Tuesday, August 06, 2013

Your Credit Score Explained

We are compiling information regarding credit reports and credit scores.

Credit Report Errors from MyCreditUnion.gov sponsored by National Credit Union Association NCUA covers how to deal with disputes on credit reports

  • How can I correct errors found in my credit report?
  • What happens next?
  • What if nothing is resolved?
  • What if I am still dissatisfied?

On Saturday, May 18, 2013, Sheryl Harris, The Plain Dealer, wrote an article, "More credit myths that can trip you up."
In the article she discusses the following myths and facts.
  • Myth: It's not important to order your credit report
    • Fact: credit reports contain errors.
  • Myth: If you co-sign a student or other loan, it doesn't affect your credit
    • Fact: payment information on co-signed loans can be reported.
  • Myth: Freezing a credit report locks all companies and debt collectors out
    • Fact: lenders can have access to credit reports.
  • Myth: Transferring balances can hide debt
    • Fact: total debt is important, not interest you pay.

Same Name Identity Problem - On Friday, May 17, 2013, Teresa Dixon Murry, The Plain Dealer, wrote about an ex-wife's bankruptcy and the concerns because the new wife's name is the same.
Ms. Murray suggests
  1. Keep maiden name as middle name.
  2. Contact credit bureaus by mail.
  3. Check credit reports before and after marriage.

60 Minutes segment from February 10, 2013 called "40 Million Mistakes: Is your credit report accurate?"

"A new study indicates as many as 40 million consumers have a mistake on their credit report and Steve Kroft finds it's hard to get them fixed." Also check out 60 Minutes Overtime to see the frustration of trying to fix your report.

#1 Takeaway: check your credit report at www.AnnualCreditReport.com.

On Monday, January 14, 2013, Debbie Dragon wrote, "How to fix errors on your credit report," in MyBankTracker.com.

Regarding disputes, "Write out the reason for disputing each mistake you circled on your report so the credit reporting bureaus can investigate and make corrections. Keep a copy of the dispute with your credit report in case you need to refer back to it."


On Thursday, October 25, 2012, Teresa Dixon Murray wrote "Westlake man has one of the highest credit scores in the entire country, 848 out of 850" in the The (Cleveland) Plain Dealer.

She writes, "He has a few simple rules:

  1. Never charge something without having something to show for it.
  2. Never spend money without knowing when you can repay it.
  3. Pay your bills on time."

On Friday, August 3, 2012, Teresa Dixon Murray's, Money Matters column in The (Cleveland) Plain Dealer, notes that, "Credit scores are confusing..."
  • She says that there are gaps between different credit scores because they're measured on different scales. Click here to read more.
Click here to take the Credit Score Quiz from Consumer Federation of America (CFA) and VantageScore Solutions - take the quiz before you fill out a loan application!

More reasons to check your credit report - click here to read the four-part series from the Columbus Dispatch titled, "Credit scars." 

Click here to read details on the difference between Vantage and FICO from Teresa Dixon Murray, The Cleveland Plain Dealer, on March 9, 2012...you need to scroll down for the second Q & A

  • She states, " I've never gotten a straight answer from Fair Isaac Corp. (architect of FICO scores) or the bureaus about why there are two or more types of scoring with different top scales. "
  • Also, click here to see a comparison between FICO and Vantage from Don Taylor at Bankrate.com 

Click here to read "Don't Micromanage Your Credit Score" by Jennifer Waters of The Wall Street Journal from March 3, 2012.

  • Ms. Waters states, "A score is determined mainly by how promptly you pay your bills and what kind of debt you carry, though other factors also feed into it. "
  • Also in the article is, "Scores also vary because the three credit-reporting companies don't have the same information. 'Lenders don't report all the same things to all the [credit-reporting companies], which is why scores will vary,' says Beverly Harzog, a credit-card analyst with Credit.com."
    • Eaton Family Credit Union reports to all three credit reporting agencies.

Click here to read "What happens to your credit score when a card gets closed?" by Theresa Dixon Murray of The Cleveland Plain Dealer from December 9, 2011.
  • Ms. Murray responds to the question: What happens when the card issuer closes out the card due to inactivity? How does that impact your score?
The definition of a FICO Score from Barry Paperno, Consumer Affairs Manager, myFICO.com
  • A FICO score is a three-digit number between 300 and 850 that summarizes a person's credit risk based on their credit report at a particular point in time.
  • The number tells a prospective lender how likely someone will pay on time, with higher scores indicating lower risk and with lower scores indicating higher risk.
  • What the score looks at on a credit report is how the person pays, how much he or she owes, how long they have credit, to what extent any new credit has been taken on and the different types of credit experience they've had.
  • Information the score doesn't look at on a credit report includes marital status, gender (and) race. It doesn't even look at the name or address, so the location has no bearing on it.
  • Another thing it doesn't look at that is commonly misunderstood: It does not look at income or assets or anything like that.
Also in this Yahoo! Finance article titled "FICO insider explains credit scores," by , from Tuesday August 30, 2011
  • Why do the scores differ by credit bureau?
  • How often scores change?
  • How to see your FICO score?
Click here to read, "FICO's 5 factors: The components of a FICO credit score" by Jeremy M. Simon, from CreditCards.com.
  1. Payment History
  2. Debit Amounts
  3. Length of Credit History
  4. New Credit
  5. Credit Mix
Thanks to our friend, Ondine Irving, for the heads up.

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