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:

1. 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).
2. Carefully review your credit report for errors.
3. Make sure any account listed in the bankruptcy is notated as “Zero” balance and “Included in bankruptcy”
4. 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”
5. 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.

Tags: banking, bankruptcy, credit, Credit Scoring, credit tip, money, Money Tips

As a Credit Specialist, I am often approached with questions about credit cards.  Having credit cards are essential in maximizing a good credit rating.  Credit Utilization is 30% of the credit score and the mix of credit you have is 10% of your credit score. If you have no credit cards you are missing out on major components of the credit score.  What you need to know:

• Ideally you want to have 3-4 major credit cards.
• Major credit cards are best. You don’t need to have a bunch of department store charge cards.
• Keep the balances down to around 10% of available limit. If you can’t manage that, keeping balances at 30% of limit is still acceptable.
• DO NOT exceed 50% of available limit or your credit score will take a BIG hit.
• Keep credit cards in your name separate from your spouse.

Here’s what I suggest:

• Keep credit card spending within limits described above.
• Have a spending plan. For example: I will use XYZ credit card  to purchase only gas for my car this month.
• Pay your bill on time.
• Pay the balance in full if you can when you get the statement.
• Spread the balances out among your cards, but keep one for emergencies.
• Make sure you use your card at least once every three months so that it will not go unrated on your credit report.

In conclusion, you MUST have credit cards to optimize your credit score. Credit cards are not the problem.  It is the misuse of credit cards that create problems.

Tags: budget, credit, Credit Scoring, credit tip, homebuyer, money, saving

Many people who have credit issues are misinformed about credit repair companies.  Many consumers feel that these companies are all scams. Like in any other industry, there are those that are not honest. However, there are reputable companies like Integrated Credit Specialists that seek to educate consumers.

Credit restoration can be a lengthy process and requires a lot of work.  Just like you can do your own taxes, you can repair your own credit. However, due to knowledge and time involved most people choose to use a professional.

If you decide to use a credit repair company, watch out for the following:

• The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they have promised.
• The company doesn’t tell you your rights and what you can do for yourself for free.
• The company advises you to dispute all of the negative information in your credit report, regardless of its accuracy or timeliness. You can be prosecuted criminally for disputing information that’s accurately and timely reported.
• The company makes claims such as: “We can erase bad credit”, “Remove negative credit! Guaranteed!“

In conclusion, credit repair companies cannot do anything for you that you cannot do yourself. But, if you do not have the time, knowledge, or patience to work on your own credit, you should hire a professional.

For more information about the Credit Repair Organizations Act  click here.

Tags: credit, Credit Scoring

In 1956, Bill Fair and Earl Isaac devised analytical tools that attempted to quantify the risk of loaning an individual money and launched a company based on this scoring system. Their company was called Fair Isaac & Co., better known by the acronym FICO. Fair Issac & Company had several decades of success in Europe before coming to America. FICO’s system caught on in the United States beginning with Equifax in 1989 and followed by Experian and TransUnion in 1991.

I have always advocated that consumers take an active role in understanding the often confusing and difficult credit scoring model. Just when you thought credit scoring scoring couldn’t get more confusing for consumers, FICO roles out a new model – FICO 08.

Per Fair Isaac, here are the key changes in the new model:

• The new model will still allow legitimate authorized users such as a spouse and/or family member.  This credit building technique still works for spouses and children who have the same last name as the credit card owner. To maximize the benefit of this option, you should make sure that the account you are being added to belongs to someone you trust, has NO negative history reporting at all, has and keeps a balance under 30% of the limit and is at least 2-3 years old.
• Having just one big black mark on your credit, like a repossession, will matter less than it used to if your report demonstrates responsibility overall.
• Collection accounts with balances less than $100 will not impact the credit score any longer.
• Maxing out those credit cards will drag your score down even more than it used to! FICO 08 increases the emphasis on having available credit.
• Having a mix of credit is also more important in FICO 08. This means you MUST have at least 1-2 active major credit card accounts.

There are three basic things you can do to help your score:

1. Accuracy: Make sure that what is reported on your credit report is accurate.
2. Credit Utilization: Keep credit card balance below 50% of credit limit at all times – 30% is better. DO NOT max out credit your credit cards. NEVER go over your limit.
3. Pay your bills on time: There are TWO important DON’Ts when it comes to late pays:

• DON’T underestimate the affect that late pays have on your credit.
• DON’T overestimate the kindness of creditors to remove late pays just because you have a good payment history with them.

In conclusion, no matter what happens with credit scoring, you must remain proactive. Ultimately, you are the only one who can ensure your credit is as good as it can be.

Tags: Credit Scoring, FICO 08