I know you are wondering how in the heck can paying off an account lower my credit score. Yes, I know it sounds backwards that by trying to do the right thing you get penalized. Here is he scoop. I have long taught that 35% of your credit score is past delinquencies. Obviously, paying your accounts in full and on time has the greatest positive impact on your score. So why would paying a collection potentially lower your score?

Here’s why, the last 24 months of activity has the greatest impact on your score. The newer the item the more impact it has. The credit scoring model uses the date of last activity to determine when the 24 month countdown starts. (Note: accounts older than 24 months still have an impact on your credit score). If you have an older collection that has not had any activity on it and you make a payment, you have restarted the clock because you have moved the date of last activity.

Many times collection agencies will try to contact you in order to have you make a payment so that they can keep the account on your credit bureau longer. Per the Fair Credit Reporting Act, collections can stay on your report up to 7 years plus 180 days from the date of last activity. Do not fall for it!

I am not suggesting that you not pay your debts. I am letting you know that there is a strategic way to handle past collections. Here are 3 simple steps:

1. Begin with accounts reporting in the last 12 months.
2. Before you pay anything, write to the credit bureaus and request validation of the debt. Validation is not verification. Federal law specifies what is considered validation. See Fair Debt Collection Practices Act for more information.
3. If debt comes back verified, contact the collection company and negotiate for a lower payment. We suggest that you ask for a pay for delete. A pay for delete is a request that the collection company deletes the entry from your credit report when payment is received. Pay for deletes are becoming increasingly more difficult to get. But, a paid collection is better than an unpaid one.

If you are applying or going to apply for  a home, we suggest you wait until you are instructed by your lender to pay off ANY collections. If your lender tells you pay off a particular account, then they have prepared for the impact it may have on your credit score.

There is nothing anyone can do for you that you can not do for yourself when it comes to your credit. However, if you want guidance and education about credit please contact us at info@intcredit.net.

Tags: budget, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, money, Money Tips, Real estate, savings

Don’t let your credit keep you in bondage. You are more than your credit score. Do not let a three digit number stop you from realizing you financial dream. This is an open forum where we invite listeners to call in with their questions. http://www.blogtalkradio.com/victoriafinch

Tags: budget, business, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, finance, money, Money Tips, savings

Past delinquencies make up 35% of your credit score. Obviously paying your bills in full and on time will have the greatest positive affect on your credit score. The credit scoring model looks at the level of delinquency. For example a judgment will have a greater negative impact on your score than a collection. Always try to avoid  public records such as bankruptcy, tax liens, and judgments.

Also, activity in the last 24 months has the greatest affect on your score. When looking a credit repair strategies concentrate on activity in the last 24 months first. Pay off collections in Escrow NOT before. By paying an old collection you will make it new again because the date of last activity will change.

If you would like to learn more about credit scoring  and how past delinquencies affect your credit score, please contact us at info@intcredit.net.

Tags: banking, budget, collections, credit, Credit Education, Credit Scoring, credit tip, debt collection, Fair Credit Reporting Act, finance, money, Money Tips, savings

Victoria Finch will share  her expertise in credit at the U3 Westside Powerhour event. Learn  important aspects of credit scoring.  Learn how to transform credit from good to great!

Tags: business, credit, Credit Education, Credit Scoring, credit tip, Fair Credit Reporting Act, finance

Home ownership is part of the American dream. Many of us grew up with the notion that we would grow up, get married, and find the perfect home to raise our children. For some the dream of home ownership is a seamless process. But, for others it can be a nightmare. Many potential homeowners seek out a Realtor prior to checking their credit and getting a loan approval. That is a backwards approach to home buying.

Case study: Jane is a small business owner. She has always paid her bills on time and maintains relatively low balances on her credit cards. Knowing she had “good” credit, Jane sought out a Realtor to help her find her dream home. Jane found a home and made an offer. After finding a home, Jane’s Realtor referred her to a Mortgage Loan Officer. Jane’s credit score came back in the low 700′s, but her loan officer told Jane she has been denied for a home loan. Three years prior, Jane had an issue with a vendor for her business and her account was sent to a collection agency. Jane had settled the debt with the original vendor, but somehow it had gotten transferred to a collection agency. It took Jane months to straighten out the account with the vendor and the collection company. The sellers would not agree to keep the home off the market. The house sold to someone else.

Jane’s story is not unusual. I see it everyday. I cannot stress enough that lending is not just about your credit score. You must be proactive regarding your credit. In today’s economic climate the people making decisions to approve or disapprove financing are being very cautious. Follow this order when considering buying a home: 1. Check your credit. 2.Get mortgage approval. 3. Seek out a Realtor.

Tags: credit, Credit Education, credit tip, Home Buying, home purchase, Real estate

Today credit is more important than ever. Financial institutions are supposed to loosen their lending requirements, but the opposite has happened. As recently as 18 months ago,  you could qualify for prime lending with a 720 credit score. Now,  in most cases, you need at least a 750 credit score.

As lending requirements go up, so must your credit knowledge. When it comes to credit what you don’t know will hurt you. Below I have listed  five reasons I believe consumers do not get the credit help they need.

1. Credit denial. “My credit is not THAT bad.” Your credit may not be THAT bad, but if your score is not a 750, you need to work on it.

2. Procrastination. “I’ll get around to it.” The fact is that many consumers do not get “around” to working on their credit and the financial damage continues.

3. Timing. “I am not going to apply for credit, so I can wait to fix my credit.” Credit restoration can be a long, drawn out process. If you wait until you need it, it may be too late.

4.Affordability of credit repair. “I can’t afford to pay someone to fix my credit.” The fact is, there is nothing a credit repair company can do for you that you cannot do yourself. If you are not going to take the time to work on your own credit, you cannot afford not to get help. Which brings me to number five.

5. Underestimating what your credit is costing you. Even with today’s rates you could be paying more than over $3400 per year in interest on a $200,000 home if your credit score is a 620 versus a 760. That’s OVER $280.00 per month. Could you use an extra $280.00 per month? For more information see mortgage calculators on banrate.com and myfico.com.

Do not play into the hands of the banks by not working on your credit. If you do not have the time, knowledge, and patience to work on your own credit, hire a professional. Working with the right professional will save you thousands of dollars in the long term.

Tags: Credit Scoring, credit tip, FDCPA, homebuyer, Money Tips, saving, savings

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

We are bombarded daily by advertisers claiming to save us money if we purchase their services in a bundle. I call “foul”. Typically these bundle discounts are only available if you purchase another service. For example, I have cable television and I only have their “stater plan”.  However, anytime I call with a question. They try to sell me a “cost savings package”. For x amount of dollars I can have t.v., internet, and telephone.  In this particular case I can have it all for a low $99.00 per month for 2 years.  Folks this is NOT  good deal. Here’s what you can do.

1. For Internet: Check with you local internet provider and tell them in detail what you use your internet for. You may be surprised to find out you are paying for features that you do not use. Try out different speeds. In most  applications, you probably won’t notice a huge speed difference.
2. Love movies? Don’t pay cable or other services for movies that you are usually are too busy to watch. Consider joining a movie rental service such as Net Flicks or Block Busters. Movies are delivered to your door. You can rent several movies at a time and keep them for as long as you want. Or better still find a RED BOX movie dispenser and rent movies for $1.
3. Once you have internet, I suggest looking into the MagicJack for phone service. They sell them at Walmart and  many other retailers. The Magic Jack costs approximately $40.00 and the service is good for 1 year and only $19.99 per year after the that.

Here’s my breakdown:

• Cable television   $29.99 (75 channels)
• Internet                  $40.00
• Home Phone:        $1.67 ($19.99 per year)

Total:                            $71.61  per month

Monthly Savings: $27.34 per month Yearly Savings: $328.13

Bottom line, if you have to spend money to save money, you are NOT saving money.

Tags: budget, credit, credit tip, money, saving