On Monday 3/23/15 I had the pleasure once again of being a guest of Dr. James Gore on his radio show New Urban Unlimited on 1150AM KKNW in the Seattle area. I will be on the show which airs M-F at 6am, the last Monday of every month in 2015. You can listen to the most recent show on the link above. During this show Mr. Gore and I have a candid conversation about credit repair and why it is important to have good credit.
Here are the highlights from our conversation.
(1) What is credit auditing/credit repair and why people need it?
Credit repair is the process of auditing your credit to make sure the most accurate items are being reported on your credit reports with the big 3 credit bureaus Equifax, Experian, and Trans Union. Having mistakes including delinquencies, judgments and collections can negatively affect your credit score and by utilizing Federal Laws such as the Fair Credit Reporting Act, items that cannot be verified must be deleted from your credit report.
Having a low credit score can affect your ability to qualify for the best lender rates which could in turn cause you to pay hundreds of dollars more in interest to your banks per month. Therefore it is in everyone’s best interest to have a high credit score so that home loans, lines of credit, and auto loans among other things can be easily accessible and affordable.
(2) What is your credit score made up of?
Your credit report is the basis of your FICO® score. The report details your credit history as it has been reported to the credit reporting agency by lenders who have extended credit to you, by court records and by you. The FICO score analyzes information from the trade line, inquiry, and public record and collection sections of your credit report.
A FICO score evaluates five main categories of information in your credit report, and compares this information to the patterns in hundreds of thousands of past credit reports. These five categories are, in order of importance:
1. Payment history — what is your track record? 35 % of the score
o Severity – how bad are the delinquencies?
o Recency – how recent are they?
o Frequency – how many times did it occur?
2. Amounts owed — how much is too much? 30% of the score
o Large outstanding balances
o The ratio of balances to credit limits
3. Length of credit history — are you established? 15% of the score
Age of the trade lines – (the age of the oldest account, the average age of accounts, or both).
4. New credit — are you taking on more debt? 10% of the score
Number of inquiries and new account openings
5. Types of credit in use — is it a healthy mix? 10% of the score
Number of trade lines reported for each type: bankcards, retail, department store cards, installment loans, etc.
6. If you don ’t have credit or have been denied credit
If you’re finding it hard to establish revolving or installment lines of credit, please contact us. We’ve strategically partnered with several trusted resources that provide credit cards and installment loans to help you build your credit score.
(3) If a person has high credit balances will that affect their score?
Yes, using your entire available credit balance will affect your overall credit score. It is best to have an available high credit limit while paying down your debts every month. If you credit balances remain high, then you are much closer to a default and are therefore a higher credit risk.
(4) What items can/can’t be removed in credit repair?
Any negative item that cannot be properly validated per the Fair Credit Reporting Act my be deleted from your credit report. These items can include delinquencies, judgments, foreclosures, etc. You will have the best chance of deletion when your debt has been sold to a third party collection company as they often times do not have the paperwork to validate a debt. If you have tax liens on your credit, that can be resolved by dealing with the IRS through a separate process.
(5) How long does the credit repair process typically take?
Generally the process can take 6-8 months (although many times results can happen in 30 days) and then for the remaining items it is up to you whether you want to negotiate to settle your debts and negotiate a pay for deletion on those accounts as having negative items removed will greatly improve your credit score.
(6) What are the legal remedies if an error does not get fixed on your credit report.
You could take legal action under the Fair Credit Reporting Act and the Washington Consumer Protection Act if you feel that your credit is not being reported accurately. Litigation can be an expensive and time intensive process so it is best to try to resolve any problems prior to litigation. Also going through a credit auditing process can help you build evidence if you decide to take legal action.
If you have additional questions regarding credit auditing and how you can improve your credit scores, give Symmes Law Group a call at 206-682-7975 to learn about your options. If you would like to learn about how to fix your own credit, check out my new DIY credit repair course complete with sample letters and materials to learn how to leverage law to your advantage.