There is a lot of misinformation out there about what a credit score really is. Simply put – a credit score is a 3 digit number that seeks to quantify how likely a borrower is going to be 90 days late on a payment. Why 90 days? At 90 days, lenders spend more to maintain the account. Calls increase, increased notices go out, the lender may turn the file over to another department or collection company.
Each score is specific to each bureau. The score is generated by analyzing the information in the consumer’s credit report at THAT particular point in time. The higher the score the less the odds of default. For instance statistically, a consumer with a credit score of 800 and above has a 1292 t0 1 chance of becoming 90 days late while a consumer with a credit score between 620 to 659 has a 38 to 1 chance of being 90 days late.
Your credit score is more important than ever. When it comes to credit what you do not know can cost you big. Stay tuned for more Credit 101.
After a bankruptcy filing many consumers feel that their credit is ruined. Consequently, they do not check their credit reports. There are two major issues with that train of thought. First, bankruptcy will hit your credit hard, but your credit can recover. Secondly, even though your credit score is typically lowered by a bankruptcy there are steps you can take to minimize the impact.
Steps To Take:
Get a copy of your credit report. You can obtain a free one by going to http://www.annualcreditreport.com (I suggest you do this 3-6 months after discharge).
Carefully review your credit report for errors.
Make sure any account listed in the bankruptcy is notated as “Zero” balance and “Included in bankruptcy”
Also review the public record section of your credit report to ensure that judgments included in the bankruptcy have been released and are notated “bankruptcy”
If you find errors on your credit report, send a letter of dispute to the 3 credit reporting agencies.
Be diligent in your efforts. Dealing with credit reporting agencies can be time consuming and frustrating. If you feel you would like to consult a professional please contact me at 317-410-4110 or email: info@intcredit.info.
Whenever I mention keeping credit separate from your spouse to my clients, I often get a deer in the headlight stare. You too may be thinking that this is a bold statement, but consider the following:
Joint accounts affect you equally. If one spouse spends more than the other. Both scores are affected.
If there is an emergency and you need to apply for credit, it may not be available.
A divorce decree does NOT take prescedent over creditor agreement. Creditors will collect from whomever they can.
Now, don’t panic and close out your joint accounts. This too can hurt your credit score. Fifteen percent of your credit score is based upon credit history. My advise is that if you have joint accounts, make sure you both monitor the accounts.
