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Understanding Your Credit Score,
Credit Repair Learning Center

Below is helpful information that we have compiled to help you further understand your credit and how it works.

We believe that an educated customer is a happy one. We do a great job fixing credit and would like to pass on some of that knowledge to you.

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What Exactly Controls Your Credit Score?

Your payment history accounts for about 35% of your entire credit score. (35% of 100%)

  • It is common knowledge that when you miss a payment, it will affect your credit score. It is unfortunate that something so small is one of the most impacting factors on your credit report score.
  • Your number of unpaid or late bills, accounts sent to collection agencies, bankruptcies, etc. will directly impact your credit score as well. In most cases, the more recent the problem was, the more it will negatively impact your credit score.
  • One common analogy most people relate to is that of your car insurance. If you were involved in a car crash six years ago and were involved in another crash last month, your insurance rates will go up. This is because you are a higher risk; you have a repeating pattern of getting into car crashes. Comparatively , if you've had numerous late payments in the past, make sure you pay all your payments before their due date from now on. Otherwise, the newer late payments may be even more damaging than the previous.

What Exactly Controls Your Credit Score?

Outstanding debt accounts for 30% of your total credit score. (65% of 100%)

  • The scoring model looks at the balances on your credit, a good rule of thumb is to keep your cards below 35% of their limit.
  • Installment loan (i.e. mortgage, car loans/leases, student loans etc.) balances are not the major issues since these accounts have a pay off period.
  • Revolving accounts (i.e. credit cards, store cards, etc...) have revolving terms, so they get analyzed based on balance compared to your card limit.

What Exactly Controls Your Credit Score?

Your credit's length of history determines about 15% of your credit score. (80% of 100%)

  • A lengthy track record provides more insight to your level of responsibility and shows your credit and payment habits
  • The longer you've been paying your creditors on time, the more likely the scoring system will classify you as a more responsible consumer.

What Exactly Controls Your Credit Score?

Your credit score only depends on your "recent inquiries" for 10% of your entire score. (90% of 100%)

  • Too many inquiries may negatively affect your credit score; as it may appear that you're applying for debt too often
  • When considering a new mortgage, the most recent 30 days are the most important
  • All three credit bureaus know that consumers compare prices for better interest rates and sometimes need their credit run by various lenders
  • But there is a downside to that. If you're also applying for other lines of credit at the same time, such as: student loans, credit cards, store cards, auto loans, etc. be cautious because your score may drop significantly.

What Exactly Controls Your Credit Score?

And finally, just 10% of your credit score depends on your "types of credit in use". (100% Those are the 5 Things that make up your credit score)

  • This applies to the number of trade lines you currently have open
  • As well as any installment or revolving accounts
  • Lastly, tier 1, tier 2, or tier 3 creditors
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TOP 10 CREDIT MISCONCEPTIONS

Misconception #1 - Once you pay a past-due account (i.e. collection, charge-off, etc.) it will no longer negatively affect your credit score.

In the event that a credit account had to be referred to a collections agency is the negative item that affects your credit score the most. By contract, you are expected to pay your bills before they become past due. Collections generally only occur when bills are paid extremely late. Whether you pay this late bill or not doesn't necessarily "fix" your credit and the damage done to it. It may show that the account was "paid in full" but the simple fact that you were turned over to collections in the first place will continue to negatively affect your good credit score.

A collection item on your credit report is an indication that you do not pay your bills on time.

On the other hand, if you feel that your account went to collection by error, it is recommended that you absolutely should dispute it in order to remove the collection from your credit report as it wasn't your fault in the first place. Furthermore, collections get sold too often and may then create even more than one negative collection item on your credit report. Since only one collection company can collect, you should identify who that company is and get the others removed from your report.

When money is owed to a creditor, they won't just forget about it. Typically you will have to pay them at least something. Many people with collections against them can negotiate a payoff amount agreed upon by both parties.

Misconception #2 - After deleting a negative item from your credit score, it might still return on your credit report at a later date.

This is simply not true. When an item is deleted, it stays off forever. There is one exception to this rule; that if a creditor doesn't respond within thirty days, the credit bureau may remove the negative item temporarily or until a investigation is complete. But if your account is deemed erroneous, inaccurate or obsolete, this negative mark will be removed permanently. If after a 30-day period the creditor comes back with absolute proof that the processes used to report your negative credit mark were in fact followed correctly and accurately, only then the creditor may place that negative mark back onto your credit report as it appeared prior to its removal.

There are other instances where an account could be transferred or sold to a new creditor and appear under a new name on your credit report. This scenario isn't possible to avoid whatsoever. You can never predict which bank is buying which company and what accounts they might sell behind closed doors. Therefore, an old item you thought was erased simply could have been sold at the time you requested a dispute.

Our professional advice is simply this: to check your credit report and score annually as the government suggests and review it thoroughly! Stop problems before they get out of control.

Misconception #3 - It is impossible to dispute and delete negative items such as foreclosures and/or bankruptcies from your credit report.

Every type of negative listing has been successfully removed from tens of thousands of American citizens' credit reports. These negative items (bankruptcy, foreclose, etc) require a specific approach during the dispute and investigation processes. They may be a bit more difficult to remove from your report, but they can be removed. Easier negative marks, such as Federal and State tax liens or judgments, are quite severe, just like a bankruptcy based on credit scoring, yet these types of items are far easier to get removed.

Mistakes are often made very easily; and many people have had accounts listed incorrectly when they filed their bankruptcy. There can be many explanations as to how the error appeared there in the first place, but if you feel the item is not an actual bankruptcy, foreclosure, or repossession item, you should absolutely employ your consumer right to have your account verified.

Misconception #4 - It is easy to remove items on your own credit report and any consumer may dispute their own negative items.

Well, Yes and No. Yes, you have the right to dispute anything you like on your credit report yourself. But getting the results is the tricky part. Disputing something takes almost zero effort, but going through and actually obtaining results from the process comes down to how organized and determined you are. Don't forget that credit bureaus are bureaucracies! The title is not just a coincidence. Credit bureaus are not a call center nor do they have customer-service hot-lines. You've got to be prepared to do some real work. And by that we mean mailing, calling, tracking, writing, verifying, following up, logging, or whatever your credit report requires you to do, based on the errors you'd like to be handled. In most cases, hiring qualified professionals to review your credit with you, right over the phone, is extremely valuable. After spending a few minutes with you going over your credit report via telephone most credit consultants can recommend your best course of action. They most likely will offer to send out dispute letters FOR you, since they are now in-the-know of your current situation and have most of the letters in a ready-to-go format. Obtaining results on your own can be very difficult if you're not professionally trained. The worst is part of it is; if you attempt to fix your credit without the help of a credit repair expert, you may not be able to hire a professional in the future, due to the potential damage you could cause yourself and your credit. Saying the wrong words in a dispute letter could move you in reverse in the process of deleting errors in your credit report.

Mistakes are often made very easily; and many people have had accounts listed incorrectly when they filed their bankruptcy. There can be many explanations as to how the error appeared there in the first place, but if you feel the item is not an actual bankruptcy, foreclosure, or repossession item, you should absolutely employ your consumer right to have your account verified.

Misconception #5 - I'll have a fresh start if I just declare bankruptcy.

This is absolutely false! Declaring bankruptcy is the absolute worst thing you can do to your credit. Your credit report is based entirely on your likeliness that you will repay your debts combined with your ability to manage your credit. In the instance that you should "declare bankruptcy", you're literally announcing to the world that you're not able to pay your debts and have chosen "the easy way out". A filing date as well as a discharge date will show up in the "public records" area of your credit report. In addition, all credit accounts included in the bankruptcy will also report negatively on your report. Removing these items post-bankruptcy is almost impossible. However, if any errors should surface regarding your bankruptcy, these are, of course, always up for dispute.

Credit Repair 1st's professional advice is to avoid bankruptcy at all costs and seek professional help immediately.

Mistakes are often made very easily; and many people have had accounts listed incorrectly when they filed their bankruptcy. There can be many explanations as to how the error appeared there in the first place, but if you feel the item is not an actual bankruptcy, foreclosure, or repossession item, you should absolutely employ your consumer right to have your account verified.

Misconception #6 - By filing a "100-word statement" it will force the creditors to read my statement and take my claims into consideration

No creditor will seriously consider the information in a 100-word statement. You're extremely lucky if they get around to reading it and is usually a complete waste of time. These 100-word statements just provide the creditor with acknowledgment that you admit to the negative marks on your credit report and have some type of excuse for one or all of them.

Misconception #7 - I can just get a new credit profile if I use a new EIN tax ID or change my social security number

This is entirely illegal and could result in imprisonment or fines far greater than the cost it would take to fix your bad credit score. Also, lying about your personal information on your credit application is a criminal offense.

Misconception #8 - My good credit history will cancel out the bad credit items on my credit report

This belief is false as well. It really doesn't matter how much good credit you've got. If you have negative marks on your credit report, it could negatively impact your credit score and could result in the denial or refusal of a personal loan, auto loan or mortgage. In many cases, any interest rate that you get approved for depend greatly on the items listed on your credit report. One negative item could increase your interest rates tremendously or get your loan denied entirely.

When it comes to good credit, you're stuck in control to manage your own credit. Most of all, you are expected to pay your bills on time and responsibly. Most loans and lines of credit come along with an agreement with terms outlined to pay your bill on time. If you fail to pay these on time, you have "not paid as agreed" and will ultimately lower your credit score.

If you balance your checkbook and develop good payment habits, you'll most likely avoid negative credit marks.

Misconception #9 - Consumer Credit Counseling Service can help me pay my bills and restore my credit

The Consumer Credit Counseling Service (CCCS) won't help fix your credit but they may help you manage your debts.

These Consumer Credit Counseling Services are debt counseling groups who work along with the credit grantors and credit bureaus. They are not able to change rules or change your credit history. These groups simply exist to help citizens renegotiate the terms of repayment for people having trouble repaying their debts.

In many cases, working with a CCCS will be noted on your credit report and is absolutely NOT a positive mark. Consequently, many creditors won't want to give you any further credit such as an auto loan or mortgage if you are using a third party service for debt management. They'll most likely view you as "not able" to manage debt on your own and having to pawn it off on an external party. We absolutely recommend that you consider other options before you have any debt managed by a CCCS.

Some of your options are: Refinance your mortgage to include your other debts. You can transfer your debts into a single loan and pay it off responsibly. You may defer your student loans for a year to give you ample time to pay off other loans. Another option is to borrow money from friends or family members in order to reduce your debt to a controllable level.

NOTE: The above suggestions assume that the overall payment will be reduced.

Misconception #10 - I was told that it is illegal for a creditor to remove a negative item from my credit report and it will remain there for 7-10 years

The law states that a negative item listed on your credit report must be present for no more than 7 years; and sometimes (in certain cases of bankruptcy, etc.) 10 years. This means that a creditor has the power to remove any negative item from your credit report within those seven years AT ANY TIME. Our task is to convince your creditors to do so; and as quickly as possible.

Be aware, trying to restore your own credit can be very demanding and extremely time consuming. There may be an extreme amount of paperwork involved, which requires immense organization. Before attempting to fix your credit score yourself, make sure you are dedicated, possess the required resources and have the drive to follow through to the end. Set the time aside in your schedule to do so. If this is something you're not absolutely committed to do, you may worsen your credit situation and make it virtually impossible for even professionals to fix your credit in the future.

Credit Repair Learning Center

Credit Repair 1st is dedicated to helping you become part of the good credit club through use of repeatedly-tested services which combine innovative dispute methodologies and other unique credit repair solutions while employing the full use of your credit rights established by federal law and the Fair Credit Reporting Act (the FCRA).

While these laws give you a way to address credit issues on your own, getting results will take more than just sending a letter and crossing your fingers. Experience is required and perseverance is a must. Many Americans who've attempted to fix their own credit score are repeatedly discouraged time and time again by the outcome of a dead end; which is exactly what their quest for good credit becomes.

Credit Information - What's On My Credit Report? Credit Reports contain 5 types of information:

Terribly enough, an alarming amount of credit files (or credit reports) contain numerous errors and serious flaws. Some of these errors could single-handedly call for the denial of a new mortgage loan or even employment. So monitor your credit report closely to minimize and/or eliminate any credit problems in the future. Remember, keeping a "clean" credit report is necessary to securing your financial (and your life's) well-being. Who is in control of my Credit Score?

The three major credit companies: Experian, Trans Union and Equifax. Your credit score comes from a company who made judging cards (approximately ten of them) to rank each individual in comparison with all other American citizens.

The three national bureaus are three separate companies who generate their profits in exchange for various credit related services. They were not created for your own well being but they ARE companies who are seeking to make money. However, the Federal Trade Commission (the "FTC") created the F.C.R.A. (the Federal Credit Reporting Act) which now regulates exactly how the three credit bureaus operate and the rules by which they must abide.

The Fair, Isaac & Company took roughly a million records from all the bureaus and studied them to identify obvious trends. This model became known as the FICO model and is used by all three credit bureaus. Think of it as a bell curve; most of the numbers are near the middle or average, while the smaller percentages are either doing super well or super terrible.

Clean Credit - The 4 main reasons to "clean up" (fix) your credit

Reason #1 - Clean Credit Almost Always Means Better Interest Rates Reason #2 – Clean Credit Reports Make for a Higher Rate of Loan Approval Let's face it, our economy is in bad shape. This means that more Americans are getting turned away from auto, home, personal and home improvement loans every day. Reason #3 - Some Employers Require Clean Credit Reports Reason #4 - Clean Credit Feels Good

Did You Know?

The three credit bureaus (Trans Union, Experian, and Equifax) are actually just normal corporations with fancy names. Most people don't know that the 3 major credit bureaus which control your credit are profiting firms whose primary objective is to make money for their shareholders, like any major corporation does. In other words, you are not their first priority. Some more interesting credit bureau facts are:

Their practices became such a concern to the government that congress stepped in with legislation to regulate the fairness by which they operate on behalf of the consumer.

You are not the most important client the credit bureaus have. Credit bureaus make much more money selling your report to lenders that charge you interest than they do selling your own report back to you. The worse your credit report is, the more those lenders (and credit card companies, etc.) make in interest against you. Smell funny?

Since government regulation has been passed, the Credit Bureaus have been fined millions of dollars in penalties for not operating legally and fairly. The Credit Bureaus have secret formulas that determine whether or not they will honor disputes you make about your report. These special formulas and formats make it difficult for you to be as successful disputing your credit on your own, although you certainly can.

Two of the three major bureaus are privately owned and held. They are not affiliated with the government in any way. Transparency is virtually non-existent. Their primary motive remains to produce a profit for their shareholders.

How long does a Repossession Stay on Your Credit Report?

It stays on your credit report for 7 years to the day the loan became delinquent. Say you made your last complete up to date car payment August 15, 2001 and you fell behind about a month after that staying one month behind until December when you missed another payment becoming 2 months behind. The repossession then occurred in January 2003.

This will stay on the credit report until September of 2008 for that 7 year period, regardless of when the loan winds up getting paid off.

It can stay on the report a bit longer if it goes to court and the bank gets a judgement against the borrower. Say this happens in 2004, then that stays on the credit report another 7 years until 2011.

Bankruptcies stay on 10 years while delinquencies and defaults stay on for 7 years.

How Long Does a Negitave Item Stay on Your Credit Report?