If you have a car payment this is considered an installment loan, because you don’t have the ability to charge the same amount over and over again, you borrow one lump sum of money and pay it off one time and then you are done with that debt. A credit card on the other hand is considered a revolving account because you can borrow $1000 dollars this month pay off $500 and borrow it again next month if you wish.

Revolving debt has a much higher impact on your credit report than an installment loan, however, they both are very important and both are needed on your credit report.

If you are looking at a credit report you have personally purchased then the scores you are looking at are very likely not to be FICO scores, but as we liked to say FAKO scores, the reason being they are not paying FICO to run their report through the scoring model, so they, the company you are getting your credit report from, has created an algorithm as close to what they think the FICO score is without being FICO. That is why when you look at your credit report as a consumer and you look at a credit report that is pulled by a lender your scores vary, sometimes as much as 100 points or more.

Credit is something that has a huge impact on our adult lives, if you have good credit you can do many things, however, if your credit is bruised, you will have a harder time doing those same things. What are these mistakes? Can they be avoided?

1. Making Late Payments – Many people believe this is the one determining factor of having good credit. While this is a very big portion of your credit score, it is only 35%, the reason I say only 35% is because you can look at the other side of the picture and say there is 65% left for me to work with.

2. Collections – Having a collection report on your credit report is considered a major derogatory.

3. Public Records – Bankruptcy, Tax Liens, Judgments – these are all major derogatory marks on your credit report.

4. Maxing out your credit cards – Credit card utilization is 30% of your credit score, so this is almost as important as late payments. If you are striving for excellent credit you will want to keep your credit card balances as low as possible. It is best to keep balances below 10% of the available credit limit.

5. Closing old credit cards – Many people think that if they are not using a credit card they should close the card and it will look good on their credit. Well, this is the exact opposite of what you should do. Length of history is 15% of your credit score. If you close out all your old credit cards your history will have only new accounts and this will affect your credit.

6. Settling Accounts – This seems to be a very popular thing to do right now. There are many circumstances that make this option one that is what has to be done. You just need to be aware that when you choose this option, depending on how the creditor reports this to the bureaus, you are doing damage that only time will help.

This is only a few of the things that you need to be aware of when looking at your credit and what can be done either in a positive or a negative way.

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The NFFC January poll question and results are as follows:

A. Not marry until the debt was paid = 37 percent.

B. Marry and pay it off together = 46 percent.

C. Marry, but not help pay the debt = 10 percent.

D. End the relationship = 7 percent.

Considering all negativity coming from debt, some people may not realize that issues can go beyond credit scores or interest rates. “It appears that debt overrides love, at least temporarily, when deciding to move forward in a relationship, its money over marriage,” said Jana Castanon, spokesperson for Apprisen.

Particularly, young adults who emerge from college with thousands of dollars in student loan debt are the ones who have second thoughts about continuing the relationship. If two millennial with similar debt obligations marry they will have a debt load. Nearly all divorces in America are caused by existing debt issues. Mentioning this brings to no surprise that people are more reluctant to start their relationship on the wrong financial foot.

<h2>Debt impacts your credit report</h2> and scores severely to the point where it affects the basic essentials needed when building a life together. It may become difficult to buy or rent a home, obtain a car, insurance, or even a job.

Lovebirds should be aware and know the difference that credit reports and scores are counted for individuals and not rated as a couple. Matrimony brings two people together, but their credit remains separate. Accounts however, can be opened jointly as a co-applicant. People mainly apply jointly when making a large purchase which requires two sources of income to support the loan. Specifically in this case if one person has a low credit rating it may affect the approval or when extending credit the interest rates may be higher. Furthermore, the benefit of having a person with good credit is that it may improve your own. Adding a person to an account as an authorized user permits the reporting to appear in both the primary and the authorized user name. When credit is handled responsibly it will positively impact on both credit reports.

Who said love and money were separated? In a marriage, financial decisions are being made on a daily basis. It is the reason why it is important that couples communicate openly about their finances. Both should be willing to share sources of income, debt obligations, credit reports, and credit scoring information. Discussions are needed to know personal preferences for spending and saving. Financial baggage may be heavy, but settling one’s differences will spend the rest of one’s life in happiness from fairy tale into realty.

Let’s continue to discuss credit report and credit score beliefs that are true and false.  There are a lot of people out there making statements about things they really don’t know about, and then they are believed as if they were facts.

Myth #1 – As soon as I pay a collection off it will be removed from my credit report.  A collection is a very serious derogatory on your credit report, and collections can stay on a credit report for 7 years from the date you went 30 days late.  Just because you paid off the collection does not mean the collection agency is going to remove it.  If collection agencies removed the derogatory remarks from credit scores too easily, a collection would not have the same fear-inspiring affect that it currently has.

Myth #2 – Once I pay off a credit card and close the account the credit card will no longer show on my credit report.  A credit card that has no derogatory information on it could possibly stay on your credit report for years, there is no statute of limitations on good credit.  However, if you have derogatory remarks on this account, then the statute of limitations is 7 years from the 30 day late.

Myth #3 – Every time I pull my credit report a score is generated.  This is not a true statement, if you have not pulled a credit report through a credit monitoring system that provides your scores and you have not paid for your scores, a credit score will not be generated.  Your credit report and your credit scores are two totally different reports that are merged together as one, when a report with a credit score is asked for.

Myth # 4 – My ex-husband or ex-wife can’t hurt my credit score now that we are divorced and the judge has divided all the financial obligations in the divorce decree.  Absolutely false, even though the judge has divided up the debts, you will still be held responsible if that debt goes unpaid…if your name remains on the credit card or whatever the financial obligation is.  The creditors do not have a say in the matter when the judge is dividing out the bills, but if you go to your creditor and have your name removed completely from the obligation then you may be saved from future credit score pains.

Many people have beliefs about their credit report that are just not true.  There are also things that are included on your credit report that will not hurt you.  The following things that won’t affect you may be found on your credit report:

Myth #1 – Income – Your income does not have anything at all to do with your credit report.  As long as you keep all of your financial obligations paid, the amount of money you make is not relevant.  You could have an 850 credit score and be unemployed or without any money coming in, and this would not affect your credit score.

Myth #2 – Age (I’m too old) – The credit scoring model does not take into consideration your age when calculating your credit score. This is another question that is asked on a loan application, but it will have no affect on whether you are approved for a loan or not.  There are laws that affect whether or not you are old enough to be approved for a credit card or to get a loan.  But there are no laws stating you are too old to qualify for the loan, as long as you are credit-worthy you will not be declined for being too old.

Myth #3 – Address – “I lived in too many different places.”  Just because your address is on the credit report doesn’t mean that it affects your credit.  The credit report does keep a list of the addresses that have been associated with your name and social security number, but this does not mean they are used in the calculation of your credit score.

Myth #4 – Race or Nationality – This is also a question that is asked when you are filling out a credit application, however, it is not used in any of the algorithms when calculating your credit report and credit score.

Myth #5 – Your credit score does not fluctuate at all; once you have a credit score it won’t change for 30 days.  This is not a true statement.  Your credit score is very fluid and changes frequently.  But if you don’t request a credit score update or if the place you have monitoring your credit only updates your score once a month, then your score won’t change.  The credit models don’t remember from one time to the next if you have a maxed-out credit card today, yet tomorrow it’s paid off…it only knows what is being told at that very moment in time.

Watch for part 2 of Myths About Your Credit Report.

Most people when asked this question, “What is a good credit score, don’t have any idea.  They don’t know if their credit rating comes from an A, B or C or if they have a numerical number that rates their credit worthiness. Until the last few years when the VantageScore came into existence the consumer would only see a numeric credit score.

Adding to this confusion is the fact that there are multiple scoring ranges you can get when you request a credit score.  If you are not familiar with this fact, you may be elated to see that you have a 750 credit score, because when you pulled your credit you got a VantageScore.  Then when your lender pulls your credit using a FICO scoring model your elation turns to disappointment, to find out your score is much lower than you thought.

“Until now, if you were given a 720, you knew that was a good score,” said Gail Hillebrand, an attorney at Consumers Union.  “Now, in evaluating your score, you need to know what the grading range is, and that’s a new question consumers didn’t have to ask before.”  FICO credit scores range from 300-850, whereas, VantageScore range between 501-990 and has both a numeric rating and a letter grade.  An insurance company will give you a letter rating of A, B or C also.  But if you are trying to buy a car they are going to get a credit score with a numeric value assigned to it.

To answer the question we started with, FICO considers a good credit score a score above 700 and if you are looking at a VantageScore you would need to have a “B” which correlates to 800 or higher.  However, that answer is very conditional of the person, you may be someone who doesn’t want anything less that an 800 with FICO or a 900 with VantageScore.

So what exactly are we teaching young people today about money and credit? Well, I can tell you from personal experience that my four year old granddaughter thinks that if you are out of money, you can just pull out your wallet, take out a plastic card and go get more money out of a machine. Every time we go into town, there is an expectation from my grandchildren that they will come how with something new. It may be a new Barbie, shoes or clothes. Even worse they may beg to go to the coffee stand and order fruit smoothies. I am sure I am not the only grandma out there that likes to indulge her grandchildren. However, there is a huge need to instill in young people the need for saving and buying things as we can afford to buy them.  We don’t want them to have the unrealistic ideal that a card will get them everything they want. I am not saying that there is anything wrong with using credit cards. It is important though that all, young and old, have the knowledge to use them responsibly.

So are we teaching our little children and our young adults the power of credit and how it can help us when we really need that new car? Or, are we teaching them to use those credit cards and other lines of credit to buy whatever we want when we want it?

As a credit repair expert I can tell you from experience that I have helped many, many people to attain their dreams.

The Fair Credit Reporting Act (FCRA) gives us the ability to dispute items on a credit report that are not 100% accurate and verifiable.

There are many times when I audit a credit report that we find things on individuals credit reports that are not reporting accurately.  What can we do to help your client?

Audit there credit report looking for these inaccuracies.
Advice them on the steps to take that will help them attain the highest possible score they can in their given situation.

Many times individuals read things on the internet and then they act on what they have read, not realizing they could be doing the wrong thing.

For example, many people think that paying off revolving credit cards and then closing them will help their credit.  This is not the case, they could be doing more harm then good by doing this.

Do you know what will happen if your client decides to go pay a collection that is more than 24 months old?

Only by having someone who really knows what the scoring model is looking for and has had the experience, can you feel comfortable in knowing your client is in good hands.