UNDERSTANDING YOUR CREDIT SCORE
Unfortunately, very few people have "perfect credit" but having made
some mistakes in the past does not mean there is not a product for you.
No credit is just that. This means that the person has no information
pertaining to their payment history. The good thing is that there are
other things that can be taken into consideration to show you have the
ability and willingness to pay your debts. One positive thing is a
history of rent payments. Another thing to show is a cell phone or land
line telephone bill. Utility bills are another way to show a history of
paying bills. Simply having no file does not bar a person from
obtaining
home financing. There is no such thing as having no credit history. There is always something available to show a history of payment.
Slow credit is another possibility and is defined by someone who
does pay there bills but has some delinquency payments, just paying a
little slower than when they are due. Late payments affect your credit
based on the severity. Reporting agencies base there scoring on
multiples of thirty days. If the due date on ones credit card is
January 15th, and the payment is made by February 14th, there may be a
late fee from the card company but it will not show as a mark against
the credit file. If that payment comes in after February 14th it will
be considered a 30 day late payments and will show as a negative mark
against the score. This type of slow payment puts a red flag up for a
lender. There would be an additional mark if that payment came in after
60 days, again after 90 and again after 120 days late. Once an account
reaches 120 days late the card company will generally forward that
account to collections. It is very important to realize that
delinquencies on different types of accounts are considered more severe
than others. A late payment on ones mortgage is considered much more
severe than one on a card. Installment
loans
fall in between revolving debt and mortgage debt. Slow credit is simply
a person that has made some late payments but has been able to get
those accounts current and has had relatively few delinquencies. In
addition slow payment is different than a bad payment history.
Bad credit
is a track record of payments that contains severely delinquent
accounts and information such as Bankruptcy; chapter 13, chapter 11 or
chapter 7. This type of file could also contain items such as
foreclosure, charged off accounts, tax liens, judgments, and a history
of seriously delinquent account. This type of profile can be caused by
some sort of life changing event. In the case where these circumstances
were caused by some unavoidable circumstances, a lender may be willing
to extend a mortgage despite the history. For those with a bad payment
history, a great place to start to correct the report is Lexington Law,
one of the best legal
credit repair companies
in the country. There are hundreds of credit repair companies out
there. Be careful when using their services as some of these services
do not use legal avenues.
Scores range on average between 450 and 850. Each of the three
bureaus: Trans union, Experian, and Equifax, have a different scoring
system and different high and low scores. Not all creditors report to
all three bureaus. A score over 700 is generally considered perfect. A
score between 620 and 699 is marginal and a score below is considered
what is called sub-prime.
The good news is that there are products available for files in
any range. There are even foreclosure saver plans available for those
who are facing the loss of their home. Everyone makes mistakes and
everyone has been in a situation where that person felt things could
not get any worse. One has to realize that there are solutions for you
no matter what your score. The good thing is that some lenders look at
more than just the score. They look at job stability, extenuating
circumstances
, and the willingness to pay.
