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Credit Repair and the End of Authorized User Accounts

admin — Mon, 08 Jun 2009 03:09:31 +0000

Common Practice

It is a common practice for parents to give a child a credit card. It’s good for emergencies and handy for everything from summer camp to college life. It is also common for one spouse to make the other spouse an additional card member.

A Little Software Bug

None of these practices are even slightly questionable. Additional card member accounts didn’t attract the attention of lenders or Fair Isaac Corporation, the creator of the credit-scoring model used by lenders when they make credit decisions, until they noticed an interesting bug in the credit-scoring model which was to spawn a questionable little sub-business in the credit repair industry.

A Cool Credit Repair Trick

It seems that as soon as the new account appeared on the credit report of the beneficiary their credit score would jump. In other words they were inheriting the credit history of the card from the donor. In the case where the donor had excellent credit the beneficiary discovered their own credit score jumping significantly, often over one hundred points, a cool little credit repair trick, but not what Fair Isaac really had in mind.

Word Spread Quickly

Well, the word quickly spread. And as always happens, creative entrepreneurs thought up a way to package this small credit repair miracle and sell it to absolutely anyone who had the money and desire to give their credit score a quick, albeit undeserved boost. And it is this undeserved issue that became the real problem.

FICO in our Life

In 1989 Fair Isaac Corporation first made their FICO credit scores available to lenders. And in 1995 the mortgage lending giants, Fannie-Mae and Freddie-Mac made FICO scores a part of their mortgage underwriting consideration. Since that time lenders have become virtually dependant on Fair Isaac’s scoring model, and the credit repair services began to focus on these powerful little numbers.

Score Distortion

The reliability of these important numbers is essential to good decisions. If something were to threaten the validity of the FICO score undeserving borrowers would be able to obtain loans they did not deserve. Lenders making these loans would be in jeopardy of increasing default rates and potentially disastrous losses.

Credit Repair, or is it?

So you can image the concern that lenders felt as they discovered that pseudo credit repair companies were popping up on the Internet selling these accounts to anyone with the money to pay. In response, Fair Isaac went to work to modify their computer model to block the benefit of these accounts, and to end to the distortion being caused by credit repair card sellers. And so they rewrote the model and introduced it as FICO ’07. But there was a problem.

The Credit Repair Battle Continues

As much as lenders wanted to eliminate the score distortion caused by authorized user accounts, they were unable to implement FICO ’07. It seems that there is a paragraph in the Equal Credit Opportunity Act (ECOA) that states that, “when lenders assess a spouse’s credit risk they are required by law to consider the credit history of accounts which both spouses are permitted to use.”

Back to the Drawing Board

This little directive stopped FICO ’07 in its tracks and sent Fair Isaac back to the drawing board. For those of us in the credit repair business, we were amused to see the fanfare amongst the brokers of these authorized user cards that trumpeted FICO ’07 as “illegal”, and of course continued to sell their questionable credit repair product to the public. Their celebration, however, was short lived.

Credit Repair Card Brokers Say Goodbye

On July 31, 2008, Fair Isaac announced their final solution. They have managed to create a way to block questionable authorized user accounts from inheriting the score benefit of the donor without blocking those of spouses and family members. So finally the death blow was dealt against the shadowy credit repair businesses selling their quick fixes.

Those Amazing Brainiacs

The exact language of the press release reads, “We have developed technology that will reduce any impact on the FICO 08 score from intentional tampering, while allowing the scores of spouses and other genuine authorized users to benefit from their shared credit experience.” How this works, I can’t say, but my hat is off to the brainiacs at Fair Isaac.

Credit Repair the Right Way

Intentional distortion of the validity of credit scores was good for no one. Intelligent credit repair never requires questionable practices. There have always been many legal and powerful ways to boost your credit score, quickly and effectively. A well-planned approach to credit repair has always produced real and lasting results that endure and truly reflect your own credit worthiness. Do it right, and do it for real.

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

What is Credit Monitoring?

admin — Tue, 12 May 2009 10:05:37 +0000

There are different ways you can monitor your credit yourself. By inquiring for your credit report every six months to year, from all of the major credit bureaus, you will have a complete overview of how your credit report is doing. Another good reason to monitor your own credit is the fact that you have eyes view of your credit report.

Another effective way of attaining the accuracy of your credit report is to initially request a report from one of the major credit bureaus. Four month later, follow-up with a request for your report from another major credit bureau. You do this same process for the last credit bureau. Doing it this way allows for time to elapse between requests to see if negative reactions will occur without you knowing about it. You monitor your credit, check for discrepancies and save yourself $300 to $600 dollars a year.

Errors no matter how small have to be fixed immediately upon detection. Be sure you report any errors you find to all three of the major credit bureaus. It usually takes about a week for changes to go through. Make sure you close all unused accounts for these can be open doors for identity thieves. Upon closing all of your accounts, ask to have them listed as “closed at the request of the consumer.”

Taking control of your credit takes a little time and effort. If you’re serious about repairing your credit you should take the necessary steps to monitor your credit effectively. Contact all three bureaus at Equifax: 1-800-685-1111; Experian: 1-888-322-5583; TransUnion: 1-800-888-4213.

The Importance of Keeping Track of Your Credit Report

admin — Tue, 12 May 2009 07:45:14 +0000

Many people today don’t understand the importance of what their credit report means and why its such a valuable asset to maintain. What many don’t know harms them, and what some do know, can either get them in trouble or get them better interest rates. It’s all in what you know and how to use what you know. It’s important to track your credit report because the more you know about it, the more you can be responsible with what you spend and buy. There are those of us that wish we would have taken the time to keep track of our credit reports, and others who laugh at those of us who didn’t take the time to be smart with the once good thing that we had, and now we’re paying for it.

Make it a point to set aside the time to track your credit report at least once a month. Annualcreditreport.com helps to make this possible, as they offer one the ability to view their credit report online for free. By going to annualcreditreport.com once a month, it makes tracking your credit report easily accessible to view. Do this for three months and you’ll learn why it’s so important to track your credit report so often. Every thirty days our credit reports change. This may be because you inquired about a new credit card, you bought a new car, you were late on a payment, you purchased a house or a consumer – without your knowledge or permission – pulled your credit to “pre-qualify” you for something you don’t want or need; yes it happens and unfortunately it’s completely legal. When consumers or third parties do this, it puts a ding in your credit. It’s wrong, yes… but there’s nothing you can do about it. To the credit reporting agencies, it looks as if you are going out and trying to get credit everywhere, and initially this drops your credit score.

It’s best to keep the responsibility of tracking your credit report close to heart, so that if situations arise, such as; identity theft, third party abuse and other such situations, you can have knowledge almost immediately to be able to know when things in you credit report change. It makes things a lot easier to prove and dispute should there ever be a conflict on your credit report. Be wise, get to know your credit report, track it like you would the miles of your car for the next oil change and life will be much easier.

Three Steps To Understanding Your Credit Report

admin — Tue, 12 May 2009 07:30:30 +0000

When you turned eighteen chances are you were ready to make your first big purchase; a new car. Then you decided to get a credit card, a cell phone, another credit card and maybe some new furniture to put in your fantastic new space. Little did you know that everything you just did was being watched? If you’re late on a payment, or miss one payment, the repercussions will hurt you for things you might want in the future. Of course you didn’t know that, or if you did, you didn’t know much. But, learning to understand your credit report is the first step in insuring that you don’t make those mistakes that will cost you later.

Once you decide to take the first step and learn to understand your credit report, you might want to sit back, because you won’t understand it all in one day. The second step to understand your credit report is to research how your credit report works. Go to the library and read books about credit reports, buy a few books at the book store, that you can study; there are actually quite a few out there that are very helpful. A lot of books, come in workbook format, so that you can sit down and do the worksheets to help you see why it’s so important you make every payment and don’t get carried away with having your credit pulled every time you go somewhere.

But that’s just a small piece of understanding your credit report. The most important step about understanding your credit report, is how to watch for anything you didn’t authorize; and believe me, it does happen. You need to understand how to track your report, keep print out’s and a file of all your credit reports. This step will help save you should something unfortunate arise. No matter how large the file gets, keep it for seven years; don’t even think of throwing it out, you never know when you’ll need it. Once you understand how to read your credit report, manage it and track it, you have insured that you will not make the same mistakes many of us Americans only wished we’d learned when we were younger.

Credit Repair – Understanding The Three Major Credit Bureaus

admin — Mon, 11 May 2009 23:20:27 +0000

When you establish credit for the first time, you credit report is collected by three major credit bureaus; Equifax, TransUnion and Experian. When a credit check is done for a loan, car or credit card, institutions do an inquiry of your credit report from these three bureaus.

The data that is being inquired is personal information about payments against your report. Institutions, banks and even landlords use this information to evaluate the decision of a approval or denial of credit. Any one of the three bureaus will give your data a score. This score is so important because it could mean the answer of “yes” or “no”. If one possess a poor payment history which in turn will result in a poor credit rating, it will be difficult for that person to receive any type of credit.

All three bureaus have visual site of personal data from anyone’s credit report. You should request for your free credit report to keep track of unauthorized transactions against your account. However, running multiple transaction inquiries can lower your score and hurt your chances of getting credit from institutions. If you spot inaccurate behavior on your report, you have the right to contact all credit bureaus to dispute the issue and take necessary steps.

Even though you make regular payments, honor your loan schedule and contact institutions about account issues, your credit score could be poor due to inaccurate information being posted on your account. That’s why its wise to contact all three bureaus immediately after spotting abnormal transactions to regain your good standings. Instantaneously, investigations will begin by each of the three bureau’s dispute departments respectively.

Not only can one get information and data about oneself when running a credit report inquiry, they can also see if any other individual or institution conducted an inquiry as well. One will be able to detect if any information has been added to their report. Upon being denied by any application filed, one has the right to check out any irregular transactions against their report and can dispute these errors with any of the bureaus. One can also search the internet for these individuals or institutions or through all three credit bureaus. Conducting these searches give people the power to manage a good credit score for future credit decisions.