Credit Scores

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If you’re new to the world of credit, then you probably know it isn’t easy to establish good credit. Getting lenders to trust you can be a challenge as they want proof that you’re trustworthy. It’s really a catch-22 because how can you prove that you’re trustworthy if you’ve never had a chance to show it.

In part 1 of “How to Build Credit When You’re Just Starting Out”, you’ll see really great strategies for pulling points in your favor.

#1 – Become an Authorized User:  If you can piggyback off of someone else with good credit, then do it. Becoming an authorized user means you will ask a friend or family member with good credit to allow you to become an authorized user on their credit card. Tell them that you don’t want a card of your own. You only want your name on the account. Depending on the company this might help add some history to your report.   

#2 – Get a Co-Signer: A co-signer is someone who agrees to go on a loan with you in order help you get approved. You will have to be responsible with this because if you default on payments, they become responsible. That’s the opposite of what you want to do.

#3 – Get a Secured Card:  Many lenders offer consumers credit cards in exchange for a deposit. So, this is another great option for when you’re just starting out.  

These three tips will help to add favorable history to your credit report. Check out part two for more credit history building strategies.


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Who knew that getting hired for a new position could all come down to your credit history? It’s true. In several states, it’s perfectly legal for employers to pull your credit history during the hiring process. In their opinion, it determines your level of trustworthiness for the position they’d possibly be hiring you for.

Although legal, this isn’t something the majority of employers actually do. According to a 2012 survey from the Society of Human Resource Management, only 13% of respondents said they check all employee’s credit history while 53% say they don’t do it at all.

It’s still better to be safe than sorry, which is why there are proactive steps you can take just in case a hiring manager does decide to consider your credit history. You can be proactive by:

  • Checking your credit history for inaccuracies
  • Cleaning up where you can
  • Having an explanation ready for derogatory marks

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In the US, many employers have the right to look over your credit report before hiring you. Some say it’s justified for “trust” purposes. Others say it’s unfair to minorities or to those who are low income. The good news is there are some states where employers are prohibited from using your credit score against you. These states include:

  • Delaware
  • Connecticut
  • Colorado
  • California
  • Hawaii
  • Maryland
  • Illinois
  • Vermont
  • Washington
  • Oregon
  • Nevada

Although the state of New York hasn’t banned this practice, the city of New York has, which is a relief for many job seekers. Keep in mind that there are still some professions where it’s still legal to check your credit report such as some government positions.


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It’s important to know that there are different places to pull your credit score from. It’s up to the lender which one they use, but the one most largely used is the FICO score. Keep note that different places offer credit scores. This is important when you’re pulling your credit score either from a paid or free agency. The most common places a score can be pulled from include:

  • FICO: This was mentioned earlier and is the most popular scoring model. It ranges from 300 to 850 and gathers its information from the large credit reporting agencies: Equifax, Experian and TransUnion.
  • VantageScore: This scoring model is the second most popular after FICO score.
  • PLUS score: This scoring model is based only on your Experian credit report. Most lenders don’t use it.
  • TransRisk score: Just like PLUS score was developed by Experian, TransRisk was developed by TransUnion.
  • Equifax score: As the name suggests, this scoring model is based on your Equifax score.

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It’s pretty common knowledge that your credit score will affect your ability to get a loan, but there are some everyday living factors that your credit score can affect too.  For instance:

Insurance rates: Believe it or not, the amount of insurance you pay can be directly tied to your credit score. Great score equals lower rates while poor score equals higher rates. Every state doesn’t allow this, however.

Approval for an apartment: Is there an area you’ve been wanting to move to for a while? Well, many apartments use your credit as a means for adding stipulations to your application.  Poor credit may equal higher deposit or monthly payment in general just to offset any “risk”.

Utilities: Once you move into your new place, your score can make it difficult to have your utilities turned on. A bad credit score could mean you have to pay a huge deposit to turn on those necessities like lights, water, and gas.


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If you’ve let your credit score hit the dumps, there are some areas in your life that it may affect. Most people already know that poor credit makes it tougher to get an installment loan or mortgage. But, there are other issues that can come up too, for instance getting a job.

Although it may seem irrelevant for an employer to judge you based on your credit score, some do. Anything from legal issues to habitual missed payments may send a red flag up to employers. The good news is there are some states that have outlawed this practice. You’ll just have to check and see if your state is one of them. Even if employers aren’t allowed to judge you for your credit, some agencies can refuse to license professionals with poor credit.

For those who want to go the independent route and start their own business, it’s important to have good credit too. If you have bad credit, it can affect your ability to get a small business loan.


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Keeping a clean credit history makes life a whole lot easier. Whether you’re trying to get a car, apartment, job or loan sooner or later someone will use your credit history to judge you. But let’s focus on how your credit score can affect your ability to get a loan. Getting a loan such as a mortgage or installment loan are the most popular reasons for improving and maintaining good credit.

With poor credit your chances of getting approved are slim and if you do manage to get approved, you will have to pay back astronomical interest rates. Other drawbacks of trying to get a loan with shaky credit include:

  • Needing a cosigner
  • Putting up collateral

Having to jump through these extra hoops can be stressful and even embarrassing (especially if you need a cosigner). You may also have do a little more to get the loan, such as find a cosigner or put up collateral. Your best bet is to start now working on cleaning up your credit.


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If you read Part 1 on Realistic Steps To Fixing Your Credit Report, then you know that you need to look at a copy of your report and challenge any errors that you see. Now, let’s move on to two other realistic steps you can take in order to fix your credit report.

  1. Ask for a goodwill adjustment: A goodwill adjustment is when you ask your creditor to remove negative information from your report. They aren’t obligated to do it, but they may if you still have a business relationship with them.
  2. Try to get ahead of default: If you know that you’re likely going to default on a loan, contact your creditors ahead of time to see what you can do. They may give you a grace period, which is better than just being late without any excuse. This course of action has to be done before you default.

If you put these steps into action today, you’ll find your credit score increasing in no time.


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A poor credit score can take the groove out of things in your life. Instead of being approved instantly for a loan, you’re treated like an irresponsible person. Even if you were irresponsible at one point in your life, something on your report from seven or eight years ago shouldn’t still haunt you.

When you’re on the mission of trying to clean up your credit report, here are some action steps you want to take.

  1. Get copies of your credit report. Take a look at your credit report and see what’s real and what’s not. Some items could be an error that’s pulling your score down. There could be items that should have dropped off your report years ago.
  2. Fix errors. When you see something that isn’t accurate, contact the credit reporting agency and let them know about it. You will need to probably send them a formal letter with your name, address, item in dispute, and any facts you have to back you up. Then you need to ask them to resolve the issue for you.

This is part one on steps you can take to fix your credit report. Check out Part 2 for more.


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When you’re ready to clean up your credit report, it can be confusing to know where to start. Depending on how bad it is, you may find yourself struggling to figure out whether you need to call the creditors yourself or just ignore it hoping that it’ll go away. Cleaning up your credit report will give you a higher FICO score, so ignoring it isn’t the best option.

That’s why many find themselves turning to credit repair agencies in hopes of letting someone else handle the problem for them. Credit repair agencies are okay, but be careful. There are several scammers out there ready to prey on those who are desperate to clean up their credit. Scammers will charge you expensive upfront feels and in return promise to remove the following items:

  • late payments
  • foreclosures
  • bankruptcies

They tell you that in 6 months to a year your score will be back to 700 when in reality, nothing ever happens.

A better credit score means better interest rates on mortgage loans, car loans and personal loans. So, do what you can to improve your score, but be careful how you start.