NY Times on How to Increase Your Credit Score

How to Pump Up Your Credit Score, according to the New York Times, May 17, 2012: http://www.nytimes.com/2012/05/20/realestate/mortgages-how-to-pump-up-your-credit-score.html?smid=pl-share.
According to the NYT, banks are tightening up lending requirements for mortgages and credit scores have a substantial impact on whether you can get a bank loan and what the interest rate will be. “A majority of banks are less likely to offer loans to people with a FICO credit score of 620 and a 10 percent down payment than they were in 2006 … [and] Lenders were also less likely to do so even for those with a score of 720.”
The two biggest factors that affect your credit score according to FICO, says the NYT, is “your payment history, which accounts for 35 percent of the score, and the amounts owed, accounting for 30 percent,” and  reducing your balances on credit cards can help improve credit scores under the FICO model. A late payment occurring during the month that you apply for a mortgage loan “can be deadly,” according to the Director of Counseling at the Housing Development Fund, Stamford, Conn.
For these reasons, at CELCWI, we advise people to get your consumer reports from Experian, Equifax and Trans Union through www.annualcreditreport.com before applying for credit. Review the reports for any inaccuracies, and then dispute the inaccuracies with the consumer reporting agencies, in writing. If the inaccuracies continue after the disputes, consumers do have legal options to correct the reports and recover any resulting damages.

ABA GP Solo Magazine Article on Credit Reporting by Expert Evan Hendricks

The American Bar Association published in its GP Solo Magazine an article authored by Evan Hendricks on credit reports, credit checks and credit scores. Mr. Hendricks is  an expert on credit reporting and the credit reporting industry as recognized in federal and state courts around the country. The article is available online at www.americanbar.org/publications/gp_solo/2011/july_august/credit_reports_checks_scores.html.

In the article, Mr. Hendricks discusses what a credit score is “a number that reflects your credit worthiness at a given point in time.” Higher credit scores is meant to reflect a better risk for the lender, so people with higher scores get loans at more favorable rates. Mr. Hendricks further explains the scoring models used by several agencies and ranges assigned to consumers that put them in certain risk categories.

HAMP Mortgage Modifications & Missing a Payment

Some consumers are told to intentionally miss a payment on their mortgage so that they can qualify for modification of their loan under the HAMP program. What consumers are typically not told is that if they miss a payment, their loan may be in default and the mortgagor can and likely will make a negative report on the consumer’s credit reports. This then compounds the financial stress that the consumer is under because the consumer’s credit report now has a negative or more negative entries on it, the consumer’s credit score drops and less credit is available to the consumer in terms of new credit opportunities, causes higher interest rates because of the lower credit score, and existing creditors and insurers may even impose a penalty rate on existing credit lines and insurance premiums. In other words, the consumer may get a HAMP modification, but in the end the consumer is worse off because of the collateral impact on his or her credit scores resulting in higher costs in other expenses and a decrease in the credit otherwise available to the consumer. So before anyone intentionally misses a payment on a mortgage loan, one must consider these other consequences.

Credit Repair Scams

The Wisconsin Department of Financial Institutions warns about credit repair scams:

“In this type of scam, a company requests an up-front fee for which the company promises to "repair" the customer’s credit report. However, there is little, if anything, such a business can do to "repair" a customer’s poor credit track record. And by law, anyone may request a copy of their own credit report for a nominal fee which is usually far less than what these firms charge. Further, if someone has actually been denied credit, they are entitled to a free copy of their personal credit report.”


Be wary of anyone saying that they can fix your credit score or credit report even where the negative information is accurate and not too old or obsolete for reporting purposes.

Not Dead Yet? But Credit Reporting Agencies Think You Are

Experian, Trans Union and Equifax, are the 3 major consumer reporting agencies or credit reporting agencies as they are commonly known. They use scoring models to determine your credit score. Sometimes, when the scoring model they use think you are dead, you won’t get a credit score. We see this happening sometimes when a spouse dies, and the surviving spouse cannot get a credit score. It typically means that the agencies are taking the deceased entry from one of the joint accounts and misapplying it to the surviving spouse. If this is happening to you, you will likely need to submit a dispute to the credit reporting agencies making the mistake. I have more about disputing inaccurate credit reports at my website www.attorneyleech.com.

Vantage Score – New Credit Scoring Method

Consumer reporting agencies may be providing you with a different scoring model than the traditional “FICO Score” they have used prior to 2010. A new scoring model, known as Vantage, is available and may create confusion when you get your score if you don’t pay attention to whether it is a FICO score or Vantage. The confusion is due in part to the range difference. A FICO score ranged from 300 to 850. A Vantage score can range from 501 to 990. If you see an unexpected increase in your score, check to see if it is simply because you are looking at a Vantage score rather than a FICO score.