What are FICO® Credit Scores?  

It is a three-digit number that summarizes the positive and negative information on your Experian credit report.  Credit scores follow an algorithm first developed by the data analytics company FICO years ago. For a while, credit scores weren't the primary force behind a credit decision but over time the impact of a credit score became more and more important. All loan programs have a minimum credit score. Creditors such as JCPenny, GM, and VISA, report payment history to Equifax, Experian and TransUnion who apply the mortgage model to the data and create a FICO score. Each of those companies are independent. The reason their scores are not the same is because their mortgage model varies and creditors do not report to all repositories because it cost them money when they do.

There are five characteristics of your credit history that make up your three-digit score: your payment history, account balances, the length of your credit history, the types of credit used and how often you've applied for new credit. Credit scores will improve much more quickly by paying attention to the two categories that have the greatest impact on a score: payment history and account balances.

  • Payment history accounts for 35 percent of the total score. When someone makes a payment more than 30 days past the due date, scores will fall. An occasional "late pay" won't do much damage to your score but continued payments made more than 30 days past due definitely will. Preventing late payments is a key to recovering your score.

  • Account balances compare outstanding loan balances with credit lines and make up 30 percent of your score. If a credit card has a $10,000 credit line and there is a $3,300 balance, scores will actually improve, as the ideal balance-to-limit is about one-third of the credit line. As the balance grows and approaches or exceeds the limit, scores will begin to fall.

  • The remaining three have relatively little impact. How long someone has used credit accounts for 15 percent of the score, but there's really nothing anyone can do to improve this area other than to wait. Types of credit and credit inquiries both make up 10 percent of the score. By concentrating on payment history and account balances, scores will improve significantly over the next few months.

There are different modeling systems which is why our scores will vary from the scores you will receive if you pull your credit yourself, or those if you pull your credit. Below is the modeling system in the mortgage industry.

Help Web Sites  

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Hold Periods (extenuating circumstances available)

  • Conventional

    • Deed-in-Lieu…..4-years

    • Short Sale…..4-years

    • Chapter 7…..4-years

    • Chapter 13……2-years from discharge, 4-years from dismissal

    • Multiple BK Filings…..5-years if more than one filing within past 7-years

    • Foreclosure…..7-years

    • BK & Foreclosure…..see guidelines

  • FHA

    • Deed-in-Lieu…..3-years

    • Chapter 7…..2-years

    • Chapter 13…..12+ months, permission from BK court.

    • Foreclosure…..3-years

  • VA

    • Chapter 7…..2-years

    • Chapter 13…..12+ months, permission from BK court.

    • Foreclosure…..2-years

    • Deed-in-lieu…..2-years

USDA

  • Chapter 7…..3-years from discharge

  • Chapter 13…..12+ months, permission from BK court.

  • Foreclosure…..3-years

  • Deed-in-lieu…..3-years

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Suggestions

  • Late Payments

    • If possible, get them removed. Some creditors will as a courtesy remove them.

  • Revolving Balances

    • Revolving balances ideally should be under 30%. There are three tiers in which you would see score improvement. 49%, 30% and 10%. Keeping the balance at 10% or less optimizes the score improvement. I would always recommend paying credit cards off monthly to avoid interest charges.

  • Collections

    • Under $2,000 usually do not have to pay.

    • $2,000 or more:

      • Pay in full before closing. (or)

      • 5% of the outstanding balance of each collection is included in monthly DTI.

      • Medical collections and charge-offs are excluded.

  • Judgments

    • Must be paid prior to or at closing.

    • An exception to the payoff of a court-ordered judgment can be made if you have an agreement with the creditor to make regular and timely payments.

    • Provide a copy of the agreement and proof of three months' payments made prior to credit approval. You cannot prepay the scheduled payment to qualify.

  • Taxes Lien from Current Tax Year (exceptions exist)

    • FHA - Must be paid unless; you can provide a valid repayment agreement and evidence to show at least 3 months of timely payments have been made.

    • Conventional - Must be paid unless; you can provide a valid repayment agreement and evidence to show at least 1 timely payment has been made.

  • Charge Offs

    • All housing and installment loans paid on time for last 12 months and no more than two 30-day late mortgage or installment payments in the previous 24 months.

    • Borrower provide a letter of explanation, which is supported by documentation, for each charge-off account. The explanation and supporting documentation must be consistent with other credit information. We must determine if the charge-off accounts were a result of the borrowers disregard for financial obligations, the borrower’s inability to manage debt, or extenuating circumstances.

  • Disputed Accounts

    • Conventional:

      • If the trade line does not belong to buyer or is inaccurate, must validate to ignore.

      • If trade line is buyers, a new credit report with the dispute removed must be obtained.

    • FHA:

      • If the cumulative outstanding balance of disputed accounts are less than $1,001, then you can leave as is.

      • If above $1,001, and the trade line is buyers, a new credit report with disputes removed must be obtained.

      • Disputed accounts not included in $1,001 limit: Has $0 balance; last late is 24-months or older; or payment is current and “Paid as agreed”.

    • USDA:

      • If the trade line does not belong to buyer or is inaccurate, must validate to ignore.

      • If trade line is buyers, a new credit report with the dispute removed must be obtained.

      • Remove disputes unless: Has $0 balance; marked as “Paid in Full” or “Resolved”; or balance owed is less than $500 or more than 24 months old.

    • VA:

      • No formal policy on disputed accounts.

      • If the trade line does not belong to buyer, or is inaccurate, must validate to ignore.

      • If trade line is yours, a new credit report with the dispute removed must be obtained.

  • Inquiries on Credit Report

    • Borrower to explain all inquiries within the last 120 days listed on credit report.

    • If new debt stated but not currently on credit report, a credit supplement showing new debt is required.

  • Debts Paid by Others  (FNMA Only)

    • Non-mortgage debt (installment loans, student loans, and other monthly debts that are non-mortgage) you can exclude the payment from the debt-to-income ratios if you receive 12 months documentation that the debt is paid by another party and has been paid as agreed. This policy applies regardless of whether the other party is obligated on the debt.

    • The policy does not apply if the other party is an interested party to the subject transaction (such as the seller or Realtor) or if the debt has been delinquent in the past 12 months.

    • Underwriting must evaluate the validity of the circumstances under which the payments are being made by another party. For example, payments on multiple student loans made by the borrower’s parent represent a common situation. However, additional investigation and documentation might be necessary when a borrower’s multiple installment and revolving debts are being paid by the borrower’s spouse who is not on the subject mortgage.

    • When a borrower is obligated on a mortgage debt – but is not the party actually repaying the debt – you may exclude the monthly mortgage payment from the borrower’s recurring monthly obligations if the party making the payments is obligated on the mortgage debt and if the borrower is not on title to the mortgaged property.  Need most recent 12 months’ canceled checks or bank statements from the other party making the payment that document a 12-month history with no delinquent payments. The party making the payments cannot be an interested party to the transaction.

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How long Stays on Your Report?

  • Credit Accounts, from 7 to 10-years

  • Judgments, 7-years from date filed, exceptions

  • Bankruptcy-Chapter 7 & 11 remain 10-years from date filed.

  • Bankruptcy-Chapter 13 non-dismissed or non-discharged, 10-years from file date.

Tax liens: Unpaid will not be removed. Paid remains 7-years from date release.

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ESTABLISHING CREDIT

  • The easiest method is using credit cards.

    • Get your own card(s). Check online or with your local bank for what they offer. Make sure the card will be reported to the credit agencies, if not, this will not help in establishing credit.

    • Steve White, credit expert recommends Skynet and Premier Bankcards: openskycc.com; mypremiercreditcard.com

    • Types of credit cards:

      • A Standard Card, or unsecured card provides a line of credit on the expectation that you will repay.

      • A Secured Card requires a bank deposit as collateral on the account, and your credit line cannot exceed the amount of your collateral. Interest rates are variable.

      • An Authorized Card is one that is already established, and someone adds you as an authorized user. This used to be a great way to share credit and sometimes it works, however, I suggest not depending on this type of credit to establish personal credit.

      • A Prepaid Card does not report to the credit reporting agencies so they will not help you in establishing credit.

      • Student Cards are available to college students. If you have one of these, find out if they are reporting on the credit agencies, if not, they will not help you. Remember, do not create debt, but rather establish a payment history. Suggest two cards. Put $10 on t hem, pay bill when it comes, put another $10 on them, repeating...

  • Other types of debt such as Installment debt, i.e.: furniture, auto, jewelry. They are good for credit, however, they have a start and end date, so at some point the loan will be paid off and you will lose the active credit. It will remain as part of your history.

  • Stay current on ALL payments.

  • See "Credit Information".

DID YOU KNOW?

  • Medical bills, #1 cause of bankruptcy filings

  • Heart disease is the No. 1 cause of death in the U.S. Every 40 seconds someone in America will have a heart attack, and every 40 seconds someone will have a stroke.

  • Just over 1 in 4 of today’s 20-year-olds will become disabled before they retire.

  • The average disability claim lasts 31.6 to 34.6 months.

  • 1,688,780 new cancer cases were expected to be diagnosed in the U.S. in 2017.

  • 30.6 million people in the U.S. each year have accidental injuries that require emergency department visits. There are 41.6 deaths due to unintentional injuries per 100,000 people.

  • There are 4 times as many days lost from work due to off-the-job injuries as for on-the-job.

  • Sweat Till You're Wet! Work up a sweat for at least 1 hour per week to enjoy a range of benefits: reduced risk of heart attack, better mood & lower blood pressure.

  • Exercise Your Brain! Dance! Studies show that regular, moderate exercise helps fight the effects of aging on the brain. No grueling workouts required!

  • Hit the Sack! It might not seem like a diet factor, but 7 hours of sleep per night not only helps you live longer, but also lowers your stress, sharpens your memory, and reduces cravings for pants-splitting foods.

  • Grab Some Nuts! They are among the best sources of healthful fats and protein. Half of a handful eaten about 30-minutes before a meal will temper your appetite and help you avoid the drive-thru.

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MANAGING YOUR DEBT

  • Contact your creditors and request any assistance on addressing debt, such as a lower interest rate, varied terms.

  • Paying down debt. There are two primary approaches to paying down debt; the snowball approach and the avalanche approach. The avalanche approach will save you more money in the long run, but the snowball approach will allow you to see faster results.

  • Snowball Approach

    • Pick your bill with the lowest balance; pay as much as you can on it each month.

    • Pay only the minimum balance on your other bills.

    • When the smallest bill is paid off, combine the amount you were paying on that bill with the amount you were paying on your next-smallest bill and concentrate your efforts on paying off that bill, while continuing to pay the minimum on all other bills. Keep all bills current.

    • Continue this strategy until all bills are paid.

  • Avalanche Approach

    • Pick your bill with the highest interest rate; pay as much as you can afford to pay on it each month.

    • Pay only the minimum balance on your other bills.

    • When the highest interest rate bill is paid off, combine the amount you were paying on that bill with the amount you were paying on your next-highest interest rate bill and concentrate your efforts on paying off that bill, while continuing to pay the minimum on all other bills. Keep all bills current.

    • Continue this strategy until all bills are paid.

Protect Your Credit

There are many services that you can use to Freeze and Unfreeze your credit. Be careful who you use that they are not simply attempting to collect your personal information. Below are links to the repositories to do this individually.

Freezing your credit is a way to limit most access to your credit file at each of the three credit bureaus for free. Each bureau offers multiple ways to place a credit freeze (also known as a security freeze), including online and in-app options. Once you've learned more about how to freeze your credit, consider placing a credit freeze if you suspect that you have been the victim of identity theft.

What Is a Credit Freeze?

A credit freeze, also known as a security freeze, is a tool designed to help protect you from fraud and identity theft. It limits access to your credit report unless you lift the freeze, or "thaw" your credit. Having a freeze in place won't affect your credit scores, but it will keep your credit report from being accessed to calculate scores unless you first lift the freeze.

Freezing your credit can help protect against identity thieves and other criminals using stolen personal information (your Social Security number, for instance) to apply for new credit in your name. Since checking your credit report and credit scores are typically the first steps in processing any credit application, freezing your credit at the national credit bureaus (Experian, TransUnion and Equifax) can help stop unauthorized credit accounts from being opened.

The major drawback of credit freezes is that, along with limiting unauthorized credit applications, they also limit authorized checks. This can complicate legitimate applications for loans, credit cards and other things because you'll need to lift your credit freeze on your file before the process can move forward.

You must contact each national credit bureaus individually to freeze (or unfreeze) your credit reports. Each credit bureau will do a credit freeze for free upon request. Each credit bureau allows online and phone credit freeze request.


What is Wire Transfer Fraud? It occurs when money transfer instructions are altered, causing funds to be diverted from the intended recipient and delivered to another account. Hackers pose as buyers, realtors, title/closing reps or mortgage lenders.

 

Be Suspicious
Confirm that email addresses are legitimate perpetrators make minor changes that mimic legitimate email addresses. Wire instructions will ONLY come from the title and closing agent, NEVER from the lender.

Confirm
Confirm over the phone or in-person any change in wiring instructions, even when the email and/or text message seem legitimate and authorized.

Keep Information Close
Never give out personal information, social security or credit card numbers over the phone unless you initiated the call directly or trust the source completely.

Verify with Attorney/Title Company
Call to validate that the funds were received. Detecting that you sent the money to the wrong account within 24-hours gives you the best chance of recovering your money.

Use a Secure Network
Never make credit card purchases on public computers or when using public wifi. Always use a secure and trusted network.

Contact Us Immediately!
If you feel you have been affected by wire transfer fraud or other suspicious activity, please contact us immediately.

Freezing Your Credit

Freezing your credit is a way to limit most access to your credit file at each of the three credit bureaus for free. Each bureau offers multiple ways to place a credit freeze (also known as a security freeze), including online and in-app options. Once you've learned more about how to freeze your credit, consider placing a credit freeze if you suspect that you have been the victim of identity theft.

Once we are complete with your transaction, freezing your credit will help protect against identity theft. It restricts access to your credit report to minimize the chance of thieves opening new accounts in your name. Since creditors need to view your credit report before issuing credit, this is a way to stay ahead of fraud and is especially smart given that our personal information has already been compromised through creditors.

Click on the links below. It’s absolutely free, and will not affect your credit score.

How do I Lift a Credit Freeze?

The same webpages used to set up credit freezes can be used to remove or suspend them, also known as unfreezing your credit. All three bureaus also provide instructions for lifting a freeze by phone or using the credentials connected to your freeze at each bureau.

In addition to your ability to permanently unfreeze your credit, you may have the option to lift the freeze temporarily by indicating a length of time (one day, one week, etc.) you want the freeze to be suspended. Policies vary by bureau so make sure you understand what your options are before you begin the process.

When you request by phone, your credit will be thawed within one hour and in near real time when you create or log in to your Experian account to toggle your settings to "Unfrozen."

Identity Theft Is a Growing Business

Identity theft is a business for perpetrators who do this to enrich themselves. They use the stolen identity to impersonate someone else or sell someone's identity to other criminals.

The crimes involving identity theft are growing at an alarming rate. Every year, identity thieves steal billions of dollars from millions of victims. Studies have identified the following significant trends:

  • There has been an increase in incidence, primarily by growth in existing card fraud and spike in card-not-present transactions

  • Account takeover problems have bounced back

  • There has been an increase in new account opening fraud

WHO ARE THEY AND HOW DO THEY DO IT?

An identity thief can be anyone. They are often professionals who display confidence. Identity thieves can also be family, friends, or familiar with the victim. There are many different ways identity thieves can obtain personal information, including:

  • Cybercrime: Financial institutions and other businesses are exposed to breaches in data security due to increased dependence on electronic data and computer networks to conduct daily operations and growing pools of personal and financial information transferred and stored online. Breaches are at an all-time high, with hundreds of breaches and millions of records exposed every year.

  • Stealing mail: Stealing mail provides the identity thief information from banking and credit card statements. Identity thieves may try to obtain a new debit or credit card on an existing account and conduct unauthorized transactions.

  • Diverting mail: Unauthorized address changes divert mail to avoid discovery of fraudulent activity. Before stealing someone's identity and taking over an existing account, identity thieves will often have the statement address changed so that the customer is less likely to notice the unauthorized charges.

  • Responses to unsolicited email (spam): Responses to spam inquiries asking users about account or identification information provide identity thieves with large amounts of information for little effort.

  • Dumpster diving: Going through trash for any sort of personal information, such as Social Security numbers, account numbers from banking or credit card statements, phone numbers, or discarded preapproved credit card offers is called dumpster diving.

  • Pretext calling: Pretext callers try to mislead a financial institution employee into believing the thief on the phone is a customer and providing personal information or account numbers. Pretext callers may then use the information gained to steal the identity of a customer.

Protect Your Identity on Social Media

Since social media first hit the internet, we began sharing things about ourselves, which is not bad as it allows us to connect and communicate ideas fast and conveniently. What can be a major security issue however, is over-sharing, whether due to ignorance (about who might be snooping on us) or simply being out of touch with online safety.

So what are some “best practices” for ensuring your identity?

  • Think of all the most personal, sensitive information about you – including your family and business – that you would never want a stranger to know about. Now ask yourself why there would ever be a need to share it publicly via social media?

    While telling a friend that you are going on vacation is perfectly fine, posting this information online is not a smart idea. It feels great to tell the world you are on a sun-kissed beach, but here’s your post’s unintended subtext: “I’m still out the country and nobody’s home!”

  • On the topic of photo uploads in general, be aware of the ‘other stuff’, like background items such as bank statements or confidential work documents being pictured.

  • Customize your social media Privacy Settings. Toggling specific options can really help tighten down on security, like limiting what kind of audience can view your posts and how much strangers/yet-to-be-accepted friends can see on your profile/posts.

  • It was once cool to brag about your friend count, but now it is much wiser to focus on building a list consisting of true friends or at least those you have met.

  • Keep an eye on your friends request, you will often find them disguised with a picture of a hot girl or guy. It’s a trick to get you to friend them.

  • Username, do not reveal sensitive information (such as your birthday and location), strong passwords to protect your accounts, and be vigilant when it comes to spotting bogus advertisements and posts built by cyber ‘phishing’ scammers.

  • Finally, ensure your computer has up-to-date antivirus and anti-malware suites for fundamental protection, and always remember to logout from social media accounts.

Phishing, Phone/Email Scams

Modern life has afforded us unprecedented conveniences. But it is also opened the door to deceptive criminality schemes which frequent global headlines. Fraudsters can attack both off and online, hiding behind the façade of phony emails, letters, telephone calls, text messages and emails.

These crimes, known as ‘phishing’, pose an ominous modern world threat. They keep us on our toes, questioning what we see and hear. Is this person really calling from my bank? Could this email attachment be a virus? Will that link lead to a bogus website?

The big question: How can you be sure what is and isn’t a trusted source? Cyber criminals, usually out to steal personally identifiable information for the purpose of exploiting our wealth and identities, deserve our attention. It can take just a click to get snared.

So how can we stay clear of these shadowy, malicious forces? How can we stay one step ahead, ensuring we do not get duped into sharing our data and downloading viruses? For starters, since fraudsters are always producing new guises to lure victims, it is wise to keep up to date with frauds by following tech news reports.

  • While there are nuances to each form of phishing, each usually shares common characteristics. It is imperative to remember that a bank – or any reputable organization – will never, ever ask for your login details (username, password) or any sensitive information, by email, text message or phone.
    If you are contacted with such a request, treat it as highly suspicious and end the call or disregard/delete the email/text message. The next thing to look out for is the ‘alarm-bell-ringing’ component, designed to frazzle your mind and encourage you to abandon your better judgement.
    A prime example of this would be being asked, upon receiving a call from your ‘bank’, to confirm your online logins in order to recover your ‘stolen’ savings. The goal of the caller is to create a situation of extreme urgency, forcing you to panic and become desperate to remedy the ‘situation’.

  • Phishing frauds involving this ‘ticking clock’ could also come from a number of other (hoax) services, again urging you to act fast to save something highly valuable. For instance, an email might say your account will be deleted or your identity compromised if you do not comply.

  • But what if you are unsure about, say, a call from your bank? Well, you could do worse than telling them you are busy and cannot talk. You could then directly contact your bank using a listed number on their official website. Now, convinced of the agent’s legitimacy, you can confirm whether there was ever an issue. This ‘reassuring practice’ can also be applied to dubious emails and texts.

  • With phishing emails, vigilance is paramount. Let us suppose a goods service notifies you that a $200 order has been placed and that you need to click a ‘cancel’ link if you suspect an error. Naturally, you are suspicious, since you haven’t made any recent purchases.

  • Fraud emails can be more deceptive, true, but there are proven ways to see through many ruses. Firstly, forget the technical and listen to your gut - is it telling you something is just off? Now pay closer attention to the email’s wording. How is the grammar, spelling, sentence structure? Does it ‘feel’ like a professional email from a trusted source? ‘Dear (Real Name)’ or just ‘Dear Customer’?

  • Inspect the sender’s email address, noting anything odd. For example, while orders@onlineshopping.com sounds plausible enough, orders@onlineshopping12.com raises suspicion. You could also refer to old (trusted) emails from the goods company and compare sender address.

  • In a different scenario, let us say you receive a work email that asks you to open a report from an attachment, but something feels awry. Since it is possible someone could have hacked your colleague’s email account, you’ve reason enough to tread with caution. To be safe, why not call your colleague to confirm the email was really from them?

  • Disaster can usually be diverted by simply taking a step back and thinking before you respond to a potential phishing fraud. Finally, be sure to regularly monitor you bank accounts for suspicious activity, and ensure that you change your passwords, contact your bank, credit card companies and the authorities if you suspect you have become a victim of phishing.

  • insurance is always on offer, making a credit monitoring service the more logical solution versus relying on a free annual credit report.

Credit Monitoring

In today's world, having control on your credit can help you to save both time and money. Not only can credit monitoring be a personal assistant to you, but also a watchdog. It watches your credit reports and will alert you with any changes to any of your accounts. This will both help you stay secure and maintain a healthy credit score.

Credit monitoring is extremely important when it comes to identity theft protection. Although credit monitoring is unable to completely prevent identity theft from happening, it can discover any suspicious activity early, which is essential.

Almost seventeen million consumers had their data compromised and experienced identity theft in 2017 alone. With your credit files, imposters can open credit cards, take out a car loan and open new bank accounts. Credit monitoring is used to identify potential cases of this and allows you to take control of it before a lot of damage is done.

Knowing your credit score is also extremely important in many aspects of your day-to-day life. This allows you to be aware of what is always going on. Your credit score can determine getting a loan, applying for a credit card, or even getting a job. Credit scores can fluctuate based on many different factors, which can often go unnoticed, leading people towards thinking they have a good credit score, when they potentially do not. 

Ensure to maximize your benefits if you have a credit monitoring service. Take full advantage of all the features the service will offer to you.

Access to your credit report, so you can check it consistently, as knowing yourself what is going on is the first step towards protecting your credit from criminals.

Access to your credit report, letting you see the number those lenders use to assess your credit worth. This will also allow to notice any potential identity theft, if you believe it is lower than it should be.

Alerts of any changes that are made to your credit file. Informing you of any accounts are opened in your name, information added to your report or even an inquiry into your credit files.