AL residents have credit scores lower than national average
News from WSFA:


A recent report finds Alabama residents have lower credit scores than the national average.  The U.S. Credit Score Climate Report, which is conducted by the website, found the average Alabama resident has a credit score of 635.  That’s below the national average of 656. 

Roger Knauff of Consumer Credit Counseling Service of Alabama doesn’t mince words when it comes to credit problems.

“I don’t think we do enough to teach our children or our employees or people who are in financial distress or on the edge how to manage money and credit,” Knauff said.

Knauff still finds people spending over their means, and using credit when they shouldn’t or turning to title and payday loans to makes ends meet.

“When you have debt that has not paid and you can’t or are not paying it, you should not borrow money. If you have no money in savings, you have no business borrowing money.”

Knauff said one place where people run into trouble is using credit for everyday purchases like food or clothing.  Knauff advises using cash whenever possible. 

“Whether you’re paying for second hand items, shopping yard sales or just paying cash in stores, your total cost of ownership is a lot less when you pay cash,” he said.

Knauff advises people to handle major bills…………… continues on WSFA

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Late medical bills can lower credit scores for consumers: How to check and fix …

Late medical bills can lower credit scores for consumers: How to check and fix …
News from Washington Post:

When a debt collector goes after you for a late medical bill, your credit can suffer — even if you quickly pay up.

Paid or unpaid, large or small amounts — all can affect a credit score, said Anthony Sprauve, a spokesman for FICO, developer of the most widely used measure of credit risk. Banks and credit card companies use FICO and other credit scores to decide if they’ll lend to you and how much you’ll have to pay to borrow money.

The effect on a credit score can vary, but for any medical collection — paid or unpaid — “a person with a FICO score of 680 will see their score drop between 45 and 65 points. Someone with a FICO score of 780 will see their score drop between 105-125 points,” Sprauve said.

Your credit score is determined by information in your credit report, which you can check for accuracy. Federal law says everyone is entitled to one free credit report per year from each of the three major credit reporting companies — TransUnion, Equifax and Experian.

The government-approved site tells how to request a free copy of your credit report.

If you find a mistake in your credit report, you can dispute the error with the credit reporting company. The Federal Trade Commission has steps for disputing errors, including a sample dispute letter, on its website.

But if the bill wasn’t a mis…………… continues on Washington Post

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How to check your credit for medical debt snags
News from Newsday:

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Quick ReadLate medical bills can lower credit scores for consumers: How to check and fix your report

When a debt collector goes after you for a late medical bill, your credit can suffer — even if you quickly pay up.

Paid or unpaid, large or small amounts — all can affect a credit score, said Anthony Sprauve, a spokesman for FICO, developer of the most widely used measure of credit risk. Banks and credit card companies use FICO and other credit scores to decide if they’ll lend to you and…

Newsday & ExploreLI are now available at no charge to Newsday 7-day and Optimum Online® subscribers. To continue reading, plea…………… continues on Newsday

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Common Things That Improve And Lower Credit Scores
News from San Francisco Chronicle:

A credit score is a numeric expression that helps lenders evaluate a person’s credit report and estimate the risk of extending credit or loaning money to people. A person’s credit score is provided to lenders by the three major credit reporting agencies, including Equifax, Experian and TransUnion. The most common credit score is the FICO score, named after software developer Fair Isaac and Corporation.

Since a person’s credit score affects his or her ability to qualify for different credit types and varying interest rates, it is in a person’s best interest to achieve the highest credit score possible. Understanding the factors that can negatively affect a credit score can help people work towards a more favorable score. This article will introduce how a FICO score is calculated, what factors are not included in a FICO score, and the common things that lower a person’s credit score.

How is the FICO Score Calculated?
It is helpful to understand what factors are considered when determining a person’s credit score. A FICO score is based on five factors:

  • 35%: payment history
  • 30%: amounts owed
  • 15%: length of credit history
  • continues on San Francisco Chronicle

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Realtors share the 10 top myths about credit scores
News from San Jose Mercury News:

Since lenders have tightened their loan requirements, there has been much concern about credit. Unfortunately, many borrowers do not have the correct information about how credit scores are evaluated, according to professional credit specialists.

“Certain facts about credit will affect you and any financial decision you make or are about to make, so it’s important to have the correct information,” says Julie Macc, a certified credit and identity theft specialist with the Century Law Group.

Macc notes your credit score is based on the following components: past delinquencies, 35 percent; debt ratio, 30 percent; average age of file, 15 percent; mix of credit, 10 percent; and inquiries, 10 percent. She asked members of the Silicon Valley Association of Realtors to share with their clients the following top myths about these components and how credit scores are evaluated.

Myth No. 1: It is good to pay your credit card balance in full. If you pay off a balance and leave a zero balance account, you will have no payment history. After six months, some companies look at it as an inactive account, which can be closed due to inactivity. It is best to leave a small balance every month (ideally 1 percent) to show you can pay on time.

Myth No. 2: I don’t need to check my credit because I pay my bil…………… continues on San Jose Mercury News

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Credit care: Closing a store credit card might lower your score
News from Arizona Daily Star:

Q: I am holding a store credit card for a store that no longer has physical stores; purchases may be made online only. I want to close that credit card.

Would that affect my credit score, as I start looking for a mortgage loan? Also, I hold another store credit card and am not using it much. Will that hurt my credit score if I am going to close that one, too?

A: You are wise to consider how any changes to your credit profile might affect your credit score, particularly when shopping for a mortgage loan. Without knowing the particulars of your credit profile, it is difficult to know precisely how closing the accounts would affect your credit. I can paint the broad outlines, though, and let you know that closing the accounts probably means a slight, temporary drop in your credit score.

Let’s look at the big picture first. Closing accounts could significantly lower your available credit. That would hurt your credit utilization rate – how much debt you have compared with available credit – and that’s the second-most-important factor that the credit scoring firm FICO uses in calculating your score. Your payment history is the most important.

Also, if you do not have any other revolving credit accounts, closing these two could negatively affect the area of your credit score that involves types of credit used. To achieve the be…………… continues on Arizona Daily Star

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4 Unexpected Things That Lower Your Credit
News from San Francisco Chronicle:

These days it is more important than ever to maintain a good credit score. Whether you’re planning to buy a home, finance a new vehicle or even sign up for a new mobile calling plan, your credit score will follow you almost everywhere you go. While most of us know the basics of how our credit scores and reports work, and how to build, improve or repair our scores, you may be surprised at some of the things that can have a negative effect on your credit score.

Closing an Older Credit Card
It is not uncommon for individuals to have credit cards that may be 10, 15 or even 20 years old. These cards were probab…………… continues on San Francisco Chronicle

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If you have a good credit score, bargain for a lower interest rate: Arun …
News from Economic Times:
The Cibil TransUnion Score has become one of the most important criteria considered by lenders while providing a loan. ET speaks to Arun Thukral, MD, Cibil, to know how customers can improve their score as well as leverage it to get a better deal.

How does Cibil compute the credit score for individuals?

We use an algorithm, which considers 258 variables to compute the score in the range of 300-900. The higher the score, the better are your chances of getting a loan from a bank. In 2008-9, only 40% of home loan takers had scores over 800, but today, it’s over 55%. This shows that banks prefer to give loans to those with good records.

While taking a loan, how can one leverag…………… continues on Economic Times
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Check Your Credit Report for Exaggerated Balances to Avoid a Lower Credit Score

Check Your Credit Report for Exaggerated Balances to Avoid a Lower Credit Score
News from Lifehacker:

Adam Dachis —Managing your credit can be an unpleasant chore and here’s another reason why: phantom money. CNN Money points out that if you end up getting reported to a collections agency for any reason, sometimes your credit report can end up showing a hugely exaggerated balance. Here’s why:

The card balance should then drop to zero, and a new account, this time with the collection agency, should appear on the report. Sometimes, though, the issuer won’t strike that balance from its records, and it will appear as if the consumer has two outstanding debts. If the debt is bought and sold numerous times, which is common, the problem can multiply. Another instan…………… continues on Lifehacker

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5 ways to improve your credit score for a lower interest rate
News from Sacramento Bee:

It’s time to improve your credit score, now that a federal report found Floridians have more money to pay down debt, thanks to more overtime, raises and new jobs.

A higher score can help Floridians grab a lower interest rate on loans and credit cards.

T. Rowe Price, an investment management company with a Boca Raton, Fla., office, reported that consumers with high credit scores can save as much as $ 300 a month in a lower house payment on a $ 300,000 30-year, fixed-rate mortgage. That’s because good credit risks are rewarded with a lower interest rate — in some cases more than 1.5 percent less.

Here are five ways to improve your score, according to T. Rowe Price:

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Get into a habit of paying down debt. And don’t think you have solved your debt problem by moving it around. Moving balances can actually hurt your score.

Make interest payments on time. Lenders like to see a history of …………… continues on Sacramento Bee
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