Understanding Credit Scores

Kirkpatrick & Associates can assist in improving the worst credit scores and even improving healthy credit scores.  Higher credit scores means paying less in interest rates.  Lower credit scores will result in higher insurance premiums and higher interest rates.

FICO, or Fair Isaac Corporation, has been the leader in credit scoring since the 1950s. The FICO score is used by more than 90% of lenders and is considered the industry standard. Your score will range from 300 to 850, the higher the better. It is calculated as follows:

FICO Scores
How credit scores are calculated

Have you ever been turned down for a loan or an apartment lease and wondered why? It could be due to your credit history. Let’s face it–our credit says a lot about who we are. It is our financial report card, and can affect many aspects of our lives.  If you are experiencing being turned down and high interest rates call us today.  We can help you rebuild your credit and raise your credit scores.

HOW DOES CREDIT WORK

When you apply for credit (say a loan or a credit card), the lender has to decide if you are a good candidate for receiving the loan. The lender’s decision is based heavily on your credit history. They have to assess the level of risk involved if they are to extend credit to you. If you have displayed a poor repayment history, it is less likely that you will be approved for the loan or a line of credit.

The data available through the credit reporting agency that’s been selected to calculate your score (Equifax, Experian or TransUnion) will determine that three-digit number, whether that data is right or wrong. That’s why it is so important to review your credit reports; at a minimum get your free credit reports from all three bureaus once a year look them over to determine if all of the accounts are yours, any late payments that aren’t accurate, liens or judgments that aren’t yours or updated as paid.

One of my former clients did not realize that he had a judgment on his credit reports that was not his.  Mr. John Doe’s daughter had provided his name as an emergency contact for the apartment she rented.  She defaulted on the apartment rent and was sued.  Once this happened the apartment manager placed the judgment on her father’s credit reports.  It was illegal and had affected his chances of getting a loan.  I was able to take care of this and had it removed within 35 days or less.

Since the three agencies don’t share information with each other, you’ll want to check all three. After all, you never know which reporting agency a lender will use to obtain your score, so you want all of them to be as accurate as possible.

Better FICO scores
Rebuilding your credit without the high fees and interest rates.

FREE CREDIT SCORES

In an effort to obtain your credit score for free, you may have signed up with Credit Karma or Credit Sesame. But then you applied for a credit card or car loan and realized your FICO score was different than the free score. Why is this?

Both Credit Karma and Credit Sesame calculate your credit score based on proprietary scores from two of the major credit reporting bureaus. However, this is not the same thing as a FICO score. Instead of using the FICO algorithm, the bureaus use their own algorithm for free scores.

Birmingham AL Credit Assistance

Credit After Foreclosure

Call Kirkpatrick & Associates if you have had a foreclosure and ready to purchase another home.  We can advise you of your rights and help you rebuild your credit.

Foreclosure in Alabama
Had a foreclosure?

If you have recently experienced a foreclosure or short sale, it is important to know the effects those events will have on your credit report and credit scores.  You may be concerned about being able to qualify for another mortgage, car loan or even a credit card.

Yes, you can #regain your credit status.  This is where we can help you in rebuilding your credit and credit scores.  Let’s take a look at some valuable information regarding your credit after a foreclosure.  Even with this information, it can be confusing to how and when to rebuild.  There are many loan and credit card companies that are ready to capitalize on your situation and charge exuberant fees and interest rates to “help” you rebuild.  Here, at Kirkpatrick & Associates, we can help guide you through the process without you paying those loan sharks.

1.    Question: I was told that I would not be able to have credit for 10 years after Bankruptcy and not sure how long after a foreclosure.

Answer:  A Bankruptcy can remain on your credit reports for up to 10 years, but you can rebuild your credit immediately after your Bankruptcy is dismissed.  With re-established credit and credit scores, you can purchase a home after 2 years of Bankruptcy, that did not include a foreclosure and 3 years with a foreclosure.

2.   Question:  How will your FICO score consider a foreclosure?
Answer:   There’s no denying that foreclosures are considered a very negative event by your FICO score. With that said, it’s a common misconception that a foreclosure will make it impossible to rebuild your credit. In fact, if you keep all of your other credit obligations in good standing, there’s a good chance that your FICO score could begin to rebound in just 2 years. Try to pay your auto loans, credit cards and any other credit obligations on time to limit the effect of this foreclosure.  [FICO.com]

3.  Question:  Are other options better for my credit standing?
Answer:  Recently, several alternatives to foreclosure have become popular – some of these include “short sales” and “deeds-in-lieu of foreclosure”. These may be viable options for you, and you should definitely do research to determine if these options make sense for your situation. However, as far as your FICO score in concerned, there is no difference between foreclosures and short sales or deeds-in-lieu of foreclosures. Each of these actions is considered an account that was “not paid as agreed”, and will have the same impact to your FICO score.  [FICO.com]

Better FICO scores
Rebuilding your credit without the high fees and interest rates.

4.  Question:  How long will a foreclosure affect my FICO score?                                                                                                                                     Answer:  A foreclosure remains on your credit report for 7 years, but its impact to your FICO® score will lessen over time. While a foreclosure is considered a very negative event by your FICO score, it’s a common misconception that it will ruin your score for a very long time. In fact, if you keep all of your other credit obligations in good standing, your FICO score can begin to rebound in as little as 2 years. The important thing to keep in mind is that a foreclosure is a single negative item, and if you keep this item isolated, it will be much less damaging to your FICO score than if you had a foreclosure in addition to defaulting on other credit obligations.  [FICO.com]

Thank you for allowing us to help your with your current credit issue.  We love to talk to you and invite you to call our office if you have concerns regarding your credit situation and feel that we may be able to assist you.  Our number is 205-352-3448 Monday – Friday 8:30 to 5:30.  We value our patrons and do our best to answer every call.  If Gale is not available, the receptionist will be happy to forward your call to Gale’s voicemail.  Please leave a message or email her at Gale@KirkpatrickAssoc.com.

Thinking of filing BANKRUPTCY?

There may be a different option than filing Bankruptcy.  We offer #free, no obligation credit evaluations to determine if there is an option to avoid Chapter 7 or Chapter 13.  You may have already filed Bankruptcy in the last 10 years and find that this option is not available to you.

You may find yourself dreading to answer the phone and even opening the mailbox.  We at Kirkpatrick & Associates are educated in the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act.  These laws are set up to protect consumers, but consumers often times are not aware of them and thus doesn’t know how to use them.  We can help.

The following is important information that you need to know if you plan to file 7 or 13.  Remember, this will have a great impact on your credit and credit scores for many years.

If you have already filed Bankruptcy, and have been dismissed, we can help you rebuild your credit.  Tired of renting and want to purchase a home.  We can assist in rebuilding your credit and make this possible.

Bankruptcy іs а legal status оf а person оr оthеr entity thаt саnnоt repay thе debts іt owes tо creditors.  The bankruptcy laws are intended to provide an honest, but unfortunate debtor an opportunity for a “fresh start.” However bankruptcy is not a free ride.

Personal bankruptcy іs а legal wау tо gіvе people wіth overwhelming debt а fresh financial start. Маnу people dо nоt realize thаt thеrе аrе fіvе types оf bankruptcy options аvаіlаblе undеr thе U.Ѕ. Bankruptcy Code.  Most consumers don’t realize thеrе аrе rеаllу оnlу twо viable options; Chapter 7 аnd Chapter 13 bankruptcy. Іn а nutshell, mоst individuals аnd married couples hаvе twо types оf bankruptcy undеr thе Bankruptcy Code, Chapter 7 оr Chapter 13 Bankruptcy. While you can receive a discharge through Chapter 7, there are various differences in Chapter 7 and Chapter 13.

Federal Bankruptcy
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

While Bankruptcy may seem to be the answer to overwhelming debt, medical bills and phone calls from debt collectors, we at Kirkpatrick & Associates may be able to help you #avoid this.  There is never a charge to find out if we can help you.  Our credit report evaluations are absolutely free and regardless of the outcome, there is no obligation. 

To help you understand  the difference in Bankruptcy I will explain:

Chapter 7

Basics: Will discharge most types of unsecured debt.  The trustee will sell any significant nonexempt property in order to repay your creditors.

Time Frame:  Takes three to four months to complete.

Property:  Keep all or most of your property. Petitioners with significant equity or assists that are not exempt by law could lose them to satisfy some debts.  Meeting with a Bankruptcy attorney is a great way to get a better understanding of how this will affect your assets.

Your income:  If you are in a high income bracket you may not be eligible for Chapter 7.

Homeowners / Foreclosures:  Chapter 7 can temporarily stop foreclosure.  Unless you can get current on your mortgage, the foreclosure will eventually continue.

Eligibility:  Chapter 7 is available to those with income less than the median of their state, or if you can pas the means test.

Filing Complexity:  Filing Chapter 7 involves preparing a large set of forms and navigating some tricky legal issues.  Simple cases can be done pro se.  (PRO SE – without hiring an attorney)

Chapter 13

Basics:  You repay your creditors, some in full and some in part through a repayment plan set up through the court.

Time Frame: Payment plan lasts three or five years, depending on your income.  Many of your unsecured debts will be discharged at the end.

Property:  No property is liquidated under Chapter 13.

Your Income:  Chapter 13,  a regular income is required for making monthly payments.

Homeowners / Foreclosures:  This can stop a foreclosure and you can make up past due mortgage payments through your repayment plan.

Eligibilty:  Has no income requirement.  Unsecured debt has to be below $383,175 and secured debt below $1,149,525.

Filing Complexity:  Involves submitting a repayment plan to the court. Will almost always require bring an attorney to complete successfully.

Know Your Rights When Shopping for Credit

Ready to purchase a car or mortgage?  Shopping around for a great rate can save you thousands of dollars over the life of the loan, not to mention that some banks charge application fees where credit unions usually to never charge extra fees.  Credit unions can be a great source of lower interest rates and easier qualifications for getting the loan.

When shopping for great rates and services ask as many questions as possible before having your credit reports pulled.  These are considered “hard” pulls and will lower your FICO scores.

The Equal Credit Opportunity Act protects you when dealing with obtaining new credit with anyone who regularly offers credit.  This includes banks, finance companies, stores, credit card companies and credit unions.  When you apply for new credit, a creditor may NOT:

Credit rights
Applying for credit?  Know your rights.

1.  Ask about your marital status or your spouse, unless you are applying for a joint account or relying on your spouse’s income, or you live in a community property state.  ( Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin)

2.  Ask you if you plan to have children or if you plan to raise children.

3.  Ask about or consider your race, sex, religion or national origin.

4.  Refuse to consider public assistance income or regularly received alimony or  child support as income.

5.  Refuse to consider income because of our sex or marital status or because it is from part-time work or retirement benefits.

You have the right to:
1.  Have credit in your first name, birth name,and your spouse/ partner’s last name, or your first name and a combined last name.

2.  If a co-signer is necessary, it can be someone other than your spouse.

3.  After you change your name you can keep your own accounts or marital status or retire, unless the creditor has evidence you are unable or unwilling to pay.

4.  Know why a credit application was rejected.  The creditor must give you the specific reasons or tell you where and how you can get them if you ask within 60 days.  Once you receive the letter from the creditor, the letter usually will inform you of your FICO credit score and give you reasons why you were turned down.  The letter will also state which credit reporting agency the creditor requested your credit reports.  You have the right to contact that credit reporting agency and request a copy of your complete credit report so that you can review it for any inaccuracies.

5.  You have the right to have accounts shared with your spouse reported in both your names.

6.  You have the right to know how much it will cost to borrow money.

7.  YOU HAVE THE RIGHT TO A FREE ANNUAL CREDIT REPORT .   You can request these once every 12 months.  When denied credit you are entitled to an additional, free, credit report from the credit reporting agency that the creditor requested your credit report.

To learn more of our services on how we can help you with your credit issues, go to our website at www.kirkpatrickassoc.com .

Call us if you have questions about your credit.  205-352-3448.  Monday – Friday 8:30 to 5:30.