Credit Score

What the New FICO Score Will Mean for Consumers

Fair Isaac Corporation, the company behind the credit score used widely by lenders across the country, otherwise known as the FICO score, announced that two new scoring models will be released this summer. These changes will impact consumers in the future, which is why it is important that consumers understand these changes and plan for what they can to keep their credit scores in a good range.

The FICO score is a three-digit credit score that is based on a person’s credit report. The score is a quick way for lenders to be able to assess the borrower’s credit history and to determine whether the borrower is a lending risk. FICO scores range between 300 to 850, with the higher the score the better. The better the person’s FICO score is, the more likely he or she will be approved for financing.

Credit Card Debt, Credit Score

Reasons to Check Your Credit Score Twice this Holiday Season

When it comes to monitoring a credit score, it is important to pay all bills on time and not max out a credit card when relying on one for holiday spending. However, another factor, known as the credit utilization ratio, plays a major role in a consumer’s FICO score. In fact, this number accounts for 30 percent of the average consumer’s FICO score, and it is the second most important part of a person’s credit score next to paying bills on time.

To figure out what this score is, the consumer needs to add up credit limits across all his or her credit cards and then add up the outstanding balance on each card. Divide the total balance owed by the total limits and multiply that by 100 to determine the percentage or credit utilization ratio.

Credit Card Debt, Debt Relief

How Late Payments Affect Your Credit Score

Missing a credit card or loan payment can be an upsetting feeling. The lender may charge you a late fee, but worse your credit score can be negatively affected.  The good news is, your payment must be a full 30 days late before a lender can report it to the credit bureaus.  This means that if your payment is made a few days later or even a couple of weeks past the due date, it will not harm your credit score.

Once the payment is past the 30-days late point, however, the account holder should expect his or her credit score to take a hit.

According to the FICO branding score model, credit bureaus do consider payment history important. In fact, payment history accounts for 35 percent of a person’s credit score. It is important to understand that not every person is affected in the same manner when it comes to how late payments hurt a credit score. Many different factors are at play when it comes to credit scoring.

For example, not all lenders use the same credit scoring model when reviewing a borrower’s qualifications. Hundreds of different credit scores are available for lenders to use. Many use the FICO score, as well as VantageScore, a credit score that was created by the big three credit-reporting agencies, TransUnion, Equifax and Experian. Ultimately, it is up to the lender to decide which type of credit scoring model to use when reviewing a borrower’s qualifications.

How badly a missed payment can affect a person’s credit depends largely on which credit score model a lender is using. Older FICO models, which are still used by the mortgage industry, consider an isolated 30-day missed payment a bigger deal when it comes to a person’s score, while the newer FICO 8 scoring models give borrowers a little more leeway. With these newer models, one missed payment will not have as serious of an effect as multiple late payments.

The problem is most lenders do not tell the borrower what type of model or version they use when processing a lending application, which means the borrower may have no way of knowing whether a one-time late payment will hurt him or her in the loan process.

Other factors play into how a late payment can hurt a borrower’s credit score. One of these factors involves how severe the late payment is, including how far it is “past due” and how recently the missed payment or late payment occurred. If the late payment occurred several years ago, its effect may be much less severe than a late payment that occurred more recently.

How long negative information stays on a borrower’s credit report is governed by the Fair Credit Reporting Act (FCRA). For most purposes, late payments will stay on a person’s credit report for up to seven years, although exceptions do exist to that rule.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources: https://www.bankrate.com/personal-finance/credit/how-late-payments-affect-credit-score/

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Two New Ways to Raise Your Credit Score

Credit scores play a major role in your ability to do many different things in life, ranging from getting a mortgage or car loan to being approved for renting an apartment. A good credit score can also secure a lower interest rate when you do receive financing for a large purchase. It pays to have a good credit score and rebuilding a damaged credit score can take time.

There are two new ways to boost your credit score. These new programs include the UltraFICO from Fair Issac, the creator of the FICO Score, and Experian Boost. These two new programs can potentially help you increase your score, especially if you have a limited credit history or have a lower credit score.

UltraFICO

The first of these scores, the UltraFICO was launched in January 2019 and is planned on being available to most lenders in the U.S. by mid-2019. The program is part of a joint venture with FICO, Experian and Finicity. UltraFICO allows FICO to look at a consumer’s bank and financial accounts to show lenders that you do have savings and the money available to make loan or credit payments if approved for financing.

FICO anticipates that this program will benefit approximately seven out of ten consumers whose financial accounts can show a history of good savings and financial behavior. Even consumers who do not have a FICO score currently could still be eligible to receive an UltraFICO score.

This score could be more beneficial to someone who has a rather large bank balance but a limited credit history. So long as the consumer can show he or she can save money responsibly, the fact that he or she has not applied for credit much in the past will not hurt them with the UltraFICO score.

One point to keep in mind is UltraFICO is only available for loans or credit cards that are applied for with a lender who uses Experian. If the lender uses Equifax or TransUnion, the borrower will not be able to take advantage of this opportunity. Before applying for the loan or credit, as the company which credit bureau they use to review new applicants. If the company says they do not use Experian, it may be advisable to use another institution if you believe the UltraFICO score will help you.

Experian Boost

Another program is set to be released in the early months of 2019, known as Experian Boost. The Experian Boost program is different from UltraFICO in that it allows lenders to review the borrower’s financial history through their bank accounts, specifically related to utility bill payments. The key is not to see that a consumer has a sizeable savings but rather a demonstrated, good history of paying his or her utility payments in a timely manner over a set span of time. Also, unlike the UltraFICO score, the data found through this review is added automatically and directly to your Experian credit report. The borrower must opt in to allow his or her utility information to be visible in the Experian credit report, and if the results are positive, they will be posted immediately to the borrower’s Experian score. Borrowers are allowed to sign up for early access to the program.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

New FICO Program Aims to Help Consumers Improve Credit Scores

Consumers are always looking for new ways to improve their credit scores. Lenders and other financial institutions use these scores to determine whether a consumer is a risk when it comes to receiving a loan or credit so it is important that the scores reflect a consumer’s positive financial behavior. Currently, several different credit scores are available to financial institutions and lenders based on consumer behavior, but now there is one more as FICO launches its “opt-in” credit score.

FICO is the largest and arguably best-known company that provides software to calculate a person’s credit score. Originally known as Fair, Issac and Company, FICO has now become a fixture for consumer lending in the U.S, and a consumer’s FICO score is often seen as a major factor in determining a consumer’s fiscal responsibility.

The traditional way of improving a credit score has been for the consumer to exercise good financial behavior, such as paying bills on time, keeping a low balance on their credit card accounts, and avoiding spending over their given card’s limit. While this behavior is still encouraged, FICO is offering a new way to incorporate good financial data into a consumer’s FICO credit score.

This new score is being referred to as the Ultra FICO Score. It is a product created in partnership with two other financial institutions, Finicity and Experian, and allows the consumer to give these companies permission to have electronic access to certain financial information that will help boost their credit scores. This access can include data from the consumer’s bank accounts to show how long these accounts have been open, provide proof that the consumer has savings and show frequency of activity in these accounts.

For consumers who have credit scores in the upper 500s to lower 600s, it is hoped that the Ultra FICO program will help these individuals rebuild their credit, especially if they are struggling after a significant crisis in their lives. This program is expected to launch at the start of 2019. However, the access to the pilot program will be limited until approximately mid-2019.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources: https://www.washingtonpost.com/business/2018/11/08/fico-has-new-way-help-consumers-improve-their-credit-score/?noredirect=on&utm_term=.1c1c57126b71

Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loan Debt Impact on Older Americans

Student loan debt is not just a problem for younger Americans; a new study shows older Americans are shouldering an increasing share of the nation’s $1.34 trillion student loan debt.

A new report released by FICO showed the percentage of Americans ages 65 and older with student loan debt increased 300 percent from 2006 to 2016. This jump is three times higher than the increase in student loan debt seen in Americans ages 35-64. The trend is expected to continue increasing as the population ages and older employees turn to workforce retraining programs to learn new labor skills.

The report also showed that the age group with the highest amount of student loan delinquencies is Americans aged 25-34, with a default rate of 25.1 percent. However, older Americans are also having a more difficult time repaying their debts. Delinquencies for Americans ages 65 and older were 13.5 percent last year, which is an increase of 3.6 percent from the prior decade.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Mark Your Calendars: Starting July 1, certain negative marks will vanish from credit reports

Starting July 1, many people with tax liens, civil judgments and certain medical debts will see a boost to their credit scores.  The three largest credit bureaus- Experian, Equifax and TransUnion, will no longer report a tax lien or civil judgment on a consumer’s credit report if it does not include the person’s name, address and either their social security number or date of birth.  Existing liens missing this information will also be expunged.

Consumer-friendly changes will also be made to the way medical debts are reported. According to the new rules, bureaus will not display medical collections until at least six months after the account became delinquent.  They will also remove any existing medical collections that insurance companies have paid or are paying for.  After the liens and judgments are expunged, some consumers can expect to see their credit score increase by as much as 40 points- enough to affect a loan approval or the terms.  The leading scoring company, FICO, estimated that out of 200 million “scorable” consumers, roughly 12 million will have a lien or judgment disappear from their report.

Starting July 1, the credit bureaus also will check lien and judgment data every 90 days to make sure the information is still accurate. These changes come as credit bureaus have been put under pressure from regulators and state attorneys general to improve the accuracy of credit reporting.  To confirm their data is correct, consumers should get a free copy of their credit report from each of the three bureaus once a year at www.annualcreditreport.com.

Click here to read more on this story.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

A New Credit Card that Helps Consumers Repair their FICO Score and Avoid Pay Payday Loans

If you have a credit score below 600, chances are you will have difficulty qualifying for a credit card.  However, Americans with poor credit scores are oftentimes the ones who need credit the most.  Many are forced to turn to alternatives like payday loans that come with exorbitant interest rates and penalties.  In rare circumstances, these loans can help but most times it ends up in a cycle of debt and borrowers are never able to recover.

FS Card  is a start-up whose sole product right now is a credit card targeting those with “less than perfect” credit histories. The card, which is called “Build” and has MasterCard branding, allows consumers to avoid the local payday lender’s sky-high rates and gradually improve their FICO sore.

FS Card’s strategy is to target “deep subprime customers” in the 550 to 600 credit score range, offering transparent rates and fees and low spending limits to start, said the company’s CEO.

Click here to read more on this story.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Credit, Debt Relief, Timothy Kingcade Posts

Goldman Sachs Extends Consumer Lending Arm

More than a third of borrowers with FICO scores above 660 have high interest credit card debt, making them an ideal customer for “Goldman’s Marcus,” which offers personal loans of as much as $30,000 for up to six years. Personal, or unsecured loans, are well suited for debt consolidation. They do not require borrowing against something of value, like a house or car, which makes them particularly attractive for those without that kind of equity.

Online lenders have joined in as well.  SoFi, Lending Club and Prosper, have emerged in recent years to offer these types of loans as the alternative, particularly for the millennial generation who may want to consolidate their debt but do not have the home equity for a secured loan to do it.

The number of people taking out unsecured loans increased more than 15 percent to 15.82 million in 2016 from 13.72 million the year earlier and is now at the highest level since 2009, according to TransUnion.

Proceed with caution if taking out these loans, as it will increase your overall debt level.  They also cannot match the zero percent balance transfer offers when it comes to consolidation.

Click here to read more on this story.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

6 Credit Score Killers and How to Avoid Them

There are financial missteps you can make that are guaranteed to lower your credit score.  One of the biggest factors in determining your credit score is your past payment history, but there are other things you may be doing that can affect your score in a negative way.

  • A first missed payment. Per a FICO study, a single 30-day late payment can cause a good credit score of 780 to fall 90 to 110 points. An average score of 680, can fall by 60 to 80 points. You can avoid missing payments by setting up auto-pay from a linked checking account every month.  If auto pay makes you uneasy, you can set up automatic alerts that will remind you when your bill is due.
  • A maxed out credit card. Credit utilization is the second most important factor of credit scores, so reaching your card’s credit limit can be problematic. What’s worse, is if you have multiple cards you are doing this with. Remember, for optimal credit score results, it is recommended you keep the amount of debt you owe collectively and on individual cards below 30%, and ideally 10% of your credit limit.
  • An error. This happens more often than you might think.  A report from the Federal Trade Commission discovered that one in five Americans had an error on their credit reports.  Staying on top of your credit score and monitoring it for mistakes can help.
  • An account in collections. That medical bill you thought insurance covered or a utility bill you forgot to pay in college can drop your score 50 to 100 points (if it winds up on your credit report).  That account can legally stay there for up to seven years, plus 180 days from the date of your first missed payment. Keep an eye on your mail for any outstanding debts and resist the urge to ignore a call from a debt collector.
  • Applying for several credit cards or loans at a time. These credit inquiries account for 10% of your credit score.  Keep credit applications to a minimum.  Making several requests in a short period of time can cause your credit score to dip.
  • Closing out your old credit cards. Another component of your credit score, 15%, is the length of your credit history. Closing old credit cards, especially your oldest card, makes your credit history seem shorter than it really is.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:

http://finance.yahoo.com/news/5-big-credit-score-killers-110000016.html

https://www.thebalance.com/things-that-hurt-credit-score-960510