re Nothing But A Number: Why Achieving Great Credit Scores Should Be On Your List of Wealth Building Strategies.

·      Misleading credit scores aren’t the only snare. Consumers are also getting tricked into paying for basic credit reports before obtaining the ones they can get free, as mandated by the federal government in 2003. The only place those free reports are available is at AnnualCreditReport. com, run jointly by the Big Three (Expe- rian, TransUnion and Equifax).

·      Yet, dozens of websites affiliated with the bureaus falsely imply that they can also distribute the government-mandated free reports. At FreeCreditReport.com, ConsumerInfo.com, PrivacyMatters.com, Free3BureauCreditReport.com and other similarly named websites, free trial of- fers and package deals abound. The most ubiquitous: pitches for free credit reports and free credit scores if you subscribe to a “credit monitoring” service that alerts you each time a lender checks your credit history, says Robert Mayer, a University of Utah professor who has analyzed two dozen such sites for Consumer Reports We- bWatch. “The word ‘free’ is used so freely that it really has no meaning in the context of these types of sites,” Mayer says.

What Is A Credit Score?

When one banker asks another “What’s the score?” shareholders needn’t worry that these bankers are wasting time discussing the ball game. More likely they’re doing their jobs and discussing the credit score of one of their loan applicants. Credit scoring is a statistical method used to predict the probability that a loan applicant or existing borrower will default or become delinquent. The method, introduced in the 1950s, is now widely used for consumer lending, especially credit cards, and is becoming more commonly used in mortgage lending (Mester, 2012).

This first section will discuss a credit score in general terms to build your understanding of what is implied by the term ‘credit score’.  I have found that it is very hard to fully grasp the importance of something without having a foundational understanding of what is was I was contemplating.

Where did this Credit Score thing come from?

Credit scores became widely used in the 1980's. Long before credit scores, human judgment was the sole factor in deciding who received credit. Lenders used their past experience at observing consumer credit behavior as the basis for judging new consumers. Not only was this a slow process, but it was also unreliable because of human error. Lenders eventually began to standardize how they made credit decisions by using a point system that scored the different variables on a consumer's credit report. This point system helped to eliminate much of the bias that previously existed; however, it was still tied to intuitive measures of credit worthiness and was not based on actual consumer behavior. Credit granting took a huge leap forward when statistical models were built that considered numerous variables and combinations of variables. These models were built using payment information from thousands of actual consumers, which made scores highly effective in predicting consumer credit behavior. When combined with computer applications, scoring models have made the credit granting process extremely fast, efficient and objective, facilitating commerce and helping consumers quickly get the credit they need.

Credit Score Model

Designers of credit scoring models review a set of consumers - often over a million - who opened loans at the same time, and determine who paid their loan and who did not. The credit profiles of the consumers who defaulted on the loans are examined to identify common variables they exhibited at the time they applied for the loan. The designers then build statistical models that assign weights to each variable, and these variables are combined to create a credit score. Models for specific types of loans, such as auto or home, more closely consider consumer payment statistics related to these loans. Model builders strive to identify the best set of variables from a consumer's past credit history that most effectively predict future credit behavior.

Credit Score Levels

In determining credit scores, lenders place you in a risk category that compares you to a large number of consumers with similar credit histories. This allows lenders to compare "apples to apples," ensuring that your credit behavior is judged in a context that is relevant and fair. For example, consumers with brief credit histories and only a few accounts are not compared to consumers with long-established credit histories. Rather, these consumers will be compared to other consumers who also have brief credit histories. Keep in mind that the attributes of your risk category (i.e. number of accounts, total debt, etc.) may not have the same impact to a credit score for consumers in another risk category.

Contributing Factors

Score factors are the elements from your credit report that drive your credit score. For example, such elements as your total debt, types of accounts, number of late payments and age of accounts are what determine the outcome of your credit score. Score factors can have a positive or negative affect on your credit score. Lenders must provide consumers with the most significant score factors when they are declined credit. With a subscription to ConsumerInfo.com, Inc., an Experian company, ("ConsumerInfo") Triple AdvantageSM, our online credit management service, you can view the negative and positive score factors that drive your PLUS score. In addition, ConsumerInfo.com, Inc., an Experian company, ("ConsumerInfo") Triple AdvantageSM provides score factor advice on how to improve or maintain your credit.

*Loretta Mester is a vice president and economist in the Research Department of the Philadelphia Fed. She is also the head of the department's Banking and Financial Mar- kets section.

Loretta J. Mester*

*www.philly.com. More Advice. May 8, 2008.