Credit scores are one of those things that has consumers (and sometimes lenders) scratching their heads and saying, “How did they come up with THAT credit score?”
The one you hear about the most are FICO scores (acronym for the Fair Isaac Corporation, the creators of the FICO score). It’s the one that most mortgage lenders use as one of the benchmarks to see if you qualify to refinance or purchase another home. Usually 3 scores are provided, and the lender uses the middle score as the basis for granting (or denying) a loan.
The thing about FICO scores is that the credit score may vary from lender to lender. Why? Because over the years, Fair Isaac has updated their credit scoring model software (best estimate, about 85 times), but the credit bureaus who buy the software from Fair Isaac do not always update their own software. One lender could be using the latest version while another lender’s model is several years old.
However, not everyone uses FICO scores as a guide. Here are some other credit scoring models that are used:
Auto Loans – If you apply for an auto loan through a dealer, they have developed their own credit scoring models, which are completely different from those used by lenders.
Insurance Companies – Your insurance premium you pay for homeowners or car insurance also depends upon the credit scoring model that insurance companies use. Oh, and it will vary with different insurance companies.
Vantage Scores – If your occupation/employment requires you to be “licensed” (especially in the financial services industry) and to obtain (or maintain) your professional license, Vantage Scoring model software is used.
Free Credit Reports – According to law, you are entitled to one free credit report (per bureau) every year. While it won’t be exactly what lenders see when they order a credit report on your behalf, it will be “in the range” and is a good indicator of what to expect.
As I mentioned, you are entitled to one free credit report—PER BUREAU. Go to AnnualCreditReport.com and you can request one credit report from EACH of the bureaus listed.
A word of caution! Be careful when signing up for offers to provide you with a FREE credit report. If you are asked to enter your credit card number, what you are really signing up for is a credit monitoring service—that may cost you over $300 per year.
Please let me know if you’d like me to review your credit report. I can make suggestions on how to increase your credit score. Sometimes it just takes a little tweaking to increase it by 25 to 50 points.
Category: Blog
How to Get Rid of Your Excess Stuff!
Here’s how you tell if you have too much “stuff”…
You cannot fit one more piece of clothing in your closet.
The rooms in your home have so much furniture that it’s difficult to walk around.
Your cabinets are so jam-packed with food, dishes, pots and pans that you have to remove items to get to the one thing you want to use.
I wanted to share with you four things you could do to declutter and make your life a bit simpler:
1. Sell your stuff: Make up a list of local consignment stores or estate sales dealers who would sell your items at a fair price—after commission. Or you could sell them online. Facebook and Craigslist usually have a local online consignment page where you can post photos. Since it’s local, you don’t have to pay for shipping. eBay is another option but there is a hassle of shipping the items you have sold on that website.
2. Donate your stuff: The local Goodwill or Salvation Army come to mind—but there are other places you may want to consider. Halfway homes. Abused women shelters. Senior citizen homes. Be sure to check what they will and will not accept.
3. Throw away your stuff: While some of your stuff my be too bulky to take to the dump, there are services that will haul away your items—like 1-800-GOT JUNK. Another way is to move the large items to the curb with a sign that says “FREE: TAKE ME PLEASE”. If you have stuff like chemicals or paint, check with the local recycling center to see what they will take. One more thing, most communities have a “used appliance pickup day” once a year where they will remove your stuff from the curb.
4. Store your stuff: If you simply can’t part with the items and think you can use it again sometime in the future, consider placing it in a self-storage unit. It could also be items that you only use periodically and it’s best to store them off site. However, the danger is that if you store the stuff and find you never visit the storage unit, you are postponing the inevitable—so you may as well get rid of it.
Are Tax-Refund Advances Good or Bad?
Did you know that if you claim an “Earned Income Credit” or an “Additional Child Tax Credit,” the IRS can delay your refund?
The delay was created to combat tax-refund fraud. So, your refund is delayed until they check you out!
That’s one of the reasons that tax preparation companies offer tax-refund advances – so you don’t have to wait weeks or months to get your refund.
But here’s the thing. It’s not an “advance”. It’s a loan from a bank, and they have the right to check your credit, report the loan on your credit report, and it could possible reduce your credit score.
And, if you read the fine print, your “loan” is subject to underwriting requirements—which means that even if you apply for the tax-refund advance, there is no guarantee that you’ll be approved.
The interest rate is usually zero. However, you will be charged a “processing fee” – usually $40 to $60 – for the privilege of getting your refund in advance. And there is usually a limit to the amount the tax prep company will advance. For example, if you are expecting a refund of $4,500, they may only advance $2,000. When the refund is received, the $2,000 will be deducted.
By the way, according to H&R Block, the tax-refund approval rate is 75%.
If you take the standard deductions—don’t pay for someone to prepare your taxes!
If you can wait a few more weeks—don’t take the tax-refund advance!
What You May Not Know About Freezing Your Credit
What is freezing your credit all about?
It’s a tool that restricts people and companies from accessing your credit report without your specific permission.
It is not the same as a fraud alert. It does not affect your credit score. You can still request your free credit report once a year.
And you can temporarily remove the credit freeze. Or, you can permanently remove the credit freeze. And it does not cost you anything to do so. It can be done within minutes of your requesting an “unfreeze” (but double check the time frame with each bureau).
The bottom line, it makes it harder for identity thieves to steal your credit and personal information or open new credit in your name.
I have listed below the three main credit bureaus to call or go online to learn about it further.
Here’s what they will need from you:
Name
Date of birth
Social security number
Your address
Other than creditors, here are some other reasons you may need to unfreeze your credit report access:
Applying for a new job
New credit card
New credit requests you have initiated
Utility or cell phone companies.
Once a credit freeze is in place, it secures your credit file so nobody can access it unless you give direct authorization to the credit bureaus, usually through a password-protected credit bureau website or PIN.
Please contact me if you would like more information.
Equifax: Call 800-685-1111 or go online. Check out a step-by-step Equifax credit freeze guide.
Experian: Call 888‑397‑3742 or go online. Here’s a detailed walk-through on a credit freeze with Experian.
TransUnion: Call 888-909-8872 or go online. Read our TransUnion credit freeze guide.
6 Easy Ways to Save Money This Year
It’s the little things—that can save you a ton of money this year. Here are six of them that I’d like to share with you!
Cancel a service – Take a look at your monthly credit card and bank statements. Are you paying a monthly fee for a service that you hardly use? Or can you find the service somewhere else for free? For example—paying a monthly fee to Netflix when you can get it from the library. Or paying a fee for a service that you didn’t remember that you had in the first place.
Use every ounce – Just when you think your mayo container is empty, it’s really not — because you’ll find at least a couple of servings left at the bottom of the squeeze bottle. Same goes for shampoo and toothpaste. As a test, a friend of mine made it a habit of turning the shampoo bottle upside down and emptying what’s left into another bottle just to see how much gets thrown away. She was able to get two months’ extra supply of shampoo from the ‘empty’ bottle.
Watch your ATM Fees – If you have to pay an ATM fee, take out more money than needed because you’ll be paying the same fee whether you take out $20 or $120. Another way to save money is use your debit card at a grocery store. Buy what you need and use the “cash back” button to avoid bank fees altogether.
Don’t buy more than you need – Unless it’s a super-duper sale, buy only what you need. You are spending your hard-earned money “now” for things you “may need” in the future.
Create a no-spend weekend – For one weekend per month, don’t spend any money—that means your credit card too.
Save dollar bills – This is kinda corny, but examine the serial number of your dollar bills. Save the ones that begin with the letter A. You can do the same thing with coins. Put them in a money jar at the end of each day. Then take it to the bank and deposit it into a savings account so you are not tempted to spend it.
Southern Elite Team 