Most Common Ways to Screw Up Your Credit

1. Late Payments – Not considered late until 30 days past the due date. 60 or 90 day late payments are more negative than a 30 day late. The age of late payments can influence credit scores. Recent late payments are considered worse than older ones. More serious issues include: consumer credit counseling, collections, bankruptcy, and foreclosure.

2. Outstanding Debt – Having a large number of open accounts with balances may reduce your credit scores. Another issue is the ratio of your credit limit compared to the current balance. Using 75% of your credit limit is a greater risk than using 25%.

3. Account History – Older credit accounts can have a positive effect on credit scores, as long they are not delinquent. Having recently opened accounts could reduce your scores. Also, multiple credit inquiries are a flag indicating a possible new account.

How Do You Correct Credit Report Errors?

Incorrect information can sometimes appear on a credit report. If you believe there is a potential error on your credit report, you are entitled to dispute the accuracy of the information. The federal Fair Credit Reporting Act gives you the right to challenge inaccurate information by contacting the reporting agencies, and the company who reported the information. Under the FCRA, they are responsible to correct any errors on your credit report free of charge, and within a specific time limit.

The credit bureaus, Experian, Equifax, and Transunion, are required to investigate your dispute within 30 days of reporting the potential error. They will contact the source of the derogatory information and try to confirm the record. Providing documentation to support your claim, if you have any, can also expedite the process. If the credit bureaus are unable to confirm the derogatory information from the source, the item must be removed from your credit report, which can improve your score.

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Because of the importance of your credit score, here are some points that you should be aware of that can boost your credit before starting the loan process. Credit score models use a variety of data in a credit report to calculate a score.

Primary Issues that Change Credit Scores:

• Amount of time since accounts were opened
• Number and type of accounts with balances
• Proportion of current balances to credit limits
• Number of late payments over 30 days past due
• How long delinquent accounts were past due
• Bankruptcy, judgments, liens, collection accounts

If you plan on applying for a home loan in the near future, there are certain things to avoid during the 2 to 3 month period prior to applying for a loan that can reduce your credit score, which could affect your chances of qualifying, plus raise the rate and your monthly payments.

Before Applying for a Loan:

• Do not apply for any new credit cards before getting a loan
• Do not open new accounts to transfer credit balances
• Avoid running up credit card balances, but reduce them instead
• Don't buy a vehicle that requires getting new a loan financed
• It is not a good idea to close any accounts with or without a balance
• Do not allow any payments to go over 30 days late or to collection

Check for errors on your credit report and dispute the accuracy if you find any. Consumer disputes must be investigated by the credit reporting agencies within 30 days of reporting an error. If the derogatory information cannot be confirmed by the source during that time period, it must be removed from your report, which could boost your score.

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1. Ratio of Balance to Limit

The ratio of account balance to the amount of credit available appears to have more influence on the credit score formula. The less available credit a mortgage borrower has on credit cards, the lower the score would be. More available credit would mean a better score. This change could have a broad impact on credit scores used by mortgage lenders to qualifying borrowers, if credit card issuers implement more cuts on their maximum limits. A borrower’s credit score may drop if the available credit limit is reduced, whether an account has a balance or not.

2. Number of Credit Accounts

It used to be that having too many open credit card accounts was viewed as a negative factor. It appears, however, that has changed, as long as the accounts have not been delinquent. More open and active accounts could now have a positive effect on credit scores under the new scoring system. A potential negative aspect of this change is that more credit card issuers may close seldom used consumer accounts. From a mortgage lenders perspective, underwriters will also have to change how they view borrower credit files.

3. Isolated Issues Counted Less

The new credit score model will apparently be more forgiving to mortgage borrowers who only have one major negative problem on their credit report. The scoring model calculates the severity and frequency of negative credit items. Depending on the item reported, isolated problems will have less impact on credit scores, as opposed to continuous and recurring late payments and delinquencies. The potential upside of this change is that good borrowers will not be lumped into a category of repeat offenders.

4. Small Collection Accounts

Collection accounts with an original amount of less than $100 are disregarded. Another positive benefit for borrowers with minor debts owed from parking tickets, unpaid library fines, small medical bills, or other disagreements. Infractions like these should no longer affect credit scores.

5. Authorized Users on Account

The previous FICO credit score model allowed for authorized users on credit card accounts to build a positive credit profile without being the primary card holder. While some authorized user data is allowed, the new formula has reduced the ability to build credit based on this method.

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There are definitely some major advantages to the access bond style. They allow people to readily borrow money against their equity to cover unexpected or necessary expenses. While these expenses may have traditional bonds available they are often at higher interest rates than most people’s home bonds. The key is that the borrowed money should be paid off as rapidly as possible to avoid paying more out in interest over the course of the loan.

Without a doubt, the biggest advantage to an access bond is that it gives you ready access to additional money to cover expensive purchases if the need arises. The best part for people using it is that it is at the interest rate of the home purchase which is often one of the lowest interest rates you can acquire. Car purchases are one of the areas where many people choose to utilize access bonds because most car bonds come with a significantly higher interest rate than a traditional home bond. This is because cars are considered to be a liability by banks since they depreciate in value.

Another type of bond which many people choose to use their access bond to replace is student bonds. Student bonds are an effective method available for people to acquire the money they need to send their children to school. The major disadvantage to these bonds is that they always come with a high interest rate and the bond is always structured to ensure that you pay the interest on the bond for the maximum amount of time possible. They do this by limiting you to interest payments until the student has actually graduated from school which means you are acquiring interest for at least four years.

Despite these benefits, there are some things that you do need to consider when you are looking at access bonds as an option. You are essentially borrowing money against the equity of your home. While your home loan has a lower interest rate than many other types of loans it is also for a significantly longer period of time. This means that if you cannot pay down the bond to be equal to the actual home bond amount fairly quickly you could pay out more in interest based on time. You must also consider that it is putting your home up as collateral so if you do not pay the bank could conceivably take your home to cover their losses.

There is no specific length of time that exists for bond approval. Typically it will take around 30 days although it can take longer. In rare circumstances it may even take less than 30 days but this is not common. The prequalification process is usually short but the final bond approval process takes a good deal of time because it has to move through a large group of different people who will take steps to ensure that you are able to pay back on the bond.

The first stage of the bond approval process involves lenders verifying your identity and your income. This is done as the application moves through a number of different people. Legal documents which are furnished by your employer will be required. This is designed to show the lender how much income you make. If you are self employed you will almost always need to be able to furnish at least 2 years of income reports which demonstrate that you are successfully making money.

The most grueling part of the process is getting in the above stated paperwork. It might be frustrating at first because you might be turning in your paperwork the same day and they do not get to it until days later. Be patient, your bond is not the only bond. They have many bonds they process and work on daily. This is why 30 days or more is generally quoted.

Hold ups in the process are also often seen in locating paperwork on your behalf. This is often times those documents you never thought you would need. In that, you will usually have to retrieve it from another source. This means you now have to wait on another third party to supply you with the necessary documents so you can deliver them to your lender.

The best thing that you can do to keep the process moving efficiently is be prepared. Discuss with your lenders representative what information you will need as the process progresses. Prepare all of these documents in advance and be ready to send them to the lender as quickly as possible.

Once you have submitted all of the documentation that the lender requires they will send it to an underwriter. It is probable that the underwriter will request additional documentation before finally approving the bond application .This information is usually related to proving what other documents declare. The key to success at this stage is to just reply quickly to the underwriter so they can continue the process.

Automated credit scoring programs are tracking your payment punctuality, and other personal financial information that directly impacts your ability to qualify for a loan, and the interest rate you will be offered. A credit score of 720 or better can provide the lowest interest rates, while a score of 620 or less can result in high interest rates.

What are the Most Common Credit Scores Problems?

1. Late Payments – Not considered late until 30 days past the due date. 60 or 90 day late payments are more negative than a 30 day late. The age of late payments can influence credit scores. Recent late payments are considered worse than older ones. More serious issues include: consumer credit counseling, collections, bankruptcy, and foreclosure.

2. Outstanding Debt – Having a large number of open accounts with balances may reduce your credit scores. Another issue is the ratio of your credit limit compared to the current balance. Using 75% of your credit limit is a greater risk than using 25%.

3. Account History – Older credit accounts can have a positive effect on credit scores, as long they are not delinquent. Having recently opened accounts could reduce your scores. Also, multiple credit inquiries are a flag indicating a possible new account.

How Do You Correct Credit Report Errors?

Incorrect information can sometimes appear on a credit report. If you believe there is a potential error on your credit report, you are entitled to dispute the accuracy of the information. The federal Fair Credit Reporting Act gives you the right to challenge inaccurate information by contacting the reporting agencies, and the company who reported the information. Under the FCRA, they are responsible to correct any errors on your credit report free of charge, and within a specific time limit.

The credit bureaus, Experian, Equifax, and Transunion, are required to investigate your dispute within 30 days of reporting the potential error. They will contact the source of the derogatory information and try to confirm the record. Providing documentation to support your claim, if you have any, can also expedite the process. If the credit bureaus are unable to confirm the derogatory information from the source, the item must be removed from your credit report, which can improve your score.

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Property prices do increase a lot over the years, which is hard to believe as we suffer a terrible downturn. Property investments can still be a good investment for you.

When looking for a good property investment remember the age old adage, LOCATION, LOCATION, LOCATION. Location is the number 1 factor when looking at property investment.

In the UK house prices double about every ten years. In view of this property investments can still be quite lucrative. Property is a prime example of a simple idea being arguably the best investment idea.

Keeping figures simple and rounded well do a quick example. Invest in a house for 150k and keep it for ten years. It should be now worth circa 300k.

If (in the above example) buying on a mortgage you should shop around for the best deals as even a little saving on your mortgage rate could mean a big cash saving. It’s always a great idea to have some cash at hand in case another great investment idea comes along.

**If you want to learn how to reduce your mortgage by years you can use our mortgage overpayment calculator and be shocked at the result**

Back to the article proper.

Chopping and changing lenders can be a hassle, but the ultimate return on your investment can be much more if you do a little work. With property investment ideas a mortgage forms an important part of future profits.

So many new investors are caught out by the peaks and troughs of the property market. They get in late and buy at a peak. Then panic and try to sell in a trough. This is a guaranteed way to lose money and confidence.

Going back to the phrase, simple is usually best, you need a system to work from to maximise any chance of great returns. If property is to be your medium then the formula has to be, wait for a trough, establish an affordable good location, obtain a good mortgage, get a good management team in to secure regular premium rentals.

For centuries it has been proven that the best ideas are the simplest with the wheel being a prime example. Don’t confuse yourself when searching for a good investment idea. Simplest is best. Click the following link for great investment ideas.

1. Amount of Available Credit

The ratio of account balance to the amount of credit available appears to have more influence on the credit score formula. The less credit available that a borrower has on credit cards, the lower the score would be. More available credit would mean a better score. This change could have a broad impact on credit scores used by mortgage lenders to qualifying borrowers, if credit card issuers implement more cuts on their maximum limits. It doesn’t matter if an account has a balance or not, credit scores may drop if the available credit limit is lowered.

2. Number of Open Accounts

It used to be that having too many open credit card accounts was viewed as a negative factor. However, it appears that has been reversed, provided that the accounts have not been delinquent or overused. More open and active accounts could now have a positive effect on credit scores under the new scoring system. More credit card lenders can close seldom used accounts, which is a potentially negative effect. From a mortgage lenders perspective, underwriters will also have to change how they view borrower credit files.

3. Isolated Credit Issues

The new credit score model will apparently be more forgiving to mortgage borrowers who only have one major negative problem on their credit report. The scoring model calculates the severity and frequency of negative credit items. Depending on the item reported, isolated problems will have less impact on credit scores, as opposed to continuous and recurring late payments and delinquencies. The potential upside of this change is that good borrowers will not be lumped into a category of repeat offenders.

4. Small Collection Accounts

Collection accounts with an original amount of less than $100 are disregarded. Another positive benefit for borrowers with minor debts owed from parking tickets, unpaid library fines, small medical bills, or other disagreements. Infractions like these should no longer affect credit scores.

5. Authorized User Credit

The previous FICO credit score model allowed for authorized users on credit card accounts to build a positive credit profile without being the primary card holder. While some authorized user data is allowed, the new formula has reduced the ability to build credit based on this method.

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