The Effect of a Deed in Lieu on Credit

Foreclosure

Mortgage loans become delinquent after a payment has not been made for 30 days. The lender can file a foreclosure proceeding on delinquent loans they service. Generally, most lenders begin this process after a 90-day delinquency. Foreclosure proceedings are lengthy and costly to the bank and are usually avoided, if possible. Homeowners, or borrowers, facing foreclosure are faced with a few options after entering the delinquency period of a loan. If these do not work, the bank will legally obtain ownership of the property.

Options

The borrowers can begin to mend the loan status by reaching an agreement with the bank. A loan modification program may be available to those homeowner's experiencing extreme financial hardship due to unforeseen circumstances. Another option is to pay the amount owed, plus penalties and interest to the lender. The third option is to sell the property at a short sale. Potential buyers can place a bid on the property for generally less than the fair market value of the home. If the lender agrees to it, then they receive the profit from the sale. Another option to avoid foreclosure is using a deed in lieu. By using this method, the borrowers willingly deed the property back to the bank. Generally, banks would like the homeowners to put the property on the market for a few months in an attempt to sell, so that they receive cash, rather than a property.

Impact on Credit

According to CNN Money, the biggest impact on a homeowner's credit score is the first delinquency. A missed payment can cause the credit score to drop 40 to 110 points, dependent on other factors. The credit score will continue to drop with each missed payment. Eventually, a deed in lieu of foreclosure could result in the loss of 85 to 160 credit points. A foreclosure filing typically sees the same general range of loss. This option is viewed by creditors as a serious delinquency on the credit history.

Considerations

Deeds in lieu and foreclosures can remain on the credit report for 7 years. At this time, a request must be made to the credit bureau to remove the foreclosure from a credit report. A bankruptcy, however, will remain on the credit report for much longer. Chapter 13 bankruptcy involves a 7-year repayment plan plus 7 years to be removed from the credit report. Chapter 7 bankruptcy remains on the credit report for 10 years. Although a serious delinquency on a mortgage loan impacts credit seriously, a deed in lieu may be a better option than bankruptcy.

Impact on Credit Score When Opening a New Credit Card

New Credit Cards

When a person takes out a credit card, she is essentially opening a line of credit with a credit card company. After the card is issued, the company that issued the card will report to credit reporting agencies that it has offered the borrower a new line of credit. Depending on a number of factors, including the person's previous credit history and the size of the line of credit, the borrower's credit score will be affected in different ways.

Short-Term Effects

In the short term, a new credit card can either help or hurt a person's credit score. Credit scores are determined using complex secret formulas, the precise nature of which varies between credit reporting agencies. Generally, the higher a person's debt-to-available-credit ratio, the lower the person's score. Taking out a new credit card, which makes more credit available, can raise this score. However, according the Fair Isaac Corp., the company that helped invent the modern credit score, taking out too many credit cards can cause a person's score to drop.

Long-Term Effects

How a new credit card will affect a person in the long term depends on how the borrower uses it. If a borrower quickly racks up a large amount of debt on a credit card, his debt-to-available-credit ratio will rise and his score will be lowered. However, if he makes his payments on time and in full, the borrower can help establish a good credit history, leading to a better score.

Credit Checks

When a lender checks a person's credit after she has filled out a loan application, such as for a new credit card, her credit score will generally drop a few points. This is because credit reporting agencies take these kinds of credit checks as a sign that the person is getting ready to take on more debt. This suggests that she may be at a higher risk of defaulting on current loans; therefore, her score is lowered.

How Is Credit Rating Evaluated?

Payment History

Your payment history is the single most important factor in deciding your credit rating. It accounts for 35 percent of your rating. If you are late on your payments, it will affect your score negatively. Conversely, if you always make timely payments, your credit rating will increase. The exception to this rule is for any grace period given to you by the financial institutions. For example, many lenders stipulate a 10 to 15-day grace period on late car payments. This means you can pay 10 to 15 days after the due date without the credit bureaus receiving a late payment report.

Amounts Owed

Your amount owed or total amount of debt, is the second largest contributing factor and accounts for 30 percent in determining your credit rating. The more debt you owe, and the more credit you convert to debt, the worse off your credit rating is. Since amounts owed accounts for your total debt, you can't easily lower some of your existing debt, such as car payments or mortgage payments. You can, however, use your credit card less often and use less of your available credit. MSN Money central advises using 30 percent or less of your credit card limit each month to avoid penalties to your credit rating.

Length of Credit History

Accounting for 15 percent of your credit rating, the length of your credit history has less of an impact on your scores than your payment history and amount owed, but is nevertheless important. An old credit account of at least six months in good standing is always better than a new credit account in good standing. New credit accounts themselves do not affect your credit score, but a lack of established credit negatively affects your rating.

Opening New Credit Accounts

Establishing credit is important when building your credit rating, but opening too many accounts at one time will have a negative impact on your score. The amount of new credit accounts must remain proportionate to your already established credit accounts so your score will not go down. For example, if you have a mortgage, auto loan and five credit cards, opening two new credit accounts will usually not harm your score. If you only have one credit card and open three new credit accounts, your score will suffer. New credit affects accounts for 10 percent of your rating.

Types of Credit

At 10 percent, the type of credit you use has the same impact on your credit score as new credit. Credit card accounts are good for building your credit score, but having too many will negatively affect it, and credit cards do not have as much of a positive affect as other credit, such as a mortgage. Auto loans also rank higher than credit cards. If you consistently make your payments each month, you will see a larger increase on your credit rating from a mortgage or auto loan than you will from your credit card accounts. Retail cards are the lowest form of credit, although they are good to build initial credit.

What Qualifications Do You Need to Achieve As a Veterinary Technician?

Job Duties

Veterinary technicians assist veterinarians during examinations, treatments, surgery and dental procedures. They provide specialized care for pets that may include administering medication and other treatments. Vet techs draw blood and perform laboratory tests on blood samples, urine and feces. They record each animal's health history and problems by talking with the pet owner.

Training

Most veterinary technicians complete a two-year associate degree from a vocational college program accredited by the American Veterinary Medical Association, as noted by the U.S. Bureau of Labor Statistics. Courses include classroom, clinical and laboratory work, and students gain experience working with animals. Not all states have specific educational requirements, and some veterinarians hire techs without a degree.

Credentials

States vary in regard to their regulation of this profession, and some are much more stringent than others. Depending on the state, veterinary technicians may need to become certified, licensed or registered. In New York, for instance, aspiring vet techs must become licensed after completing a high school program and a two-year diploma or degree in veterinary technology registered by the New York State Education Department or accredited by the American Veterinary Medical Association. The BLS advises that veterinary technicians wanting to work in a research facility are likely to need certification by the American Association for Laboratory Animal Science.

Skills and Personal Qualities

In addition to technical skills, veterinary technicians need excellent communication skills because they work not only with pets but pet owners. Some vet techs have more contact with pet owners than the veterinarians do. Veterinary technicians typically must be good at working as part of a team, and they need organizational skills and a keen eye for detail. Importantly, veterinary technicians must have the emotional strength to deal with unpleasant situations involving severely injured pets, animal abuse, euthanasia and distraught pet owners.

Continuing Education

Some states require continuing education for veterinary technicians. Nebraska, for instance, requires vet techs to complete 16 hours of approved additional training or coursework every two years.

Requirements for a 750 Credit Score

Pay on Time

Pay all of your bills on time. The largest negative effects to your FICO score are from delinquent payments.

Keep Debt Low

The FICO score takes into account how much available credit is actually in use. If you are near or at the credit limit on your credit cards, you will be considered a greater loan risk than someone who keeps their credit debt low. Try to maintain your credit card debt at less than 10 percent of available credit.

Old Credit Cards

Do not close out old credit card accounts, especially if you are not using them. Two positive effects to your FICO score are long-term available debt and a small debt-to-available-debt ratio. That old, unused credit card account works for you in both ways.

New Credit Cards

The more times you request a new credit card, the more negative dings to your FICO score. Decline that offer for a new store credit card that saves you 20 percent on only today's purchases.

How Are Points Added to Your Credit Score?

Remove and Prevent Negative Items

Removing negative items from reports will increase scores. Negative items, such as late or missed payments, not paying the full amount due and repossessions, will lower a credit score. Negative information will be removed from a report in time -- seven years for a late payment -- but the credit bureau will remove erroneous information if you prove a disputed item. Negative items lose their impact over time but affect your score until they drop off your report.

Lower Outstanding Debt

Lowering the amount you owe on debt accounts will add points to a score. The credit bureaus look at the amount of credit a consumer has available compared to how much he owes on those accounts and whether he is reaching his balance limits. Lower balances reflect a cautious use of credit and can raise your score. The amount of debt you have compared to available credit makes up a good part of your credit score -- about 30 percent of your score reflects your credit utilization. To add points to your credit score, use your credit cards less frequently and make more than the required payment to lower the balances.

Long Credit History

Credit bureaus look at how long you have had credit when determining your credit score. The longer a person has had good credit, the lower the risk that the person will quit paying her bills. The amount of time that you have maintained accounts can make up 15 percent of your score.

Lower the Frequency of Asking for Credit

The more credit you apply for, the lower your score. Credit bureaus assume that if you are applying for many different lines of credit you need access to money, which could make you a credit risk. New credit inquiries will remain on your report for two years and new accounts can comprise up to 10 percent of your score.

Pay on Time

Consistent timely payments are mandatory to add points to a credit score. Paying your bills every month shows the credit bureaus that you are not over-extended and able to meet your current obligations. Your payment history can attribute as much as 35 percent of your score, which makes paying on time a key path to a high score. If the payment falls at a difficult time of the month, your account provider may be able to change the date.

How Long Is a Mortgage Default on a Credit Report?

Missed Payments

Each lender maintains its own standard regarding how many missed payments constitute a mortgage default. Regardless of how many payments you missed before and after your lender declared your loan in default, each missed payment remains a part of your credit history for seven years. In addition, missed payments have a more significant derogatory effect on your credit rating than any other single factor.

Losing the Home

If your mortgage default resulted in a foreclosure, the legal record reflecting the foreclosure appears on your credit file for seven years from the date the foreclosure occurred. Because foreclosure occurs after you miss several loan payments, you can expect a foreclosure record to linger within your credit history for slightly longer than missed payment records -- even though the record adheres to the same seven-year reporting period.

Mortgage Deficiency

If your home is worth less than your lender can recover at the foreclosure auction or through a private sale, you still owe your lender the difference between the sale price and your loan balance. Depending on the statute of limitations for debt collection lawsuits in your state, your lender may have up to 10 years to sue you for this deficiency. After it wins the lawsuit, a record of the court judgment connected to the original default appears on your credit report for an additional seven years. Because a court judgment's reporting period begins on the date the judgment was awarded, your credit report could reflect evidence of your defaulted mortgage for much longer than seven years after you stop making payments.

Credit Reporting Exceptions

If your lender agrees to work with you and allow you to redeem your defaulted mortgage, it may also modify any previous negative reports to the credit bureaus. Although many lenders refuse to modify consumer credit reports, some lenders will agree to do so in exchange for payment. It is more cost-efficient for a lender to allow you to redeem your home rather than seize it through foreclosure. In addition, if you successfully dispute negative information related to your mortgage default with the credit bureaus and your lender does not verify the information's accuracy, the Fair Credit Reporting Act states that the credit bureaus must delete the disputed information from your credit history -- resulting in derogatory reports related to the mortgage default disappearing before the reporting period expires.

How to Rack Up Points on Your Credit Score

Payment History

Your payment history accounts for 35 percent of your credit score. Catching up any late bills and paying all of your accounts on time racks up points on your score because of this area's heavy influence. Pay all of your accounts by the due date, even if you only send the minimum amount due. Set up an automatic withdrawal from your checking account to ensure you pay by the proper date or mail payments as early as possible to offset postal delays.

Account Balances

High account balances hurt your credit score, especially if most or all of your credit limits are maxed out. MyFICO recommends paying down your accounts so you have a more equal balance of owed money and available spending power. Create a strict budget that cuts out as much discretionary spending as possible so you can pay more on your bills. Your score goes up as the balances drop. Channel most of your extra funds toward your highest interest accounts, as that reduces the balances more quickly because more money goes onto the principal.

Old Accounts

Part of your credit score is based on the overall length of your credit history, and long-term accounts that have always been paid promptly raise your score. Keep older credit cards open, even if you do not need all of them. Consumer advocate Clark Howard recommends using those cards twice per year to show recent transactions on your credit report. Keep purchases low enough to be paid off immediately.

Mistakes

Dayana Yochim, a writer for the Motley Fool money management website, warns that up to 80 percent of credit reports have mistakes hurt your credit score. You have a right to find and dispute them, and you add points to your credit report for each negative entry you eliminate. The Federal Trade Commission website explains that you can order free Equifax, Experian and TransUnion credit reports yearly through annualcreditreport.com. The bureaus are obligated to process any disputes you submit in 30 days and correct or erase errors.

Definition of "Credit Scoring Model"

History

Before the 1970s and 1980s, credit scoring models were non-existent, according the Public Broadcasting Service. Instead, lenders and loan officers had to use personal judgment, such as a person's appearance, job and street address when assessing a loan application. Human judgment cannot reliably ascertain credit risk as well as a mathematical model based on verified data.

The FICO Score

The most widely used credit score model was developed by the Fair Isaac Corporation. The actual FICO is one of the biggest secrets in business, but the Fair Isaac Corporations offers a general idea of its make up. You payment history, such as late and on time payments, make up 35 percent of the score. The amount owed, which includes the number of accounts, makes up 30 percent. How long you have had credit, any new credit accounts and the variety of accounts make up the remaining 35 percent, according to FICO.

Meaning

When calculating your score, a credit scoring model compares your financial data to the past performance of people with similar histories. Your credit score is a standardized result that determines the likelihood of you defaulting or being late on a loan payment, according to Lending Tree. The higher your score, the more likely you will repay your lender.

Considerations

The score you receive from a credit reporting agency is not necessarily the one a lender sees, but merely an approximation, according to MSN Money Central. Also, the credit reporting agencies have "secret" scores that the public cannot see. A bankruptcy scores calculates the chances of you going bankrupt and the transaction score estimates the odds of a fraudulent transaction.

What Do Veterinary Technicians Earn?

National Average

Across the United States, veterinary technicians earn an average of between $22,790 and $33,498 per year, according to a December 2010 PayScale report. The average salary has not increased much since the National Association for Veterinary Technicians in America (NAVTA) conducted a salary survey in 2003. Those survey results showed an average of $26,569 to $30,500. The U.S. Bureau of Labor Statistics reports a national low of under $19,770 for vet techs, while top earners averaged over $41,493 in 2008.

Regional Differences

The NAVTA survey highlights regional pay differences among vet techs across the United States. Technicians in the Northeast report the highest pay rates, followed by those in the South. Midwestern techs lag behind the Southerners in pay, followed up by those in the West.

Degrees and Training

Most states require certification for vet techs, but individual states decide certification criteria. To prepare students for certification exams, many two-year colleges offer veterinary technician degree programs. However, veterinary technicians with bachelor's degrees in science or biology tend to earn slightly more than those with only an associate-level degree.

Experience

Vet techs can expect to start at the lowest end of the pay scale and work their way up. Technicians who have been on the job less than a year report average hourly wages between $8.89 and $11.96, according to PayScale. Technicians who have been practicing for five to nine years report wages averaging $11.95 to $15.85, while longstanding techs of 20 years or more can make $14.37 to $18.70, as of December 2010.

Other Influential Factors

Experience and clinic type may influence a vet technician's salary. Techs in private clinics typically report higher earnings than those in animal shelters or pet hospitals associated with major pet supply store chains. Membership in NAVTA also appears to increase potential pay rate, but because this data comes from a survey conducted by that organization, data may be influenced by the number of members versus nonmembers reporting.

How Long Does It Take for Issues to Hit Your Credit Reports?

Identification

Credit reporting agencies depend on individual creditors to report the status of your payment history and accounts, according to Credit Factor. Typically, once a creditor updates your account it shows up on the first of the following month. For instance, if you open a credit card on Jan. 3, your credit report shows this on Feb. 1.

Considerations

Your creditor may not report all negative issues. If you are a few days late on a payment, for example, your creditor may not update this with the credit rating agencies, according to the Motley Fool. Creditors will probably report any serious offense, such as a payment later than 90 days. You should not, however, rely on your creditor to have "mercy" on you rather than paying your bills on time.

Time Frame

It takes six months of credit updates before the credit reporting agencies will calculate your score, according to MSN Money Central. Even if you have negative marks on your credit history, it won't show until you have a sufficiently long credit history. Once you do hit the six-month mark, the credit bureaus will factor in any negative issues into your FICO score.

Tip

Not all creditors report to the three major credit rating bureaus: TransUnion, EquiFax and Experian, according to True Credit. After seven years, all negative information leaves your record -- 10 in the case of a bankruptcy. Also, you can dispute any errors on your report, such as an account erroneously reported under your name. You should make an aim to pay all bills on time, even if a single late payment probably won't affect your score much in the long run.

How Much Does a Hard Credit Pull Lower Credit Score?

Identification

A single hard inquiry will not ding your credit score more than five points, according to NHACA Financial Investing. Hard inquiries ding your score because FICO score models show that needing to add any line of credit to your financial portfolio presents an increased risk of you defaulting on a loan.

Potential

The more lines of credit you open in a short period of time---usually less than a month---the greater hard inquiries hurt your score, according to the Fair Isaac Corporation. Statistics from the Fair Isaac Corporation show that opening six or more credit lines increases your risk of declaring bankruptcy eightfold. The rest of your credit history determines how much an inquiry or inquiries hurt your score.

Time Frame

Inquiries stay on your credit history for two years, but only affect your FICO credit score---the standard in the lending industry---for the first year on your credit profile, according to Bankrate.com. Alternative credit scoring models, such as the VantageScore, factor in hard inquiries whenever they are on your credit history.

Tip

Pulling a hard inquiry on your own credit profile will not lower your score, according to TransUnion's True Credit. If you plan to open a new account, put in all applications within two weeks---multiple inquiries for the same type of credit are beneficial because it looks like shopping for the best rate. A hard inquiry at the time as a negative mark, such as a late payment, compounds the impact of a hard inquiry.

Difference Between Deed in Lieu & Foreclosure

Features

Foreclosure consists of a legal process in which the mortgage company gains ownership of a property after the borrowers have defaulted on payments. Each state has different foreclosure laws; however, in most cases the mortgage company needs to use legal counsel to complete the foreclosure process. A deed in lieu of foreclosure can eliminate the lender's need to take legal action against the borrowers. With this option, the borrowers sign a deed granting ownership of their property to the mortgage company. This generally takes less time and may cause less of a negative impact than foreclosure to the borrowers' credit scores.

Function

With both foreclosures and deeds in lieu, the bank gains ownership of the property in order to sell it. Typically, these properties are sold at a pubic auction. The starting bid generally begins at the amount the mortgage company is owed by the borrowers. Once the home is sold, the lender earns back its loss. However, the foreclosure or deed in lieu will appear as a negative impact on the borrowers' credit reports.

Impact to Credit

In some situations, it may be beneficial to use a deed in lieu to prevent foreclosure. However, this depends on the laws in the state where the property is located and some other factors. Negative remarks to the credit reporting bureaus begin after 30 days of non-payment. After that, another missed payment is reported every 30 days. Most mortgage companies do not begin foreclosure proceedings until after 60 to 90 days of missed payments. The process itself can take up to a year in some states. All the while, the borrowers' credit scores suffer. If possible, a deed in lieu can save time and negative remarks from begin reported.

Time Frame

The foreclosure process can be completed in as little as one month, or as long as one year. This depends on the specific laws in the state. Deeds in lieu of foreclosure generally take 3 to 6 months, depending on the lender. Often, the lender wants the borrowers to try to sell the home on their own, so that the lender does not have to use its own resources to sell the property. Typically, the mortgage company wants to see the home on the market for three months. If no bids are offered on the home, then the deed in lieu can be utilized. The borrowers should research the foreclosure laws in their state before making a decision whether to use a deed in lieu.

Is the Use of a Credit Score a Valid Screening Criteria for Employment?

Identification

Employers may use credit checks when reviewing your employment application, according to the Privacy Rights Clearinghouse. As of 2009, however, Hawaii and Washington state do not allow the use of credit checks when investigating an employee's background. Also, in states that allow employers to use credit checks, the employer must receive written consent on a separate document to run one.

Considerations

If an employer rejects your application, the Fair Credit Reporting Act requires him to notify you that adverse credit conditions caused your denial, according to the Privacy Rights Clearinghouse. Also, the employer must furnish a copy of the background check if he finds an "adverse" credit history. If you have a bankruptcy, the employer may not take this into account on your job application.

Loopholes

Employers can sidestep FCRA provisions for consent and notification of adverse conditions by conducting a credit check themselves, rather than hiring a third party, according the Privacy Rights Clearinghouse. Alternatively, the employer can find another reason to reject your application, such as having more qualified applicants. As of 2010, California has closed these loopholes.

Tip

The Federal Trade Commissions says that consumers should contact the FTC to file a complaint. The FTC will investigate claims of credit check discrimination and could help you sue companies that violate the FCRA.

Check your own credit report before applying for jobs. All consumers receive one free credit report from each of the three major credit reporting agencies each year. If you find errors, such as delinquent accounts you never opened, you can dispute this with the credit rating agencies.

Which Credit Score Do Lenders Use?

Identification

As of 2010, most lenders use a credit scoring formula developed by the Fair Isaac Corp., according to Kiplinger. The FICO score is so common among lenders that credit scores are often synonymous with the FICO model. Each of the three credit reporting agencies, however, have different information and scores can vary by several dozen points.

Variations

The Fair Isaac Corp. updates the FICO formula every few years. In 2009, for example, the latest FICO version was 08 and it would give a much different score than a lender using the FICO 98 formula, according to Consumer Reports. FICO also has scores based on niche needs, such as a formula designed for lenders who specialize in car loans.

Misconception

Credit rating bureaus may try to sell you their own credit scores, such as the Experian ScoreX or TransUnion TransRisk, according to credit expert Michael Bluejay. The real FICO score sold by credit rating agencies also go by different names. Equifax calls the FICO score a "BEACON," Experian the "Experian Score" and TransUnion the "EMPIRICA," according to the Fair Isaac Corp.

Creditors typically use credit reports from all three ratings agencies and consider your median score your true FICO score.

The Future of Credit Scores

All three credit bureaus -- which control almost the entire consumer credit rating industry -- started backing the VantageScore developed by these same credit bureaus in 2006, according to MSN Money Central. The VantageScore claims it gives consistent scores, while weeding out more bad borrowers than the FICO model. The FICO model, for instance, can give high scores to borrowers with a limited credit history.

As of 2010, there is not enough information to determine whether the VantageScore will supersede the FICO. Only 5.4 percent of lenders chose the VantageScore model between 2006 and 2009, according to Bankrate.

Other Alternatives

Many companies, such as Ford, use credit scoring formulas they create themselves, according to Consumer Reports. Banks sometimes purchase a credit history and calculate a score themselves. Some lenders look at scores from companies that report payments not traditionally included in credit reports, such as rent and utilities.

Cosigning & My Credit Score

Definition

When you co-sign on a loan, it means that in the event that the borrower cannot make the payments on the loans, you will take over responsibility for the loan. In other words, you're just as liable for the loan as the person requesting the loan. If the loan goes into default and late fees are associated with the debt, you will also be responsible for those penalties.

Credit Score

The loan will appear on your credit report just as any other debt would, which increases your debt-to-income ratio. This may make it difficult for you to obtain any new credit of your own. Additionally, the lender must make an inquiry into your credit report, which has a small negative effect on your score. Any late or missed payments are also reflected on your credit report and will cause your score to drop.

Warnings

According to the Federal Trade Commission, studies on certain types of loans have shown that in three out of four cases in loans that go into default, co-signers are asked to pay. Also, if the lender asks for collateral for the loan, such as your home or your car, you risk losing those assets if the loan goes into default.

Considerations

Before agreeing to co-sign on a loan, make sure that you can pay the loan if needed. Even if the person requesting the loan has the ability to make payments now, he may lose his job, fall ill or come under some other circumstance that makes it impossible to make payments on the loan. The Federal Trade Commission recommends asking the lender to notify you in writing of any late or missed payments.

What Will Filing Chapter 7 Do to My Credit Score?

Short-Term Damage

In the period immediately after filing for bankruptcy, your credit score will be annihilated. Under Chapter 7 bankruptcy, nearly all of your debts are discharged. To a credit reporting agency, this is equivalent to defaulting on all of these debts. This fact, plus the fact that you will likely be short on liquid assets, makes you a huge credit risk. The exact drop in score will depend on the rest of your credit history, but you will certainly no longer qualify for good interest rates.

Long-Term Damage

According to U.S. law, a credit reporting agency can keep a notation of your Chapter 7 bankruptcy on your credit report -- the compilation of information that determines your credit score -- for no longer than 10 years. However, the longer ago you declared bankruptcy, the less effect it will have on your credit score. If you begin to establish good credit shortly after your bankruptcy, you may be able to rebuild your score to decent levels within a couple years.

Considerations

Although declaring bankruptcy will surely drastically lower your credit score, your score may already be very poor anyways. Many debtors who declare bankruptcy are already delinquent on a number of debts. While your score will definitely drop immediately after declaring bankruptcy, it may not have very far to fall. Declaring bankruptcy, which will cause these debts to be discharged, may provide you a chance to start over again and build a new credit history.

Solutions

After declaring bankruptcy, the best way to moderate the damage is to begin to borrow money again and pay it back on time. While getting a loan at a reasonable rate of interest may be difficult for a while, you can start by attempting to get a secured loan. For example, many banks offer secured credit cards, in which the amount of money you draw against the card's line of credit is secured by money in your checking or savings account, which acts as collateral on the debt.

What Does a High Risk Credit Score Mean?

Negative Marks

Your credit score is a reflection of your overall borrowing track record. Recent adjustments to the FICO score better reward consumers who pay on time and have no negative remarks and have a harsher impact on the scores of consumers with a history of serious delinquencies and charge offs. If your score is below 620, odds are you have quite a few negative items -- such as late payments or over-extended credit -- included on your credit report. It may be worth a quick view of your report to dispute any inaccurate negative items.

Risk of Default

While you may have every intention of paying your bills on time, being classified as high risk places you in a bucket of consumers that experience higher default rates than those with good or excellent credit scores. If a lender extends you credit, you can be sure they think you will repay the loan, but you are likely to have to pay higher interest rates, come with more cash upfront or put up collateral to compensate for the higher chance you will fall into default status. Fortunately, as you make payments on time, your score will gradually increase and hopefully lead you out of the high risk pool of borrowers.

Penalty Rates

You may pay an account on time each month, but that does not mean your performance on other accounts is irrelevant. Many lenders, particularly credit card issuers, will automatically raise your interest rate to the penalty rate -- which can exceed 30 percent -- or even close your account if your credit score falls into the high-risk category. If you have been extended credit from multiple sources, you are obligated to stay current with each account -- one misstep on one account can have radical effects on other open accounts, even if they are in good standing with no history of delinquency.

Prime Rate Threshold

Once you fall into the high risk category, you are typically below the cutoff to obtain a prime loan. This does not mean you will not be able to obtain financing; however, it does mean that you will have to pay higher interest rates and likely be excluded from the advantageous financing offers available to those with better credit. While a 620 is considered a respectable score, many lenders use that figure as the threshold as the cutoff to extend preferred financing offers.

Definition of Credit Scoring Brackets

Identification

Credit scoring brackets are charts lenders reference when setting the interest rate on your loan. A lender, for instance, might consider all scores above 770 the top tier and give anyone in this range the lowest rate. The next bracket would be 769 to 740 and receive the second highest rate.

Considerations

While lenders set their own credit scoring brackets, lenders usually consider anything above 720 to 760 the top tier because getting higher than this is nearly impossible, according to MSN MoneyCentral. Anything less than 620 typically falls into the worst bracket of scores -- known as "subprime."

Benefits

You will reap benefits even if your rate improves by a minuscule amount. On average, for example, raising a score in the range of 700 to 719 to 720 and above saves about $20 per month on a $250,000 loan. This, however, equates to a savings of $7,200 over the life of a 30-year loan, according to Kiplinger.

Tip

Edmunds recommends asking your loan officer about their credit scoring bracket and how it correlates to their interest rates in writing. Having a visual representation of credit score matrices can make comparison shopping easier for you.

How Long Does a Late Mortgage Payment Stay on Your Credit?

Identification

If a lender reports a late payment to the credit bureaus, it will stay on your record for seven years, according to Experian. The clock on the seven-year window starts on the first day the bill becomes overdue, not the first day you receive it. The account, however, will carry a status for ten years that you were previously late on a payment.

Considerations

Lenders usually give borrowers a 15-day grace period where they won't assess penalties, fees or report late payments to the credit rating agencies, according to Lending Tree. If you are late for between 15 and 29 days, the lender probably assesses fees, but does not yet report your payment as late to the credit bureau.

Effects

How long a late mortgage payment will have any noticeable effect on your credit depends on the time it spends in default. Any payment reported 30 to 60 days late won't affect your credit score much after you become current on your loan. Payments that are more than 60 days late increase your risk to lenders appreciably for as long as they remain on your report.

Tip

Contact your lender the moment you think you might not be able to make payment on your mortgage, suggests the Federal Trade Commission. You might even qualify for federal assistance through the Making Home Affordable Modification Program (HAMP) or loan modification if your mortgage payments exceed 31 percent of your income and you received your mortgage before January 1, 2009.

Does Your Credit Rating Go Down If You Are Late on Paying a Utility Bill?

Credit Reports

Credit reports are maintained by three major credit bureaus: TransUnion, Equifax and Experian. Creditors report information to the credit bureaus of which they are members. A creditor must join a credit bureau to be able to report your financial information. Some creditors will join all three credit bureaus, while other creditors may join only one or two. For this reason, each credit report will be slightly different with each credit bureau. Your reported payment history is a large component of your credit score.

Credit Scores

Credit scores are calculated based on the information your creditors report. According to myfico.com, the largest portion of your credit score, 35 percent, is based on your payment history. The remaining factors are age of credit file, new accounts, credit balances and inquiries. Having late payments reported to your credit report can cause your credit score to go down. The lower your credit score, the harder it is to establish new credit.

Reporting Accounts

Late payments and other information is generally reported to credit bureaus from credit card companies, mortgage companies and other financial lenders. Creditors, generally, report each month and include information such as balance, monthly payment, payment status and type of account. There are certain types of companies that, generally, do not report monthly payment status and will only report if an account is in default status.

Utility Companies

Utility companies do not often report your monthly payment history; however, if you close the account with a balance owed, the company will report the negative status. For the utility companies who do report monthly, a late payment cannot be reported until it is 30 days late. By paying a payment a few days late, you are not at risk of being reported to the credit bureau. Your credit score will only drop if the utility company does report to the credit bureau and the payment is over 30 days late. To find out if your utility company reports to the credit bureau, contact the customer service number on your bill and ask if late payments are reported and, if so, to which credit bureaus.

If My Credit Card Is Frozen, Will it Affect My Credit Score?

Default

If you fail to pay your credit card bills on time, your financial institution will of course stop honoring your charge requests, even if your outstanding balance is well below your total line of credit. Credit card issuers will usually give you some time to make an overdue payment, usually weeks rather than days, before they will either inform a credit rating agency or decline payments through your credit cards.

While this situation is usually referred to as a credit card being "locked" as opposed to a "freeze," there is no universally accepted term to define this situation, which can lead to confusion. The bottom line, however, is that your inability or lack of willingness to pay your credit card bills will result in the issuer eventually putting a hold on your card and will negatively impact your credit score.

Fraud Investigation

If warranted, you can also ask your financial institution to stop honoring payments to a specific company or to all merchants while a fraud is investigated. If you suspect or have proof that someone stole your credit card information, this may be a prudent temporary solution. Such a "freeze" will not affect your credit score.

Cancelation

If what is meant by a "freeze" is a simple cancellation of a credit card account or one of the several credit cards in a joint account, such a move may or may not impact your credit score. Since agencies do take your total outstanding line of credit into account when calculating your credit score, a reduction in your line of available credit could negatively influence your credit score. The formulas for these calculations are complex and proprietary, however, and if the resulting decline in your line of credit is deemed inconsequential, your score may not move.

Credit Freeze

Finally, a credit freeze is much different from putting a hold on a particular credit card and involves making your entire credit history inaccessible to all merchants for a specific period of time. By contacting credit rating agencies, you can prevent anyone obtaining new lines of credit under your name or checking your credit score. This is often done if you suspect that an individual or criminal organization has gained access to a large amount of your personal data and could fraudulently apply for new lines of credit under your name. A credit freeze is free if your application is accompanied by a police report, but subject to a small fee without such a report. Such a freeze will not impact your credit report, but do keep in mind that all of your applications for credit, whether in the form of a car loan, mortgage or a new credit card, will likely be declined while the freeze is in effect. Merchants who cannot see your credit history will almost certainly decline to provide you with a line of credit.

Tips to Legally Improve Your Credit Score

Get Your Credit Report

The first step toward improving your credit rating is to request a copy of your credit report. According to the free file disclosure rule of the Fair and Accurate Credit Transactions Act (FACT), consumers can request a free credit report from Equifax, Experian, and TransUnion, every year.

Correct Any Mistakes

Your credit report may have inaccurate information. If it does, it can negatively effect your credit rating. It's important to report and correct any mistakes, by sending the appropriate credit reporting company an official letter disputing the report, along with any proof that supports your claim. Negative reports that are true can only be removed by the passage of time -- in some cases, up to 10 years.

Building Credit

Building credit can improve your credit rating, especially if you're young. One way to build credit is to apply for a credit card, and use it regularly to pay bills, or make purchases. If you're careful to always pay off your monthly payments on time for a year or more, you can start to build your credit score up. This in turn makes it more likely you'll be approved for bigger loans and purchases.

Maintaining Good Credit

It's always easier to simply maintain a good credit rating, than it is to build a bad credit score back up. One way to maintain your credit rating is to consistently put $10 - $20 into a savings account for emergencies. Before long, you'll have three to six months' worth of expenses saved for an emergency, to help pay bills on time, and to help save your credit score.

Can HAMP Ruin Your Credit Score?

Identification

HAMP will damage your credit if you started missing payments before entering the program. This is because modified payments will mean you are not current on your installment plan. If you were current before your loan modification, lenders will report HAMP-modified loans as on time and current. Either way, the account will have "modified by federal government plan" noted on it.

Effects

If you were current on your account before entering HAMP, you will see the biggest dip in your score. Already delinquent mortgages tend to have lower drops, because late payments probably mean you have less than excellent credit. HAMP modification, however, should not lower your score by more than 100 points. This will keep you in the "good" range if you have a score above 700. What's more, lenders only report your account as delinquent during the trial period. Make your payments during the three-month trial period and lenders will adjust your account when it reports to credit bureaus for the rest of the life of the loan.

Considerations

It might seem unfair that a program intended to help mortgage holders experiencing financial hardship damages their future ability to gain credit. But that's because it is a program for people who cannot fulfill a commitment. Keeping a mortgage will probably benefit the consumer more than constant late payments and possible foreclosure.

Tip

HAMP participants can soften the blow from loan modification by improving other areas of their credit report. If your loan modification includes lower monthly payments, use that to pay off any other debts with a higher interest rate. Do not take on new accounts just to add positive items to your report -- new inquiries ding your score and new credit could increase your debt burden if you overspend.

Five Ways to Harm Your Credit Score

High Balance

Carrying a credit card balance alone doesn't hurt your credit score. On the other hand, if you carry high balances, have maxed-out accounts or exceed your credit limit, expect a dip in your credit score. To be on the safe side, keep balances below 30 percent of your credit limit. On a credit card with a $2,000 credit limit, your balance should never exceed $600.

Late Payment

A payment that reaches your creditor a few days after your due date may not affect your credit score. On the other hand, being 30 or more days late on your payments may prompt the creditor to report this information to the credit bureaus, and having a late payment on your personal credit file can reduce your credit rating. Always pay on time to keep a good payment record and credit rating.

Canceling Older Credit Cards

In an effort to control debts, some people cancel their credit cards. This seemingly innocent maneuver can significantly damage your credit rating. The length of your credit history influences credit scoring, and canceling an older credit card can reduce your credit history and bring down your score.

Multiple Inquiries

Credit scores decrease every time you submit a credit application and a creditor checks your credit report. This includes credit checks for instant credit approvals offered by department stores and other retailers. Only apply for credit cards and loans when necessary to avoid harming your credit score.

Co-signing Loans

Co-signing a vehicle loan or personal loan can help someone get on his feet and establish a credit history. However, a co-signed loan appears on your credit report. You're responsible for the debt if it isn't paid, and late or missed payments may cause your credit score may suffer.

What Are My Responsibilities As a Co-Signer on a Car Lease?

Monthly Payments

As a cosigner, you are responsible for the consignee's monthly car payment. Even though you are likely not making the payment, you are liable if the payments are not made on time. Late payments are reported to the credit bureaus, and if you or the person you cosigned for do not make payments, both of your credit reports will reflect a history of late payments. If the vehicle is repossessed for non-payment, it will also mark your credit history, as well.

Mileage Restrictions

Even though you are not driving the vehicle, the vehicle must remain under the contracted mileage allowance when it is returned. If you are cosigning for 36 months and 12,000 miles per year, the vehicle must be turned in with 36,000 miles on it or less. If the driver goes over the contracted mileage amount, both of you are responsible for over-mileage fees. Usually, these fees are 12 to 18 cents per mile over the mileage allowance. If neither of you make the payment, it will reflect on your credit history as an unpaid debt.

Lease Return

During the time of the lease, both of the contracted lessees must maintain the vehicle and pay for repairs before the car is turned in. If the person you are cosigning for does not maintain the vehicle or brings it back without completing repairs (for body work or broken items), the leasing bank will send a bill for the cost of completing the work. It is equally your responsibility to pay the bill. This debt is also reported to the credit bureaus if it is not paid.

Warning

Consigning for a lease is risky, as leasing requires more than just timely payments. You must have excellent credit for lease approval, and the person you are cosigning for likely has a limited or poor credit history. Make sure the person you cosign for makes all payments on time and follows all contracted requirements. If the person you cosign for does not abide by the contract, you can face negative credit reporting, which affects your credit score, future lending opportunities and future interest rates.

Little Known Things That Hurt Your Credit Score

Library Fines and Parking Tickets

That $2.50 fine from your library, and that $40 ticket from parking your car at the wrong curb, may seem insignificant. Unfortunately, most municipalities now turn over unpaid fines -- no matter how minor they are -- to collections agencies if the tickets go unpaid. Craig Watts, a company spokesperson for the Fair Isaac Corporation, told CNNMoney.com that ignoring even the tiniest library fee can cause your credit score to plummet by 100 points.

Paying Off Closed Accounts

This may fly in the face of most advice you've heard, but sometimes it's okay to not pay off your credit card balance right away. This is true when you've closed a credit card account that has a small balance. Under new credit card laws enacted in 2010, your interest rate won't be hiked on your balance. Additionally, paying off the balance completely closes that line of credit, thus reducing your credit utilization ratios and hurting your score.

Shopping Around

When you're in the market for a new credit card, it may be tempting to fill out several applications and shop around to see where you get accepted and who offers the best deals. Every time you apply for a credit card, you generate a credit inquiry that causes your credit score to dip. But that doesn't mean you shouldn't shop around; otherwise you could miss out on a deal. Instead, limit all of your credit applications to a 45-day window. The credit agencies will then view this as a single shopping period instead of multiple inquiries, thus limiting the damage to your score.

Maxing Your Cards

Approximately 30 percent of your credit score is calculated from something known as your debt utilization ratio, which is the amount of credit you've used compared to the amount of credit you have access to. The greater the gap between the two, the better your score. For optimal credit scores, try not to use more than 30 percent of your available credit.

How Can I Tell What My Credit Score Is?

Fair Isaac Corporation Credit Score

In the 1960s, the Fair Isaac Corporation revolutionized the credit-scoring industry with its credit risk scoring service, now known as the FICO credit score. The three credit bureaus use software developed by Fair Isaac to generate a FICO credit score. FICO scores consider the information contained in your credit report; each bureau's credit report might be different, so you might have three different FICO credit scores. Experian's score is also known as the Experian/Fair Isaac Risk Model; Equifax's is called the BEACON score; and Transunion's is the EMPIRICA score.

VantageScore

The three credit bureaus jointly developed their own credit scoring system, VantageScore, which launched in 2006. Like the FICO scores, VantageScore utilizes your credit report to calculate your credit score, so you may have a different result for each credit bureau. Each bureau might also provide an independent credit score. In addition, some lenders use their own algorithm to evaluate a customer's credit risk.

Factors Used to Determine Your Credit Score

Every credit-scoring system uses the same basic information to determine your credit score, with different weight given to the various categories. Federal law prohibits credit-scoring companies from using your race, gender, religion, marital status or national origin when calculating your score. The key factors in your credit score, which come from your credit report, include your payment history, length of credit, account balances, types of loans, credit utilization, and recent loans or inquiries. While the methods of calculating credit scores vary by company, in general a long history of paying your credit on time, keeping your balances low compared to your available credit, and having both credit cards and installment loans will lead to higher credit scores.

Obtaining Your Credit Score

Many companies offer your credit score for a fee, including Fair Isaac and the three credit bureaus. Sometimes you can obtain a free credit report with a trial of a credit-monitoring service. If you cancel the service within the trial period, you will not be charged. Legislation effective January 1, 2011, requires lenders to provide you with your credit score in some situation. If a lender provides different terms based on the customer's credit report or score, the lender must either inform customers who don't receive the best terms of that fact or provide them with the credit score used to determine their terms.

What Your Credit Score Means

In addition to having a different score from different credit providers, your credit score can vary from day to day as your balances change and age. Fair Isaac recommends checking your credit score six to 12 months before applying for a large loan, so that you can take steps to raise your score if necessary. A higher score often means you will get a higher loan amount or lower interest rate, which generally means you will pay less over the life of the loan.

Credit scores fall within a range of numbers, which vary by the scoring company. FICO credit scores range from 300 to 850, while the VantageScore range is from 501 to 990. For both systems, a higher score means a lower credit risk. Lenders do not rely solely on your credit score when evaluating your credit worthiness, but it can provide a general idea of where you fall on the scale of responsible credit use.

Will a House Boost Your Credit Score?

Credit Score Basics

Your credit score is a three-digit number produced based on information found in your credit report. The credit report information comes from your creditors, public records and collections. A credit score is influenced by several different aspects of your credit report, such as your credit balances, the age of your accounts and any negative credit marks such as collections. Lenders use credit scores to determine your credit worthiness when you apply for a loan or credit card. Good credit scores allow you to get promotional rates, low interest rates and other benefits. Bad credit scores can prevent you from qualifying for credit at all, or can result in you getting terms that include higher interest rates.

Diversity

If you have never had a mortgage loan, buying a home will boost your credit report's diversity of credit lines. The diversity of your credit accounts is a positive factor, so once the mortgageis reporting, you will likely receive a score increase. Other types of accounts you can add to your credit report to increase diversity of credit lines include credit cards, installation loans, car loans and store cards.

New Account

Another aspect of credit scoring involves new accounts. A new account may have a positive effect if you do not have many new accounts or a negative effect if you have many accounts and your new account reduces the average length of time that you have had credit accounts.

Inquiries

When you apply for a mortgage through a lender, an inquiry is placed on your credit report. The inquiry reduces your credit score slightly, because it indicates you want to borrow more money, but it may have a larger effect if you have a thin credit file. Thin credit files are credit reports without long histories or many accounts. Inquiries are removed from your credit report after two years, so the negative effect is temporary.

Five Ways to Cut Credit Cards From Your Life

Budgeting Your Money

You may feel compelled to pull out credit cards when funds are low and you don't have enough cash to pay your bills or meet other financial obligations. However, carefully budgeting your money and sticking within your budget can alleviate money problems and reduce your need to live on credit cards. Establishing a budget is simple -- staying within your budget is tricky. But if you're serious about gaining control of your credit, learning how to budget is imperative. After reviewing your income and expenses, set aside a certain amount of money each month for essentials such as transportation, housing, food and utilities. Allot a small percentage for entertainment and recreation. Going over budget and spending more than necessary on "fun activities" cuts into your funds, which can force you to rely on credit cards.

Eliminate Balances

Credit card balances can follow you for years, and if you continue to charge new purchases, the balance will gradually increase. Paying off debt is key to cutting credit cards from your life. Depending on how much you owe, it can take months or years to reduce your balances. Putting a solid plan into action helps bring down the principal. Re-focus attention on your budget and determine what's left after paying bills each month. If you have a cushion and there's extra money, put this money toward debt. If not, think of ways to create extra money. Sell personal belongings or get a part-time job.

Getting Rid of Credit Cards

It's smart to keep one credit card in your wallet for emergencies. But if you can't control your credit card use, grab a pair of scissors and cut your cards into several pieces to get them out of your life. Toss the remnants of the credit cards into the trash and don't request a replacement credit card. If your credit card company mails a new one once the old card expires, repeat the process and destroy the new credit card.

Locking Up Credit Cards

If you feel that you're strong enough to keep a credit card intact and not use the plastic for purchases, keep hold of one card for emergency use only, and then keep this card at home, away from retailers. Since it's easy to shop online from home, consider storing this credit card in a locked safe that's not easily accessible. To ensure that you don't pull out the card for an impulse buying spree, ask someone that you trust (perhaps a spouse) to hide the card in a safe location.

Cash Payments

Adopt the mindset of paying cash for everything. And if you don't have cash to pay for an item outright, realize that you can't afford the item at this time and move on. Saving up for purchases is a smart way to purchase items because you don't have to use credit cards to acquire merchandise. No credit cards means you don't have to worry about a monthly bill or interest charges.

How Does a Credit Score Impact Your Ability to Get Credit?

Importance

Most lenders look carefully at your credit report when you apply for a loan or line of credit. Your credit score reflects the amount of risk you pose to the lender. Low scores indicate a high risk of default, and high scores indicate a good chance of repayment. If you don't have a good credit score, you will usually have a hard time getting credit. If you do get a loan, it's likely to have a higher than average interest rate. If your score is very low, you may not be able to get credit at all. Before the 1970s, standardized credit scores essentially didn't exist, and lenders had to rely on personal judgment when assessing credit risks. Today, credit scores reflect detailed statistical data from borrowers with a similar financial background, and are accordingly far more consistent.

Other Factors

Although credit scores are an important part of the equation when lenders appraise credit applications, they are usually secondary to an analysis of the applicant's overall financial situation. Initially, lenders use credit scores to weed out applicants are who are statistically likely to miss payments or default. After weeding out such customers, lenders conduct a more thorough investigation of the applicant's financial status and risk factors. This is known as "underwriting," and includes setting an interest rate based on the applicant's income, employment history, credit score and other factors.

Favorable Scores

Most lenders have a cutoff score for high-risk applicants, as well as a minimum eligibility score for the best interest rate. Different agencies generate different credit scores, but according to the widely used FICO scoring system, which ranges from 300 to 850, any score above 700 is likely to qualify for a prime-rate loan. In the wake of the 2008 financial crisis, favorable credit scores have become more important than ever. Lenders tend to be much less willing to approve borrowers who have low scores, or no credit history at all.

Tips

The factors that comprise your credit score include payment history (35 percent), debt obligations (30 percent), length of credit history (15 percent), new credit accounts and type of credit (10 percent each). Improving each of these areas will help you get the best credit score. Make at least a minimum payment on your debts each month; if you have extra income, shift it to the debt with the highest interest rate to boost your payment history and reduce the amount you owe. Responsible use of various kinds of credit (e.g., a credit card, a retail card and a mortgage loan) generally helps your score. It's a good idea to have at least one credit card, but only charge a small amount to it and pay the bill in full each month. You should also try to limit applications for credit, because new accounts tend to lower your score and reduce the average length of your credit history.

How Much Can Medical Laboratory Technicians Earn?

Medical and Clinical Technicians

Medical and clinical laboratory technicians perform tests to aid in the detection and prevention of health problems. The U.S. Bureau of Labor Statistics reports that about 152,420 were employed in 2009 and made a mean hourly wage of about $18 per hour or about $37,860 annually. The middle 50 percent of these workers earned about $17 an hour or about $36,000 per year, while the top 10 percent made closer to $27 per hour or about $55,000 per year.

Medical and Clinical Technologists

Medical and clinical laboratory technologists use technological equipment and tests to aid in diagnoses and disease prevention. About 166,860 were employed in 2009, according to the BLS, and made an average of about $27 an hour or about $56,000 per year. The lowest 10 percent of medical lab technologists earned about $18 per hour or about $38,000 per year, while the top 10 percent made about $37 per hour or about $76,000 per year.

Medical Appliance Technicians

Medical appliance technicians build, fit and repair medical devices such as artificial limbs and surgical devices. About 13,760 were employed in 2009, according to the Bureau of Labor Statistics, and earned an average wage of about $19 per hour or about $39,000 per year. The lowest 10 percent of earners made about $11 per hour or about $23,000 per year, while the highest 10 percent made about $29 an hour or about $60,500 a year.

Dental Laboratory Technicians

Dental laboratory technicians construct or repair dentures and other dental devices. The Bureau of Labor Statistics reports that about 40,480 were employed in 2009, earning an average wage of about $18 per hour or about $38,000 per year. The lowest 10 percent of earners made about $10 per hour or about $21,000 per year, while the top 10 percent made about $28 per hour or about $58,000 per year.

Why Does My Credit Report Not Include My Credit Score?

How to Get a Report

By law, you are entitled to receive a free copy of your credit report from each of the three credit bureaus, Equifax, Experian and TransUnion, each year. The law requires the bureaus to give you a copy of your history, but not your score. They do not include the score in hope that you will choose to purchase it. To receive the free copy, visit annualcreditreport.com or call 877-322-8228 to make your request. You cannot request the free copies directly from the credit bureaus. You will need your Social Security number, date of birth and addresses for the past two years to request this copy.

What Report Contains

Your credit report contains four main types of information: identifying information, credit information, public record information and recent inquiries. The identifying information contains your name, contact information, previous addresses, Social Security numbers, past employers and the year of birth. The credit information shows your current and past accounts and loans with nongovernment entities, any payment patterns or charge-offs. The public record information shows bankruptcy, judgments and liens against your estate. Finally, the recent inquiries section shows one to two years' of credit report inquiries. The last three sections are combined to create a credit score but it will not be listed in your free report.

How to Use Reports

Even without the score, your credit report gives you a good idea of how potential lenders will view your creditworthiness. You can look at your credit report to see if there are any major credit problems potential lenders will see. You can also check for errors. If you notice errors, contact the credit bureau and the entity that reported the erroneous information to the credit bureau in writing, asking them to remove the error. You must have documentation that shows you are not responsible for the account. The credit bureau must investigate your request within 30 days. You must also ask the creditor to provide proof of the disputed reported item. If it cannot furnish this proof, it cannot report that information again.

How to Get Your Score

Sometimes knowing your score is important, particularly when a lender considers you a borderline case. If you need your score, you can pay the credit bureaus for access to it. You can also get a free copy of your score by signing up for credit monitoring services through each of the credit bureaus or a third-party company. To make this free, find a company that offers a free initial month. Sign up for the service, get your score and then cancel the service before your credit card is charged.

The Fastest & Easiest Way to Build Up Credit

Retain a Credit Card

Under certain situations, you can keep a credit card when faced with bankruptcy, consolidation or foreclosures, so long as you make the payments on time for that credit card. Once the financial situation has been resolved, on-time payments for this credit card will help build good credit.

New Credit Account

If all your credit accounts were closed, you need to open a new account to re-establish credit. In most cases you won't be able to open a regular unsecured credit account, so you will need to get a secured credit card. This type of card requires a cash deposit in the amount of credit limit being offered. This deposit offers the lender security as to the payment of the credit card balance, but after a certain time has passed, this deposit is returned to you. Once you have a credit card, make small credit charges and pay them off every month. This will start rebuilding your credit score quickly.

Timely Payments

Make all of your payments on time. This includes payments for utilities, rent, mortgage and credit cards. On-time payments increase your credit score, whereas late or missed payments will lower your score even more.

Credit Score

Pull your credit history every three months to six months to make sure payments are being reported and that all the information being reported is pertinent to your accounts. If anything is incorrect, report it immediately to get it removed from your credit history. Pull a report from all three credit reporting agencies, Experian, TransUnion, and Equifax, as not all credit reporting agencies have the same information.

Will an Insurance Inquiry Appear on My Credit Report?

Federal Law

Under the Fair Credit Reporting Act, any time an insurance company, or any other company, accesses your credit report, an inquiry will appear on your report that shows the name of the company that viewed your credit file and the date of that inquiry. Inquiries remain on your credit report for two years. A hard inquiry occurs when you apply for a product or service based upon your credit, such as a loan or credit card. A soft inquiry occurs when your credit is accessed but not reviewed, such as when you view your own credit report.

Significance

According to Financial Web, obtaining a quote for insurance is considered a soft inquiry and such rate shopping will not impact your credit score. However, if you are actively applying for lots of other types of credit at different places within a short time, the scoring model will consider that risky behavior and it may lower your credit score. For credit score calculations, FICO only considers hard inquiries that occurred within the last 12 months. It does not factor in soft inquires.

Considerations

Your FICO score ranges from 300 to 850. The impact inquiries have on your FICO credit score depends upon the number of recent inquiries, how recent the inquiries are and how many new credit accounts have been opened recently. Credit inquiries affect consumers with a short credit history more than those with a long credit history. Also, according to MyFico, a large number of inquiries, six or more, may indicate that the consumer is much more likely to file bankruptcy than a person with no inquiries at all -- lots of inquiries suggest the consumer needs to borrow money.

Prevention/Solution

Knowing what's in your credit report can help you spot identity theft. Hard inquiries on your credit report from companies that you have not applied for credit with may indicate that your identity has been compromised. According to the Federal Trade Commission, identity theft was the top consumer complaint of 2009. To help protect yourself, you can order one free copy of your credit report yearly from each of the three major credit bureaus through the Annual Credit Report website, annualcreditreport.com. If you believe you are the victim of identity theft, place a fraud alert on your credit report by calling the credit bureau using the phone number found on your credit report.

Will Late Cell Phone Payments Hurt Credit?

Reportable Actions

Typical items that get added to your credit reports include repossessions, foreclosures, financial judgments and bankruptcy filings. Your cell phone company may eventually sue you for non-payment, resulting in a judgment that gets reported by TransUnion, Equifax and Experian. The phone service provider might opt to sell your account to a collection agency. Debt collectors often report this to the credit bureaus, which adds the collection account to your files.

Effects

Both court judgments and collection agency accounts hurt your credit, according to the MyFICO credit scoring company website. Lenders who review your credit reports when you request new accounts see those items and classify you as a high risk borrower. Judgments and collection accounts are part of your payment history when your score is calculated. The history makes up 35 percent of your score, so your unpaid cell phone bills harms it badly. The effect is compounded if you have other unpaid bills too.

Confirmation

The Fair Credit Reporting Act gives you a way to confirm whether cell phone-related entries are showing up on your credit reports. You can order free reports from TransUnion, Equifax and Experian every 12 months (see Resources). The reports include keys to help you interpret the data so you can figure out whether any judgments and collection agency accounts resulted from your cell bill.

Solution

You can sometimes undo the damage caused to your credit by late cell phone payments by reaching a settlement with the phone company or debt collector. Negotiate a lump sum payment for the judgment or collection agency account in return for removal from your credit report. You can often settle for less than the original bill. Pay the agreed-on amount after you get a written promise that the credit report entry will be erased.

Steps to Achieve a Better Credit Score

Credit vs. Debit Card

A low credit rating can result from overuse of credit cards and excessive debt. What you owe to your individual creditors account for 30 percent of your credit rating. Using less credit and more cash helps to lower debt and improves your rating. Instead of carrying credit cards, get into a habit of using cash for most purchases and pay for the items with your debit card. Debit cards tie into to your personal bank account, with funds automatically deducted with each swipe of your card. Make sure you have the cash available before using it.

Monthly Payments

Once you get out of the routine of pulling out your credit card for every purchase, start tackling your balances and pay off your debt. Using cash alleviates new charges. But to put a dent in your balances and remove debt, plan to make larger monthly payments to your creditors every month. Check your budget and see what you can afford. Start by doubling your minimum payments. As your finances improve, consistently add more money to each payment until the balance disappears. Paying off debt is a key to improving a credit score.

Late Payments vs. On Time Payments

Achieve a better credit score with timely payments to your credit card companies and lenders of your mortgage and auto loans. Payments contribute largely to your credit score. Rebuilding a low score requires acknowledging your due dates and paying creditors before the cutoff time. Several methods can help to improve your payment history. For starters, don't wait until the last minute to mail payments. Use online payment services, or arrange for creditors to withdraw monthly payments automatically from your bank account.

Provide Explanations

As you build your score and improve your credit history, consider updating your credit report with a comment or information explaining the reason(s) for a low score. This method doesn't fix a bad credit score. However, if you need to buy a car or acquire a new line of credit, having this information on your credit report may convince a lender or creditor to approve your application. Did you lose your job, or experience an illness or injury that stopped you from working? If so, include these reasons in your comment to help you acquire financing.

Does Being a Secondary Person on a Credit Card Lower My Credit Score?

How It Works

A primary credit card holder is the individual who originally applied for the card and whose credit and income were considered when the credit card company awarded him the account. The primary user can then authorize other individuals to make purchases using his account. Any individual authorized to have access to the primary user's account is a secondary or "authorized" user.

While only the primary card holder is legally responsible for paying debts she and her authorized users incurred, the credit card company reports the card's debt level and payment history to the credit bureaus, and this information appears on all users' credit reports -- impacting their credit scores.

Credit Impact

Becoming an authorized user of an established credit card account serves as a viable method of building new credit or repairing damaged credit. Provided the primary user does not carry a high balance and makes each credit card payment on time, secondary users' credit scores benefit rather than suffer from having the credit card company's trade line on their credit reports. This process is known as "piggybacking."

Potential Damage

If the primary user misses a scheduled payment, defaults on the credit card balance or carries a high balance from month to month, both his credit score and the credit scores of his secondary users suffer. This is because the credit scoring formula places a high importance on timely payments and rewards consumers for low revolving debts.

Because the authorized user is not responsible for paying the debt, the credit card company is not obligated to contact her in the event the primary user fails to make payments as agreed. Thus, not only could the secondary user potentially suffer credit damage, she would not receive notification that the damage was occurring -- leaving her unable to make payments and mitigate the damage on her own.

Removing Secondary Users

An authorized user has the right to request that the primary card holder's credit card company remove her from his account -- but the credit card company does not have to oblige the request. Because authorized users have no power over the account details, only the primary card holder can force a credit card company to remove an authorized user from a credit card account. Each credit card company employs differing regulations regarding removing secondary users. Once removed, however, the account will cease to update on the authorized user's credit report -- preventing further credit damage.

Does a Late Mortgage Payment Harm the Chance to Refinance?

Mortage Rates

The interest rates available to a prospective lender depend on a variety of factors, perhaps the foremost of which is the lender's credit score. This credit score is derived using information about how successfully a borrower paid back his loans. If loans are paid back late or not at all, his credit score will decline. Borrowers with lower credit scores are at a higher risk of defaulting on a mortgage. That means they typically must pay higher interest rates.

Late Payments

A late mortgage payment will almost certainly cause a person's credit score to decline. The larger the size of the missed payment and the longer the payment remains delinquent, the steeper the credit score's decline. In addition, other delinquent debts will hurt a borrower's credit score. Any prospective lender who looks at a borrower's credit report will know that the borrower was late making a mortgage payment, because it will list the late payment.

Refinancing Rates

When a person seeks to refinance his mortgage, he will apply for home loans in the exact same way he did when he was seeking to take out a new mortgage. However, the primary difference is lenders will now look not just at his financial status and credit history, but his record paying back his current mortgage. The fact that he was late making a payment could hurt the borrower's chances of receiving favorable rates, even if his credit score is healthy.

Considerations

The exact effect of a late payment will depend on a number of factors, including the lateness of the payment and when the late payment occurred. Negative information such as late mortgage payments, can only stay on a credit report for a maximum of seven years. So, if the late payment occurred more than seven years ago, the lenders to whom the borrower applies for a new mortgage may not even know the late payment occurred.

Myths & Truths About Grants

Billions of Dollars Are Available

It's true that there are billions of dollars in grant money available, both through government and private sources. The vast majority of funds, however, are earmarked for specific purposes, in particular for educational, environmental, research, community service, health care and social purposes. Grant recipients tend to be nonprofit organizations that meet needs detailed by funding sources. Nonprofit organizations have full-time staff trained and experienced in writing grant proposals; the agencies and organizations that are successful in securing grants have track records of spending grant funds wisely on specific, identified needs.

Resources Are Diverse

It's also true that grants funds are available through local, state and federal government agencies, as well as through foundations, companies and other private sources. The federal government---through the U.S. Department of Health and Human Services---actually operates a clearinghouse grant website, "Grants.gov," which provides information about where and how to apply for grants. There are literally hundreds of websites dedicated to helping you locate grant possibilities--some solid informational sources and others dubious. Private sources, such as foundations and businesses, tend to be more discreet about their grant programs, although vast amounts of money are available.

Securing Grants Is Easy

Nothing could be further from the truth. Grant writing is a learned skill. It's intricate, time-consuming and shouldn't be left to amateurs, especially in large, nonprofit organizations that depend on grant monies to survive. Individual grants, such as educational grants, also are complicated. For example, completion of the FAFSA (Free Application for Federal Student Aid) is almost mandatory if you're applying for school assistance of any kind, because most public and private grant sources use FAFSA information in determining your grant eligibility. The fact is, 95 percent of grants are awarded to organizations and not to individuals, and organizations employ professionals to seek and secure grant funds. Operations and individuals who use the "spray and pray" method of applying for every grant under the sun, in the hope of landing a grant purely by chance, are decisively outmaneuvered in the grant-seeking department.

Business Grants Are Abundant

Myths abound on late-night TV and on the Internet. Promises of "easy" money through grants to start or expand your business simply aren't true. Virtually no grants, public or private, are available to simply start or expand a business without very specific conditions attached. Minority "grants," for example, often consist of counseling and information services. Many business grants require you and your business to meet narrowly defined parameters, such as replacing existing light or heat sources with solar panels or meeting an identified need within a specific community. The federal government's Small Business Administration doesn't even offer grant programs, only low-cost loans. The fact is, people aren't going to provide funds just to help your business make money. If it seems too good to be true, it probably is.

Individual Grants Are Plentiful

Individual grants are available, but mainly for educational and research purposes. Again, government agencies and private foundations simply aren't going to give you money to pay your bills. Beware any such claims or promises. There are plenty of government grants available to assist with higher-education costs (such as Pell grants), as well as foundation and private-business grants that also provide educational grants. However, you're not going to secure a grant because you're behind in your car or credit-card payments.

Tips on Boosting a Credit Score

Pay Bills on Time

Your payment history on your credit reports shows whether you pay bills by the due dates and any delinquency period when you are late. The My FICO site advises that 35 percent of your credit score results from this information. Budget to ensure you have enough money for at least the minimum payment on all of your accounts. Set up electronic payments, if possible, so the funds always arrive on or before the due date. Otherwise, mail them early.

Reduce Debt

Your debt load is the second most important factor in your FICO score, according to My FICO. It makes up 30 percent of the score. Lenders like to see you actively using credit, but they will not open new accounts if you owe too much to existing creditors. Your balances do not go down much if you only pay the bare minimums. Cut out optional purchases and expenses and redistribute the money to your highest interest accounts. The federal Credit CARD Act makes credit card companies spell out how long it would take you to pay off your accounts by only paying the minimums, according to the Board of Governors of the Federal Reserve System website. Use this information as a guide for where to channel the extra funds for the most impact.

Maintain Old Accounts

Keep your oldest credit card accounts open and in good standing. Fifteen percent of your credit score results from how long you have used credit. Closing old accounts hurts this area. Leave them open and use them occasionally so your bank does not cancel them for inactivity. The law forbids card issuers to charge inactivity fees, but they can close accounts for non-use.

Maintain Accurate Reports

Credit scorers depend on the information on your credit reports for their calculations. Wrong information affects your score and negative entries lower it. The Federal Trade Commission explains that you can legally dispute mistakes, which forces the credit bureaus to verify or delete the data. Get no-cost credit reports from Annualcreditreport.com and review them for accuracy. Report mistakes through the online dispute forms on the bureau website. Your credit score gets a boost once the bureau fixes or removes the incorrect, negative entries.