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Here are a few changes in credit score models in recent years:

1. Data sources such as rent, utility and cellphone bill payments are being added.
2. The new models also treat medical collection debt more fairly by ignoring settled delinquencies.
3. Many ignore paid collections accounts entirely.

Additionally, from a recent American Banker article:

“Credit file data is also changing for the better (in July, 2017). In March, the Consumer Data Industry Association, a trade organization representing the three national credit bureaus and companies that collect and sell consumer information, announced stricter standards on including information from civil judgments and tax lien data, which will result in the removal of much of this information from consumers’ credit reports. Under the standards, consumers will have a 180-day grace period to settle insurance claims for medical bills.”

Obviously, these changes are positive, but there is a small problem: lenders and banks are slow to implement the new models, and the benefits will only be received by consumers when lenders put these scoring risk models into use. So far, lenders are continuing to rely on older credit models that are less predictive.

Why? Go here to read the complete article on American Banker.

There is hope on the horizon, though, as more and more lenders test the waters. In the meantime, until the new score models are more widely accepted, it is important for consumers to understand their credit reports and the many factors that go into calculating their score so they can qualify for the credit they need.

Check out these past articles for help:

Here are three of the biggest mistakes to avoid if you want to keep your score high— and your interest rates down:

1. Most importantly, make sure you pay every bill on time each month. Missing only one payment can cost you dearly. Missing a payment is defined as being 30-days late, or, said another way, missing a payment and not making it until the next month when you make two at once, called “catching up”. If you have excellent credit and become 30 days or more late on one account, you can expect to lose 90 or more points. For some people, the easiest way to avoid a mistake is to set up auto-pay with all of your creditors.

Most people are not surprised that a late payment can hurt their credit score, but they are often shocked by how many points you can lose for a single late payment.


Tweet this: If you become 30 days or more late on ONE account, you can expect to lose up to 90 pts on your credit score.

2. Second, watch those medical bills closely. Unpaid medical bills are often quickly referred to collection agency and become a collection item on your credit report. Although many of these bills end up with agencies because of confusion during the billing process, the collection item reported to the credit bureau looks like a default. Take control, and aggressively follow up with your medical providers and insurance company. It is a good practice that if you think you owe the doctor or hospital money, do not wait for them to initiate calling you.

A collection item like this can take 70 points or more from your score. The balance does not have to be big. Even if the balance is relatively small it has essentially the same effect as a large balance.


Tweet this: Unpaid medical bills are often quickly referred to a collection agency and become a collection item on your credit report.

3. Third, pay close attention to your utilization ratio. You may not be familiar with this technical term used throughout the lending and credit industries. To calculate utilization, divide the statement balance on your credit cards by your total available credit. For example, if you have a $1,000 balance on a $10,000 credit card, your utilization is 10%. People with the highest credit scores have a utilization across all of their accounts below 10%. It is recommended to be below 30% utilization ratio at minimum. Higher than that you begin to reap the biggest damage to your credit score. Have you heard of “maxing out your credit cards”? That is basically 100% utilization ratio. If you have only one credit card and use the full limit every month, your 100% utilization ratio could be costing you 90 points.

Pay down your balances and keep old credit cards open to ensure your utilization stays low. It is worth repeating: Keep your revolving (credit card, etc.) utilization ratio lower than 30%, and preferably 10%.


Tweet this: Pay close attention to your utilization ratio on your credit report. Go here to learn how to avoid a high ratio.

Hope this has helped. Here are some more articles you might be interested in:

By Blair Warner, Sr. Credit Consultant, Chief Editor

This short, but concise article will show you how to get your free credit reports.

How do I get my free credit reports?

As mentioned above, under federal law, the three major credit reporting agencies – Equifax, Experian and TransUnion – are each required to provide consumers with one free copy of their credit report each year. The official website is AnnualCreditReport.com.

you can request your report from each of the big 3 credit reporting agencies, by either ordering and viewing each report online, or requesting that a copy be mailed to you. You’ll have to provide personal information to verify your identity and current residence when you order.

It’s a good idea to print a copy of your report if you find you need to dispute information on your report, or at least save it as a .pdf file for later review.

You may prefer not to order your report online, or have trouble answering the security questions. You can order your reports by phone by calling 1-877-322-8228. You can also request your file by mail, which will require you to print the order form you’ll find online and mail it to each agency with the required identifying information.

Note: Getting your free annual credit report does not hurt your credit rating.

Some experts recommend staggering your requests for your reports so that you get one from each agency every four months. For example, January you order your Transunion report, May your Experian report, and September your Equifax Report. This approach is fine if you are one who stays on top of their debt payments well, with pretty good scores, and you are not planning on applying for any new credit in the near future.

One of the problems with this approach is that these agencies don’t share information with each other, not to mention that not all data furnishers report to all three agencies. This means your reports will more than likely vary significantly, not giving you a complete picture of the credit profile lenders see. Furthermore, if there are errors on your reports, or if you become a victim of identity theft, you won’t discover it for several months.

Finally, please note that the free credit reports at AnnualCreditReport.com do no supply you with your credit scores.

Related Article: 3 Good Reasons To Question What’s On Your Credit Report

Credit Monitoring Services

If you’d like to have regular access to your credit reports as they are updated, you will most likely have to subscribe to a credit monitoring service, for which there will probably be a recurring monthly fee. Be careful. There are some credit monitoring sites not as good as others. Our favorite paid site that we have been using for years in our credit consulting business is Privacyguard.com and instructions for pulling your credit so that we can give you a free credit report evaluation can be found here. You get all three full reports, and all three VantageScore credit scores. Privacyguard.com gives you a 14-day trial for $1, and then only costs $19.95 per month for monitoring. Monthly monitoring is not necessary all the time, but we do recommend it if you are in credit repair and re-building phases, or looking to do something requiring credit in the near future. If you only want your credit reports for one month, you can order them for the $1 and make sure and cancel before your 14-day trial is up by calling the 800-number. (We are NOT affiliated with privacyguard.com)

Has this been helpful? Please feel free to comment or share on social media. We like helping people.

Tweetable Takeaways Include:

• There is only one place where your credit report is 100% free, with no bait and switch, or small print (Click to tweet)
• The Fair Credit Reporting Act (FCRA) requires the three major credit bureaus to provide one free credit report per year. (Click to tweet)
• Most lenders use FICO (credit scores), especially mortgage lenders. (click to tweet)

My friend’s biggest regret was that he didn’t monitor the process and details enough. I hate to say it, but he put too much trust in the hands of his builder. It’s not that builders can’t be trusted, most can, but the fact remains, they are building YOUR house, FOR YOU, and it is in your best interest to stay on top of things.

When it comes to your personal finances and debt management, including how items are reported on your credit reports, it is no different. It is your responsibility to “stay on top of things”, because it is in your best interest to make sure everything on you credit report is yours, and is correct.

One or two errors can have as much as a hundred point influence on your score, depending on the circumstances. It is important to question what is on your credit reports. Tweet this….


3 Good Reasons to Question What’s on Your Credit Report


1. Credit data furnishers make mistakes
I am sure this comes as no surprise, but the furnishers of your credit data make mistakes. Credit furnishers include anyone that has extended you credit and reports to the credit bureaus like banks, credit unions, auto lenders, credit card companies, cell phone providers, delinquent medical bills, even unpaid taxes, just to name a few. They either have your information incorrectly in their files and when they send it to the credit bureaus it is reported incorrectly, or the error actually occurs in the transmission of data. There are some that even intentionally and unscrupulously report your information wrongly so that they can get more money out of you or, at the very least, make life difficult for you when you apply for new credit somewhere else. To make matters worse. The credit bureaus are not required to verify the accuracy or validity of information sent them until you, the consumer, initiates it.

2. The big 3 credit reporting agencies are separate, independent companies
Unfortunately, it is not common knowledge that the big 3 credit bureaus, Experian, Equifax and Transunion are 100% independent of each other. They are not government agencies or even GSEs (government-sponsored enterprises), like Fannie Mae or Freddie Mac. They are for-profit companies no different than Walmart or Apple, and are publicly traded. This means they are competitors in this fiercely competitive, and lucrative credit reporting and data market. Not surprisingly, then, they do not share or cross-check information about you or your credit history with each other, and an error caught and corrected at one does not effect the others. Additionally, since not all credit data furnishers (creditors) report to all three bureaus, your reported credit information will be different for each bureau, resulting in different profiles and scores.

3. Identity Theft
Someone’s identity is stolen once every 2 seconds in the United States. Need I say more? If you don’t monitor your credit reports on a regular basis, and question anything that looks suspicious, especially if you don’t recognize it as your debt, you could be a victim of identity theft and not know it until it is too late. The sooner you can catch it, the least damage will occur. Believe me, you want to catch it early. We help people who have been a victim of identity theft, and it is a nightmare. This reason alone should be enough to prompt you to check your credit reports regularly.

There are a few other good reasons to question what is on your credit report, but we will go over them in our next post. Stay tuned.

Don’t regret not “staying on top” of what is reported on your credit reports. We at Upgrade My Credit recommend checking your credit reports as often as possible, but at a minimum, a couple of times a year. There are two ways to get and monitor your credit reports, and we cover them in a recent post. How To Get Your Credit Reports

Related Article: Can you really get your credit reports for free?


If you remember only one take away from this article it is this:

If you see something on your credit reports that is not yours or looks suspicious, let your doubts turn to questioning it, and do something about it. Don’t delay! Click to Tweet


If you need help, we are here for you!


By Blair Warner – Certified Credit Consultant

When it comes to securing financing for a new house or an existing property, getting a great mortgage rate is at the top of all of our lists. This is probably because even a small difference in your mortgage rate can make a BIG difference to the total interest you’ll pay over the lifetime of your mortgage and overall amortization.

The truth is that getting a great mortgage rate often comes down to having great credit.

But did you know that having no credit can be just as damaging as having bad credit?

Did you know that credit reporting agencies don’t verify the information that is given to them? Or did you know that your credit can affect more than just your ability to qualify for loans? In fact, it can affect many of your everyday purchases, from cell phones to insurance to public utilities!

So if you’re looking for tips to improve or repair your credit, read on for valuable advice and recommendations to manage your credit and improve your financial situation you can start today!

First, always make at least your minimum payment on time on every loan, credit card or other debt you owe.

You may think that you can miss a month and then pay extra the following month—but that’s not how the credit card companies operate (or calculate interest). Instead, your required payment will be considered late or delinquent. Most companies will report even one missed payment to the credit reporting agencies – and this can damage your credit score. So make at least the minimum payment on every loan, no matter what, to keep your credit healthy and in good standing with any debtors you have, as well as have the best chance of a high FICO credit score.

Related Article: How Are FICO Scores Determined

Second, set up pre-authorized payments so your bills are paid automatically.

As I mentioned above, missing even one payment can affect your credit. Debtors don’t care if you intentionally or accidentally forgot to make a payment. They only care if you make your payments on time, every time.

Maybe you simply forgot to pay a bill because all of your bills are due on different days and you don’t have an organized system to keep track of them. In that case, setting up pre-authorized payments can be a lifesaver.

If you prefer not to use preauthorized payments, setting a reminder on your cell phone or computer can be another great way to make sure your bills are always paid on time. Paying your bills becomes effortless so you never miss a due date. You’ll also save money by avoiding unnecessary interest charges.

Lastly, request a copy of your credit report at least once a year and review it thoroughly.

In Canada, you can contact one of two credit bureaus (Equifax or TransUnion) directly to request a free copy of your credit report. In the U.S. you can go to http://annualcreditreport.com to get all 3 credit reports from Equifax, Transunion and Experian.  Verify the accuracy of ALL information, including your personal information, loans, credit cards, etc.

Take note: Credit bureaus don’t verify the information they get from your creditors so it’s up to you to make sure all the information is accurate! Otherwise, you could get a nasty surprise since inaccurate information or information about a loan you don’t recognize could signal that someone may have opened an account in your name, or even possible identify theft.

Address any inaccurate information as soon as possible so that you can be on your way to improving your credit.

For more tips on managing and repairing your credit you are in the right place. Upgrade My Credit is here to help. To get straight forward advice and tips so you can qualify for the best Barrie mortgage rates, visit my website or give me a call.

By Darren Robinson, Mortgage Broker

Medical Collections
With the new changes, FICO has reduced the impact of medical collections on FICO scores by differentiating medical collection from non-medical collections, and even bypassing paid non-medical collection agency accounts. That means it will stop including in their calculations any record that shows a paid or settled collection account. FICO states that this change is expected to increase the median FICO score for consumers whose only derogatory references are unpaid medical collections 25%. This is a huge win for consumers.

Get a FREE credit report analysis by a certified credit consultant here ->

Benefits For Those With Limited Credit
The latest model will also measure a consumer’s payment history in degrees of risk rather than in absolutes, such as simply paid or not paid. Another improvement reflects a better analysis of reports with limited credit history, or thin files, as it is often called.

From FICO.com: “FICO Score 9 uses a more refined treatment of consumers with a limited credit history and those with accounts at collection agencies, so that lenders can grow their credit and loan portfolios more confidently,” said Jim Wehmann, executive vice president for Scores at FICO. “By applying innovative predictive modeling techniques on recent data to capture consumer credit behavior, FICO Score 9 will extend FICO’s leadership in providing the credit score that most accurately and fairly defines U.S. consumer credit risk.”

FICO has said their new FICO 9 Score will be available this fall and “will be the most consistent FICO Score across all three credit bureaus.” It is used by 90 precent of all U.S. consumer lending decisions, with 25 of the largest credit card issuers and 25 of the largest auto lenders. The only caveat is that it does take a while for a broad spectrum of lenders to adopt FICO’s updates. When they do, though, it is indeed going to improve the lending/borrowing world in the U.S.

References:
FICO.com website
Wall Street Journal article
Chicago Tribune Article

Additionally, credit advice for general purchases or buying a car can differ from home-financing tips, not to mention, your FICO score can vary, depending on who pulls it. A consumer-pulled score will likely differ from when a car dealer looks…which will probably be different than when a mortgage consultant pulls your credit score. It also matters which financial institution that’s looking at the credit history and the score. A store offering zero-down credit with their store card, for example, may not look as far back as a mortgage banker, or they may not look at medical collections the same way, either.

A lot is riding on your FICO score when you’re looking to buy a house. So, it benefits you to have a few tips to keep in mind if you’re considering a purchase in the future, near or far?

“Highlight” these 6 credit tips when you’re getting on the road to mortgage-ready credit.  Tweet This…

1 – Pay your payments on time, all the time. Whether you’re 6 months away from buying a house or 6 years, paying your bills on time is a big one. Late payments can negatively affect your credit score for years. Sometimes “things come up,” and a late payment just happens. Fortunately, some bills have grace periods. Make sure that if you’re going to be late on a payment, it’s one with a grace period. The ones without, should be paid first. Then make sure you pay the late ones as soon as possible. Again, late payments can have a major impact on your credit score. Payment history actually makes up about 35% of your FICO score.

2 – Don’t close credit accounts, yet. Paying down balances to zero is generally a great idea. However, don’t close that account just yet. Wait until you talk to a mortgage consultant about your FICO score in particular. A varied, seasoned credit history helps your score. That credit card you opened up your freshman year at college shows that you’re a long-term consumer. That helps. Don’t max it out, but keep it at about 30% of the limit or less. Keep it at zero, just make sure you use it occasionally. A long history with various lines of credit – credit card, car payment, insurance, cell phone bill – shows that you’re a “good borrower.”

3 – Keep an eye on your credit history. Checking your credit often is a great way to make sure no one is stealing your identity. You have the right to check your score with each of the major credit bureaus once a year. This means you can do it all at once, or each quarter check with a different bureau. Keep on top of fraudulent charges or other issues so you’re not surprised when a creditor pulls your FICO score. Preparation is vital.

4 – Don’t open line after line of credit. When you’re getting close to buying a home and you’re ready to get your mortgage pre-approval, it’s not a good idea to go buy a new car, motorcycle or a bunch of furniture on credit. Remember: your mortgage pre-approval is based on your current financial situation. If you change that drastically, your pre-approval could turn into a denial.

5 – Avoid major purchases. Even if it’s not on credit, a major purchase during your mortgage pre-approval time frame can sap your cash reserves. A vacation or new appliances might have to wait until after you close and move into the new house.

6 – Finally, try to avoid job changes. Whether it’s leaving your job, or a big change to your hours worked, changes in employment can sometimes have adverse effects on your home buying journey. If you worked a ton of overtime in the months leading up to your mortgage pre-approval, cutting way back on your hours before you close on the mortgage could affect your full, official approval. Keep things as even-keeled as you can.

One of the best things you can do as you consider launching your ship on a home-buying journey, is to talk to your local lender about mortgage pre-approval. Make sure you’re on the right track with your finances before you go house hunting. Tweet This…

Revolving Debt Ratio

Revolving debt ratio as applied to credit cards is simply the ratio of the amount which has been used (charged) on a particular credit card at the time of calculation to that card’s maximum available credit. For example: If you have a card with a $5000 credit limit and you have used $1000 on purchases, then your utilization ratio for that card at that current time is 20% ( $1000/$5000 = .20 , or 20%). This would apply to business lines of credit and home equity lines of credit the same way. Tweet This Example

Why is this important, you might ask? FICO has said on their website that revolving debt ratio is one of the factors it considers in calculating your score, and can account for up to 30% of your FICO score calculation. The the lower the ratio, the better one’s score is, and the opposite is true, of course, the higher the ratio, the lower one’s score. The common phrase “maxed out” comes to mind. When credit cards are maxed out, that means all available credit has been used and a 100% utilization ratio has been reached. FICO “penalizes” consumers for maxing out because it shows they possibly rely on borrowing too much (or are in too much debt), and/or may not be the best credit and debt managers.

FICO does consider other aspects of credit utilization ratio on your credit profile to some degree, like how many accounts have balances, and even installment loan utilization ratio, but revolving debt ratio is by far the most important and easiest to influence when trying to optimize your credit score.

Clear as mud? Please feel free to ask us any questions you may have on this subject.

Has this been helpful? Please feel free to comment or share on social media. We like helping people.

Tweetable Takeaways Include:

If you currently have low credit scores, you may be wondering if you should pay money to improve your credit score. Well, I’ll let you in on a little secret: if you ever get any kind of loan, you will make your money back many times over!

The reason is simple. Creditors of all kinds will charge you more – sometimes much more – to borrow money if you have a low or even a fair credit score.

Having a 720 credit score instead of a 640 score could save you thousands or even tens of thousands of dollars. Yes, it may seem unfair, but that’s the reality of the lending world.

As someone who has 12 years of experience in the lending world as a loan officer and manager, and now the editor of MyMortgageInsider.com, I could tell you countless stories of how people have saved tons of money by having great credit.

Let’s look at an example, taken straight from today’s rate sheets: Someone with a 720 score could get a $200,000 loan with a principal and interest payment of $1013 per month and a rate of 4.5% (4.652% APR)*.

The same person with a 640 score would pay $1073 per month and have a 5.0% interest rate (5.155% APR)*. The borrower with a 640 score would pay an extra $60 per month and an additional $21,700 in interest over the life of the loan!

How does that fee for credit repair services look now? Pretty low?

The bottom line is this: lenders want to see that you are a low-risk borrower. And it all comes down to the three little numbers on your credit report. The higher those numbers, the less you will pay for credit.

And a home mortgage is just scratching the surface when it comes to the money you’ll save by having a good credit score. Some other things you’ll save money on are:

Car insurance
Homeowner’s insurance
Renter’s insurance
Auto loans
Credit cards

Heck, many employers look at your credit reports when you’re applying for a job these days, and some may even look at your credit scores! What if your bad credit cost you a great job? Reference NYTimes article on this subject.

When you add up all the money you could save and make over your lifetime by having a great credit score, the dollar amount could easily be six figures or more. This is no exaggeration.

Yes, it may seem like a lot of work to build, improve, and maintain your credit score. It takes a lot of discipline. But it’s that discipline that lenders are looking for. It proves you are a worthy candidate and will pay back the loan according to the terms you agreed to.

So if you can get help from an expert to improve your credit score, take that opportunity despite the time, cost and effort. You will get huge returns on your investment – more than you probably ever expected.

*Payment does not include taxes, insurance, or HOA dues. Rates are as of 9/10/13. Purchase price $250,000, loan amount $200,000, property in WA. Scenarios are 30 year fixed conventional loans.

• Having a 720 credit score instead of a 640 score could save you thousands or even tens of thousands of dollars. (Click to tweet)
• Lenders want to see that you are a low-risk borrower. And it all comes down to the three little numbers on your credit report. (Click to tweet)
• Most employers look at your credit reports when you’re applying for a job these days! (Click to tweet)

Free credit Reports! Hhhmmm… really?


The above quote is what someone who called in from our website said almost word-for-word. Unfortunately, she is right. There is no free lunch, as they say. The sites she mentioned, and many more, are not really free, even if the word “free” is displayed somewhere. Furthermore, it is not always clear what you are getting. Creditkarma.com, for example, gives the impression you are getting your credit scores and reports, but in reality they have their own “credit management” platform that does not include your real credit report, only partial information pulled from it. In my opinion, it is this small word free coupled with credit reports or credit scores that throws people off because they have heard that you can get your credit reports somewhere for free. There is only one place where your credit report is 100% free, with no bait and switch, or “small print”, or a catch. More on this in a moment.

Here’s how they work:
Except for sites like creditkarma.com, here’s how most of them work. First, in various catch phrases and combinations of products offered (read each carefully), they tout in big print that you get credit scores and/or credit reports from all three credit reporting agencies, Transunion, Equifax and Experian , with call to action buttons saying things like “Try it Free”, or “Get Started Now” and “Click Here to Start”. However, usually in small print, they state it is a free trial for 7 or 14 days. At the end of the free trial you are immediately transformed into a monthly credit monitoring customer, which costs between $14.95 and $29.95 per month, depending on the company. The ones that only give a 7 day trial are particularly tricky. Your reports aren’t usually available for 3-4 days due to “processing”, which gives you 3 days to view it. There hope is that you will “accidentally” pass the 7 day mark without cancelling the trial. As a rule, it is my opinion to avoid the 7-day offers. If you don’t cancel within the 7 days, they immediately charge you their monitoring fee. Additionally, needless to say, it is not always easy to cancel.

Tip:  Some offer a printer-friendly version. if you print it out immediately,         and make sure to call to cancel, then, depending on the site’s offer, you         could actually get a free credit report.


Credit Karma is truly free, but you don’t really get all your reports and scores, only ONE score, as mentioned above, and their proprietary credit management platform. Credit Karma is, in my opinion as a credit consultant, useless, and useless translates in my book as a gimmick, of sorts, because customers think they are getting something useful. (Update 6/14/15: Since the writing of this original post, Credit Karma now offers scores and reports for two of the big three credit reporting agencies, Equifax and Transunion. They still don’t offer information from Experian. Keep in mind that the scores they provide are NOT your FICO scores).

The ONLY place you get a free credit report without pitfalls to avoid, and hoops to jump through is AnnualCreditReport.com. The Fair Credit Reporting Act (FCRA) requires the there major credit bureaus to provide one free credit report per year. You can get one at a time each quarter, or all three at once, once each year. Keep in mind, though, that this does not include scores, FICO nor VantageScores. Go here for a comparison of the FICO Score and Vantage Score. Most lenders use FICO, especially mortgage lenders.

Our favorite paid site is Privacyguard.com and instructions for pulling your credit so that we can give you a free credit report evaluation can be found here. You get all three full reports, and all three VantageScore credit scores. Privacyguard.com gives you a 14-day trial for free, and then only costs $19.95 per month for monitoring. Monthly monitoring is not necessary all the time, but we do recommend it if you are in credit repair and re-building phases, or looking to do something requiring credit in the near future. (We are NOT affiliated with privacyguard.com)

Has this been helpful? Please feel free to commment or share on social media. We like helping people.

Tweetable Takeaways Include:

• There is only one place where your credit report is 100% free, with no bait and switch, or small print (Click to tweet)
• The Fair Credit Reporting Act (FCRA) requires the three major credit bureaus to provide one free credit report per year. (Click to tweet)
• Most lenders use FICO (credit scores), especially mortgage lenders. (click to tweet)