Sellers take as big a hit on their credit report by going through foreclosure as giving the lender a deed-in-lieu of foreclosure.
Points lost on a FICO score are:
Foreclosure or Deed-in-Lieu of Foreclosure
Both of these solutions affect credit the same. Sellers will take a hit of 200 to 300 points, depending on overall condition of credit. This means if a seller's FICO score before foreclosure was 680, it could dip as low as 380.
Short Sale
The effect of a short sale on a seller's credit report is identical to that of a foreclosure. The hit on your credit will show up as a pre-foreclosure in redemption status, This results in a loss of 200 to 300 points. This means a short sale with a previous FICO of 720 will see it fall from 520 to 420.
Showing posts with label Credit and FICO Scores. Show all posts
Showing posts with label Credit and FICO Scores. Show all posts
Saturday
I don't have anything, what can they legally do to me?
Surprisingly, the best approach for some people deeply in debt is to take no action at all. If you're living simply, with little income and no property, and look forward to a similar life in the future, you may be what's known as "judgment proof."
This means that anyone who sues you and obtains a court judgment won't be able to collect from you simply because you don't have anything they can legally take. Except in unusual situations you can't be thrown in jail for not paying your debts. Nor can a creditor take away such essentials as basic clothing, ordinary household furnishings, personal effects, food, or Social Security, unemployment, or public assistance benefits.
The key here is to grasp the knowledge, become more aware of the changes and policies that are being imposed on you, decide for yourself what is best for you, and take control of your future.
This means that anyone who sues you and obtains a court judgment won't be able to collect from you simply because you don't have anything they can legally take. Except in unusual situations you can't be thrown in jail for not paying your debts. Nor can a creditor take away such essentials as basic clothing, ordinary household furnishings, personal effects, food, or Social Security, unemployment, or public assistance benefits.
The key here is to grasp the knowledge, become more aware of the changes and policies that are being imposed on you, decide for yourself what is best for you, and take control of your future.
How do I get out of credit card debt?
Always pay the mortgage first and keep it current. Same with the car loan. Go on a cash diet. Create a allowance for yourself. From each check, set aside an amount of cash to cover everything you have to do for that period. Change credit-card companies.
Make a budget. What credit counselors advise their clients to do is look through all their bills. Look at secured debts such as your home and your car. Then look at the essentials: power, phone, groceries, insurance, etc. Take out your credit card statements to see what you owe on each and the interest rate. Finally, look at the items you want, but don't really need like cable television, gym memberships, dinners out, clothing.
Once you have an idea of what your monthly expenses really are, look for ways to cut. The first two areas are essential and everything else like your gym membership, dinners out and different pairs of sneakers for walking, running, driving, and for standing is negotiable.
Make a budget. What credit counselors advise their clients to do is look through all their bills. Look at secured debts such as your home and your car. Then look at the essentials: power, phone, groceries, insurance, etc. Take out your credit card statements to see what you owe on each and the interest rate. Finally, look at the items you want, but don't really need like cable television, gym memberships, dinners out, clothing.
Once you have an idea of what your monthly expenses really are, look for ways to cut. The first two areas are essential and everything else like your gym membership, dinners out and different pairs of sneakers for walking, running, driving, and for standing is negotiable.
Can creditors contact my friends and family members?
If your main concern is that creditors are harassing you remember that collectors cannot…contact your friends & other third parties, except for your attorney, a credit reporting bureau or the original creditor, and only for the limited purpose of finding information about where you are.
Collectors can contact your spouse, your parents if you are a minor and your co-debtors unless you have asked them in writing to stop contacting you. Collectors cannot call you repeatedly or contact you before an unreasonable time. The law presumes that before 8 a.m. or after 9 p.m. is unreasonable.
They cannot contact you at work if your employer prohibits it, use or threaten to use violence, use obscene or profane language, place calls to you without identifying themselves as bill collectors, claim that you owe more than you do, claim to be attorneys if they're not, claim that you'll be imprisoned or your property will be seized, send you papers that resemble legal documents, and they collectors cannot add unauthorized interest, fees or charges to what you owe.
Collectors can contact your spouse, your parents if you are a minor and your co-debtors unless you have asked them in writing to stop contacting you. Collectors cannot call you repeatedly or contact you before an unreasonable time. The law presumes that before 8 a.m. or after 9 p.m. is unreasonable.
They cannot contact you at work if your employer prohibits it, use or threaten to use violence, use obscene or profane language, place calls to you without identifying themselves as bill collectors, claim that you owe more than you do, claim to be attorneys if they're not, claim that you'll be imprisoned or your property will be seized, send you papers that resemble legal documents, and they collectors cannot add unauthorized interest, fees or charges to what you owe.
If I file bankruptcy, can I ever get another credit card?
You as a consumer are being encouraged to take on more debt than ever before. Do you think filing a bankruptcy will stop these companies from pursuing you?
On the contrary, you will find another offer for more credit cards in your mailbox sooner than you think. These companies are more willing to give you new cards because they assume now that you have filed for bankruptcy you have more money. It’s easier for credit card companies to put you in bankruptcy and then start you all over again.
On the contrary, you will find another offer for more credit cards in your mailbox sooner than you think. These companies are more willing to give you new cards because they assume now that you have filed for bankruptcy you have more money. It’s easier for credit card companies to put you in bankruptcy and then start you all over again.
Should I file bankruptcy to get creditors off my back?
If creditors are harassing you, bankruptcy is not necessarily the best way to stop them. The whole intent of a collection agency is to work on your conscious by any means necessary. They will employ every tactic they can dream up, while they have you on the phone. Whether it’s making you feel guilty for being in your situation, by telling you that you’re unfit to be an American or that your lazy and a burden on society.
They may also contact your place of employment and hint to your co-workers that you are a bad person. I have heard of instances where collection agencies have suggested that debtors take on menial and demeaning tasks such as scraping gum off of buildings for pennies.
And know matter what they tell you on the phone or how much they threaten, they have already cut your credit score down to your shoe size. So there's not much more they can do. You can't get water from a rock!
They may also contact your place of employment and hint to your co-workers that you are a bad person. I have heard of instances where collection agencies have suggested that debtors take on menial and demeaning tasks such as scraping gum off of buildings for pennies.
And know matter what they tell you on the phone or how much they threaten, they have already cut your credit score down to your shoe size. So there's not much more they can do. You can't get water from a rock!
The phone call I got from a collection agency..
I can remember some time ago being harassed by a debt collector. First it started with these letters that had urgent stamped in red on the envelope. And inside would be this short memo that read, did you misplace pay your bill?
Did you forget to send in your check? After three months of that I started receiving these phone calls from a very concerned billing clerk, who said, hello Sue? It’s Melanie. I just called to verify your billing address and by the way are you still working at the same company and is their phone number still 555-1223 and do you still bank at …? We’re having trouble with our computer system and I just want to verify all of your information again. This is normal. It’s just routine.
Less than an hour after I hung up the phone, someone a little less pleasant called. He didn’t start with hello, he began with, Sue you ought to be ashamed of yourself. You are the only women in this country that doesn’t pay her bills on time. How does that make you feel? To be so irresponsible? I’d like to know what you are going to do about this problem you’ve created? I know you at least have 100 dollars you can give me today, right? You can sell some of that stuff in there.
I started to look around the room. Can this guy see me?
Did you forget to send in your check? After three months of that I started receiving these phone calls from a very concerned billing clerk, who said, hello Sue? It’s Melanie. I just called to verify your billing address and by the way are you still working at the same company and is their phone number still 555-1223 and do you still bank at …? We’re having trouble with our computer system and I just want to verify all of your information again. This is normal. It’s just routine.
Less than an hour after I hung up the phone, someone a little less pleasant called. He didn’t start with hello, he began with, Sue you ought to be ashamed of yourself. You are the only women in this country that doesn’t pay her bills on time. How does that make you feel? To be so irresponsible? I’d like to know what you are going to do about this problem you’ve created? I know you at least have 100 dollars you can give me today, right? You can sell some of that stuff in there.
I started to look around the room. Can this guy see me?
How can I increase my credit score?
How can you increase your credit score? Paying off your credit card debt in full each month does not make your credit rating go up. Paying off an old debt, can actually make your score go down. Closing credit cards can also make your score go down. Why? Because by closing your credit cards, you reduce your debt to equity rating.
If you have 3 credit cards each with a 10000 dollar credit limit and I didn’t owe any money on them and I close 2 cards, my equity is reduced from 30000 dollars to 10000. My choice should have been to keep those credit cards open, with no balance, to keep my debt to equity ratio high. Can you see that having credit but with little or no balance owed, is actually a plus.
If you have 3 credit cards each with a 10000 dollar credit limit and I didn’t owe any money on them and I close 2 cards, my equity is reduced from 30000 dollars to 10000. My choice should have been to keep those credit cards open, with no balance, to keep my debt to equity ratio high. Can you see that having credit but with little or no balance owed, is actually a plus.
Do Insurance companies look at my credit scores?
Insurance companies are using studies that lead them to believe that the lower your credit score, the more likely you will get into an accident and therefore your premium should be higher.
How can I stop bill collector harrassment?
If you are being harassed by phone calls from collection agencies, creditors or other bill collectors send them a cease or a stop contact letter by certified mail. Do not give out your social security number, place of employment, bank account number, or information of other family members. If they offer to take a personal check from you and hold it for 30 days or more, do not agree.
The collection agency is under no obligation to be truthful with you.
Their sole purpose is to separate you from your money.
A bill collector may not contact any third parties about your debt except your lawyer, credit bureaus, and those who might help the agency locate you. If a collector does contact someone else to help locate you, he or she cannot indicate that debt collection, or your debt, is the reason for the call. Contact can be made only during normal hours. You cannot be called before 8 am and after 6 pm. Nor can a collector call you repeatedly just to annoy or intimidate you.
The collection agency is under no obligation to be truthful with you.
Their sole purpose is to separate you from your money.
A bill collector may not contact any third parties about your debt except your lawyer, credit bureaus, and those who might help the agency locate you. If a collector does contact someone else to help locate you, he or she cannot indicate that debt collection, or your debt, is the reason for the call. Contact can be made only during normal hours. You cannot be called before 8 am and after 6 pm. Nor can a collector call you repeatedly just to annoy or intimidate you.
What are Collection Agencies?
If you miss more than a few payments, often creditors will ask for the full balance of the loan or debt to be paid immediately. The creditor has the right to do this if your loan agreement contains an "acceleration clause." If you immediately bring the payments up to date, the creditor may then decide not to insist that you pay the rest at once.
But when you do not respond with a payment, the creditor may threaten to turn the matter over to a collection agency, a business that collects debts for others. Often collection agencies work on commission, collecting between 30% to 60% of the amount they collect from you. You can expect debt collectors to use high-pressure tactics to collect a debt, although the Fair Debt Collection Practices Act (FDCPA) protects consumers from unnecessary harassment and offensive strong-arm tactics. The act-which applies only to debt collectors, not creditors-makes very clear what a collection agency, may not try its efforts to get you to pay.
But when you do not respond with a payment, the creditor may threaten to turn the matter over to a collection agency, a business that collects debts for others. Often collection agencies work on commission, collecting between 30% to 60% of the amount they collect from you. You can expect debt collectors to use high-pressure tactics to collect a debt, although the Fair Debt Collection Practices Act (FDCPA) protects consumers from unnecessary harassment and offensive strong-arm tactics. The act-which applies only to debt collectors, not creditors-makes very clear what a collection agency, may not try its efforts to get you to pay.
How can I clean up my credit?
Clearing unfavorable credit history usually takes a few years and a good strategy. First review your credit report and clear any inaccurate information. Have the credit reporting companies remove any “paid in full” accounts. Pay off any accounts that are in arrears. Ask the creditor to remove all negative information from your credit file in exchange for a check for the outstanding balance.
Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix - it probably won't raise your score.
Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
Note that closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered by the score.
Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information.
Keep balances low on credit cards and other "revolving credit". High outstanding debt can affect a score.
Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
Don't close unused credit cards as a short-term strategy to raise your score.
Don't open a number of new credit cards that you don't need, just to increase your available credit. This approach could backfire and actually lower score.
Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix - it probably won't raise your score.
Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
Note that closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered by the score.
Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information.
Keep balances low on credit cards and other "revolving credit". High outstanding debt can affect a score.
Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.
Don't close unused credit cards as a short-term strategy to raise your score.
Don't open a number of new credit cards that you don't need, just to increase your available credit. This approach could backfire and actually lower score.
How can I delete stuff on my credit reports?
Federal law requires credit reporting companies to delete any information that is outdated, inaccurate, unverifiable or misleading when it is brought to their attention. If your investigation of your credit results in a change or a deletion of the information contained within your report, you can request that Equifax send your revised credit file to any person or entity that received your credit report in the past 6 months for any purpose. For employment purposes, the length of time is 2 years.
Credit bureaus are legally required to investigate and correct wrong information, however, you have to point the error out to them.
Write a letter and describe the error and request an investigation. Send the letter by certified mail and return receipt requested to have proof they’ve received it.If they find the error, contact the creditor and ask them to send a written correction to all of its credit bureaus.
If you disagree with the results of the investigation, you can attach a 100 word statement of your version of the credit dispute to your credit report. Request a copy of your revised credit report to make sure it is correct.
Credit bureaus are legally required to investigate and correct wrong information, however, you have to point the error out to them.
Write a letter and describe the error and request an investigation. Send the letter by certified mail and return receipt requested to have proof they’ve received it.If they find the error, contact the creditor and ask them to send a written correction to all of its credit bureaus.
If you disagree with the results of the investigation, you can attach a 100 word statement of your version of the credit dispute to your credit report. Request a copy of your revised credit report to make sure it is correct.
What's not on my credit report?
Your credit report does not list your bank accounts whether checking or savings accounts. It also does not list mortgage loans, utility bills, medical bills, gas credit cards or other major assets. These types of items will show on your credit report when a debt collection has been initiated against you.
Credit scores consider a wide range of information on your credit report. However, they do not consider:
Your race, color, religion, national origin, sex and marital status.
Your age. Other types of scores may consider your age, but FICO scores don't.
Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however, as may other types of scores.
Where you live.
Any interest rate being charged on a particular credit card or other account.
Any items reported as child/family support obligations or rental agreements.
Credit scores consider a wide range of information on your credit report. However, they do not consider:
Your race, color, religion, national origin, sex and marital status.
Your age. Other types of scores may consider your age, but FICO scores don't.
Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however, as may other types of scores.
Where you live.
Any interest rate being charged on a particular credit card or other account.
Any items reported as child/family support obligations or rental agreements.
What is a FICO score?
Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the US are produced from software developed by Fair Isaac and Company. FICO scores are provided to lenders by the three major credit reporting agencies: Equifax, Experian and TransUnion. The higher the score, the lower the risk.
There are other credit bureau scores, although FICO scores are by far the most commonly used. The FICO score from each credit reporting company considers only the data in your credit report at that company. If your current scores from the three credit reporting agencies are different, it's because the information those agencies have on you is different. As your data changes at the credit reporting agency, so will any new score based on your credit report.
Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.
There are other credit bureau scores, although FICO scores are by far the most commonly used. The FICO score from each credit reporting company considers only the data in your credit report at that company. If your current scores from the three credit reporting agencies are different, it's because the information those agencies have on you is different. As your data changes at the credit reporting agency, so will any new score based on your credit report.
Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.
Why do companies use scoring systems?
Some credit reporting companies use scoring systems to help creditors evaluate your creditworthiness. Credit reporting companies instruct lenders to identify credit related factors such as income level, length of employment and payment history, and then assign point values to each characteristic. By comparing this information to the patterns in hundreds of thousands of past credit reports, the score identifies your level of future credit risk. The Federal Trade Commission has a rule that if a credit reporting company uses a scoring system, it must provide you with your score and an explanation of how the score was determined.
How long will my payment history remain on the reports?
Even though you make a payment in full, it does not remove your payment history. The length of time payment history remains in your file is:
7 years from the date of the last activity - Credit and Collection Accounts
7 years from the date filed - Courthouse Records
10 years from the date filed - Bankruptcy Chapters 7 and 11
5 years from the date filed - Satisfied judgments, paid collections New York residents only
In most cases your negative information more than 7 years old will be removed from your credit reports. However, employers, insurance companies, or potential creditors may legally request negative data prior to that limit.
7 years from the date of the last activity - Credit and Collection Accounts
7 years from the date filed - Courthouse Records
10 years from the date filed - Bankruptcy Chapters 7 and 11
5 years from the date filed - Satisfied judgments, paid collections New York residents only
In most cases your negative information more than 7 years old will be removed from your credit reports. However, employers, insurance companies, or potential creditors may legally request negative data prior to that limit.
What exactly is on my credit report?
Your payment history on your credit file is sent to these three companies by credit grantors with whom you have established credit. Your history includes both open and closed accounts:
Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
Severity of delinquency (how long past due)
Amount past due on delinquent accounts or collection items
Time since past due items (delinquency), adverse public records (if any), or collection items (if any)
Number of past due items on file
Number of accounts paid as agreed
Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
Severity of delinquency (how long past due)
Amount past due on delinquent accounts or collection items
Time since past due items (delinquency), adverse public records (if any), or collection items (if any)
Number of past due items on file
Number of accounts paid as agreed
Can employers look at my credit scores?
If you apply for a job with an annual salary of $20,000 or more, your prospective employer has the right to request your credit history.
What’s On My Credit Report?
Your credit report includes payment history for your bank loans, any major retailer accounts, and your bank or credit card accounts. For each account, the creditor terms, type of account, amount of the original debt or credit limit and the outstanding balance will be shown. Your credit report also shows a list of any inquiries made in the last 6 months by any credit grantors. All credit related, publicly available information such as foreclosures, judgments, tax liens or bankruptcies will be shown.
Amounts You Owe
Amount owing on accounts
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Your Credit History
Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity
Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems
Amounts You Owe
Amount owing on accounts
Amount owing on specific types of accounts
Lack of a specific type of balance, in some cases
Number of accounts with balances
Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Your Credit History
Time since accounts opened
Time since accounts opened, by specific type of account
Time since account activity
Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
Number of recent credit inquiries
Time since recent account opening(s), by type of account
Time since credit inquiry(s)
Re-establishment of positive credit history following past payment problems
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